Importance of Referral and Word-of-Mouth Marketing

June 22, 2021

Importance of Referrals and Word-of-Mouth Marketing

It's no secret that the holy grail of marketing is achieving word-of-mouth referrals. It proves you are not only making current customers happy, but that they are willing to brag about you. The bonus? As these customers rave about your products or services to those around them, you no longer are responsible for building that trust — it's already been established.

Many businesses fail to capitalize on word-of-mouth. But now it's time to make this technique an integral aspect of your marketing plan. While it may feel lucky to land new customers through word-of-mouth, it is possible to strategize it.

Statistics on Word-of Mouth-Marketing

Consumers talk about their favorite products and services all the time. According to SemRush, 23 percent of us will do this daily. These little recommendations drive $6 trillion in global sales yearly or roughly 13 percent of all spending. 

It's better than paid ads, and it's much better for building consumer trust. Word-of-mouth is so effective that 83 percent of marketers are working it into their strategies.

Word-of-Mouth Road Goes Both Ways

But, word-of-mouth marketing works both ways. It's almost more powerful when a customer is frustrated with your brand. According to statistics cited by Inc., if a customer is dissatisfied, they will tell between nine to 15 other people about their negative experience. 

As detailed by SemRush again, 21 percent of consumers will lose trust in a brand if they hear about a bad experience. One negative customer review requires approximately 40 positive reviews to correct the course.

It's why it's so important to build word-of-mouth marketing into your current marketing strategy. Encouraging customers to share their positive experiences will automatically help push down the impact of any negative ones.

Word-of-Mouth and Referrals in 2021

Word-of-mouth referrals look a lot different in the 21st Century. With the rise of the internet, consumers have more ways than ever before to proclaim their love affair with your brand. 

Consumers may still rave about their experiences to friends, family, and colleagues, but they can also leave online reviews. Facebook, Google, and other platforms are all changing the way people show brand loyalty and support. 

Social media can also play a role. The comment section on Youtube, Instagram, and LinkedIn is an ideal place for consumers to engage. Not all consumers may play nice in this section, but a consumer's true feelings will come out here. So why not capitalize on it?

3 Tips for Working Word-of-Mouth into a Marketing Strategy

Word-of-mouth strategies tend to work entirely online these days. Why? Because more than 70 percent of social media users rely on social media referrals to make their purchasing decisions.

Of course, marketers aren't completely ignoring offline methods, but about 70 percent have refocused their attention on increasing online word-of-mouth spending.

1. Reward User-Generated Content (UGC)

UGC is essentially free advertising and a powerful way to adapt to word-of-mouth online advertising. The beauty industry is doing this remarkably well. 

Many indie makeup brands can get thousands of Instagram stories and Tiktok shoutouts with every new eye shadow or lipstick launch, from customers unboxing and testing the products.

Adopt this method into your own social streams. Share positive posts and stories to your own brand page, engaging with and rewarding these customers and filling the algorithm with your brand and products. Add unique branded hashtags to create a sense of community.

2. Work with Influencers

Influencers, whether we like it or not, are now a valuable marketing tool.

By some measures, 40 percent of consumers are already buying based on influencer recommendations across social platforms. Almost 49 percent have admitted they rely on influencers to help guide purchasing decisions. These are not numbers to ignore.

When done right, they are a powerful and affordable way to reach tens of thousands of new customers. An influencer is already trusted among their followers, which means their followers will trust the recommendations they make.

We have all seen influencer-paid placements gone wrong, so the key is to work with social media influencers in the right niche. Influencers should be selective about the brands they work with. Someone hawking every product that comes their way will do less for you than someone who already loves your product and operates within your industry.

3. Focus on Incredible Customer Service

A tried and true method for online and offline word-of-mouth marketing is going above and beyond with customer service. Returns are the most straightforward example. Brands with lifetime, no-questions-asked return policies make customers happy — often happy enough to share this experience with friends.

Surprise loyal customers with discounts and coupon codes. Send bonus samples in their orders. Offer something for free on their birthday. Add special touches to experiences and services that were not advertised. 

There are many ways to create a positive experience for your customers. You just have to get a bit creative.

Word of Mouth Marketing Amplified in the 21st Century

Getting positive reviews from consumers has always been important, but it's more critical in the age of 24-7 connection. Before, word-of-mouth might have reached a dozen or so people — if you were lucky. Now, a single glowing report from one customer could reach tens of thousands of people through Google reviews or an Instagram story. 

Instead of waiting for this to happen by chance, work word-of-mouth marketing into your strategy. Online or off, word-of-mouth marketing remains the most important way to grow your business.

Interested in learning more?

Amplify believes in a more human approach to advertising. Let us demonstrate how you can reduce wasted ad spend and time to conversion by implementing an omni-channel strategy that amplifies your SEO, Paid Search, Content and Programmatic strategies. If you would like to learn more about shifting your marketing strategies to grow your marketshare and bottom line, let’s have a conversation.  

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