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What is Word-of-Mouth Marketing?

Women holding drinks and chatting in a white room. People like to talk about their experiences with products and services, and you can make use of this in your word-of-mouth marketing strategy.

No matter what product you offer, finding customers is a challenge that all entrepreneurs have in common. It’s a never-ending process, requiring continuous effort to find approaches that work consistently for your business. If you’ve tried different advertising strategies but can’t seem to find the right solution, word-of-mouth marketing might be for you.

Word-of-mouth (or WOM) marketing is an advertising strategy where customers promote your products based on their favorable experiences with your business. It is a great way to build a community of loyal followers who will support your brand. Some examples of word-of-mouth marketing are personal referrals, product reviews, or social media posts.

WOM marketing can be both effective and free, but since it depends on your customers to do it effectively, what can you do as a business owner to maximize it for your brand?

How to create an effective word-of-mouth marketing strategy

Woman sat at a desk with a mug and an open laptop, creating a word of mouth marketing strategy.

To develop a WOM marketing strategy, it is necessary to have a deep understanding of your customers by knowing their needs and interests. Using that knowledge, you can provide a solution to solve their problems and exceed their expectations. Knowing the profile of your customers, understanding the things they want and how they think, and solving their needs and problems can translate into positive interactions and experiences with your business, which ultimately turns into the good word they’ll be spreading to their friends and family—other potential customers.

When it comes to creating a word-of-mouth marketing strategy, there is no one-size-fits-all approach. It requires a lot of time, effort, and analysis to see what works. Follow these steps and customize according to your business needs:

1. Highlight your unique value proposition

A unique value proposition explains what your business is about and what value it brings. It highlights how your products will solve the customers’ pain points or satisfy their needs.

Showcase your unique value proposition by creating a catchy tagline and adding it to your marketing collateral. Doing so helps customers remember what’s good about your business and why they should choose it over others.

For example, Novo watch, a Shopify store providing restored watches, summarized their unique value proposition in one line: “Custom watches made from meaningful memorabilia.” It clearly explains what they offer and what makes their products better than other watches.

Novo Watch’s tagline, ‘Custom watches made from meaningful memorabilia’.

Remember that WOM marketing starts by giving your customers a reason to talk about your brand. If you create a distinct value proposition, it becomes dramatically easier for your customer to share the unique identity of the product with their friends.

2. Take advantage of online tools

Although WOM marketing depends on your customers, it is your responsibility to make it easy for them to share your products. Use marketing tools and social apps, such as those available on Shopify, to facilitate your goal.

For example, you can automate WOM referrals and turn them into bonus perks and rewards for your customers with a number of loyalty program add-ons, such as Automizely, Stamped.io, or Referral Candy. These add-ons can give you a good reason to ask for referrals from your customers, because not only do they make it easier for people to share your site, they also get something in return.

Online apps and add-ons allow you to both automate and incentivize word-of-mouth promotion for your customers.

3. Provide excellent customer service

The standards for excellent customer service vary depending on the business. A good rule of thumb is to treat your customers the way you want to be treated. Show your willingness to go the extra mile and add value beyond their initial transaction or purchase with you. You can do this by solving problems, offering freebies and extras, and simply expressing appreciation for their patronage.

Consider doing things like personalizing products, offering free delivery, and responding immediately to customer concerns. People often also appreciate gestures like providing ongoing updates before shipping their order or proactively offering a discount on their next purchase. Whatever method you choose, be sincere.

When customers are delighted with your service, they are more likely to stay loyal to your brand and refer friends and family to your products.

Shopify email marketing landing page.

4. Focus on your audience

Who is your product for? Create a persona of your ideal customer. Research their age, interests, motivations, and behaviors. Gather information using social media tools like Facebook and Instagram. If you are selling a niche product, it’s a good idea to join community forums like Reddit to find those who share similar interests. Another way is to interview people in your chosen demographic.

As a business owner, it is important to know your target market so you can create products that will solve their problems or fulfill their needs. Understanding how your customers think and act will help you personalize marketing campaigns and improve customer experiences that can ultimately motivate them to spread word about your business.

