What is Word-of-Mouth Marketing Strategy?
Word-of-mouth marketing, also known as oral advertising, is the process of influencing organic discussions about your brand. It is free advertising from customers that arises from a positive experience with your brand. Engaged buyers often recommend personal communication. They make word-of-mouth significantly influential in their purchasing decisions and generate high customer loyalty.
“Word-of-mouth is the most effective marketing channel, but more importantly, it’s the only thing that shows the reality that what you’re building has real value.” – Lanai Moliterno, Founder of Sozy
Why Does Word-of-Mouth Marketing Matter to Retailers?
Traditional advertising is taking a backseat to other forms of promotion in today’s world. Many advertising channels have experienced a decline in click-through rates (CTR) over the past few years. In the first quarter of 2020, the average CTR for Google Search ads dropped from 2.5% to 1.55%. The CTR remains lower than the previous year. The same applies to display ads, which have a worse average CTR of 0.47%. On social media, the situation isn’t much better. Only 1.1% of people who see newsfeed ads on Facebook click on them, 0.79% of views on Facebook Stories, and 0.22% of the audience for Instagram ads. As a small retailer, you don’t have the funds to waste on expensive and unpredictable ads. You need to know that your marketing strategies will work and be cost-effective. Word-of-mouth is a reliable channel for retailers of any size and age. It is almost inexpensive to generate referrals, yet 40% of customers come from word-of-mouth marketing. And if you’re not convinced, 88% of people trust online reviews written by other customers as much as they trust recommendations from personal acquaintances. Additionally, 74% of consumers identify word-of-mouth as a key factor in their purchasing decisions.
Benefits of Word-of-Mouth Marketing
Customer Loyalty
Word-of-mouth marketing creates a loyal customer base. Buyers do not simply buy and forget. Instead, they engage with the brand and share their experiences with others. Data indicates that 65% of sales will come from current customers. By having customers who can vouch for the quality of your products, you will have a base of people who will continue to purchase from you. These people can help your marketing efforts and bring new customers to your business. They provide value by sharing referrals, saving time and money in acquiring new customers. (This is especially important given the nearly 50% increase in customer acquisition costs over the past eight years.)
Brand Affinity and Trust
With intense competition for customer attention, brands are heavily investing in marketing and advertising. However, that comes with a flood of ambiguous marketing tactics that consumers begin to ignore. Think about where you see them: Facebook, Instagram, radio, laptop, billboards. People want products from brands they can trust. They can be skeptical of professional advertising. Nielsen states that 92% of consumers trust recommendations from friends and family more than advertisements. Those recommendations and reviews from customers or brand ambassadors are more credible. They showcase your business’s track record of reliability and build trust with buyers. In short: trust drives consumer decision-making. Retailers don’t need to build their own trust; just get someone the prospective customer already trusts to recommend you.
Engagement
Social and Buzz
Viral marketing campaigns are not sustainable, but they provide short bursts of brand awareness and revenue for retailers. Word-of-mouth marketing strategy spreads naturally. If you create a lot of buzz around your brand or create an unforgettable customer experience, it can help your brand go viral. Initially, word-of-mouth marketing may lead to only a few sales. But as your brand grows, you’ll see more people starting to tag their friends in your posts, mention your name in their stories or reels, or talk about your brand on TikTok. Over time, this social engagement and buzz can help your brand grow at a faster rate than relying solely on influencer partnerships, Facebook ads, or organic social media marketing.
Reaching Older Generations
It’s easy to forget that not everyone shops online. The global internet penetration rate is 59.5%, which means billions of potential buyers are not using the web to search, browse, or purchase products. Word-of-mouth fits perfectly with this strategy, making it essential for retailers reaching older generations. 18% of Generation X discovers products through word-of-mouth, compared to 16% of baby boomers and 12% of Generation Z.
The Difference Between Word-of-Mouth Marketing and Referral Marketing
People often confuse referral marketing with word-of-mouth marketing as the same thing, which is understandable because the two ideas seem similar at first glance. So what’s the difference? Word-of-mouth marketing is about creating buzz around your brand or service. It’s organic and not a true promotional strategy because it’s not forced. People naturally talk about your brand because they want to. Imagine a brand you love sends you a free birthday gift in the mail. You share it on social media, your friends see it, and they sign up for the same campaign. When they receive their birthday gift, they share it on social media, tell their friends, and recommend others to sign up because the service was fantastic. Sellers who use organic word-of-mouth marketing launch viral campaigns. On the other hand, referral marketing is a promotional strategy that encourages current customers to refer new customers. There is usually an incentive associated with referral programs, such as points in a program, discounts on future purchases, or cash rewards.
How to Implement Word-of-Mouth Marketing
1. Create Something Worth Buzzing About
The first thing that comes to mind when hearing “something worth buzzing about” is a product launch or a big sale. However, there is a strategy behind the viral content that gains popularity through social media sharing. According to research conducted by Jonah Berger, author of “Contagious,” there are six key factors that drive what people talk about and share. Let’s take a look at how retailers can use them to enhance word-of-mouth recommendations:
– Social Currency. The more your product makes someone look good, the more likely they are to share it. Create content that impresses customers. Who are your customers trying to impress? How can you make them better at something? Create a blog, do a live stream on Facebook, or host live workshops.
– Triggers. Things that are on people’s minds are more likely to be shared. Create partnerships with influencers and other local brands that have a similar audience. Also, make sure they have similar values to your brand.
– Emotion. People share things they care about. Think about the content that will emotionally resonate with your readers. Relevant content is a good way to engage and get them talking about your brand.
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General. The easier something is to see, the more likely people are to replicate it. Create content that your audience can share. Organize public events and share news. Try to avoid sensitive topics or controversial opinion pieces, or any other content that may dissuade readers from participating.
– Practical value. People share useful