At the end of the day, it’s all about establishing connections. People will be more likely to support your business if they can relate to you.

Benefits of word-of-mouth marketing

WOM marketing is a cost-effective way to sell products, increase your brand reach, and improve your business. There are several benefits to this marketing strategy:

  • Free advertising: People who are happy with your service will rave about your brand and encourage others to buy from you. For every customer you delight, they can refer you to more people from their network. At its most effective, word-of-mouth marketing can provide a seemingly endless source of clients.
  • Brand support: Even if you don’t see immediate sales conversions, you still have access to high-quality leads that can turn into a loyal following. Having a customer base that supports your business is better than having superficial followers who may abandon you any time.
  • Market research: Word-of-mouth marketing is also a way to access valuable information. By asking for feedback from customers, you can understand the factors leading to a referral or repurchase. Your customers may also have creative ideas for improving your products and services.

 One person holding a package out, while the person receiving it is confirming the delivery using a tablet. All aspects of the customer journey, from order to delivery, can contribute to their willingness to spread the word about your business.

It is important to note that negative reviews about a brand can also spread quickly through word-of-mouth marketing. If you encounter criticism, try to turn it into a positive situation.

For example, if a customer complains about a missing order, then acknowledge your mistake and fix it. You could offer to ship the product for free, add a complimentary item or provide a voucher. Show your customers that you value them. Remember, criticism is normal for any business—what matters is how you handle it.

Ultimately, word-of-mouth marketing is a helpful strategy that can open numerous opportunities for you.

Examples of word-of-mouth advertising

Tiger Sugar

Tiger Sugar milk tea used word of mouth marketing well.

Taiwanese milk tea brand, Tiger Sugar, set up its first franchise in Manila and became famous due to word-of-mouth marketing. Customers were sharing their milk tea experience online, posting photos, and telling their friends and family about it. The brand became so popular that people were lining up for hours just to try it even months after its launch.

Dropbox

Dropbox eventually became the top online file storage service in the world through its unbeatable referral program.

As mentioned earlier, one way to kickstart word-of-mouth promotion for your brand is to have a strong referral program, ideally one that rewards customers for spreading the word. Popular online file storage service Dropbox did exactly this at the start of their service, promising extra storage space to users for every friend they got to sign up for the website. Don’t underestimate the power of freebies to encourage your customers to spread the word.

Common questions about word-of-mouth marketing

What is the meaning of word-of-mouth marketing?

It is a marketing strategy where customers recommend your business to others based on their interaction with your brand. There are different ways to do this, such as writing product reviews or social media sharing.

Why should I use word-of-mouth marketing?

It can help your business expand in many ways.

WOM marketing helps increase brand reach through customer referrals. Clients can recommend your products to people who might be interested but are not necessarily part of your target audience. This, in turn, can lead to more sales and expansion of your customer base. WOM marketing helps increase brand reach through customer referrals. Clients can recommend your products to people who might be interested but are not necessarily part of your target audience. This, in turn, can lead to more sales and expansion of your customer base.

Business owners looking for cost-effective advertising techniques will benefit from this type of marketing. Focus on delighting your customers, and you will be rewarded. Satisfied clients will happily promote your brand for you.

Is word-of-mouth marketing effective?

Yes. People are more likely to support a brand recommended by trustworthy sources such as family, friends, and even previous buyers. Customers are aware that advertisers create campaigns to generate sales. Therefore, they seek unbiased reviews from others to make informed decisions about a product.

How much should I spend on word-of-mouth marketing?

Word-of-mouth marketing can be free, but it depends how you implement it. If you want to outsource tasks, give customer incentives, or create ads, then you’ll have to allot a budget for it.

Try word-of-mouth marketing today

Whether you are a budding entrepreneur or an experienced business owner, word-of-mouth marketing can help grow your business. It’s perfect for boosting brand awareness, strengthening customer relationships, and generating more sales. Follow the steps above, and you’ll be on your way to business success.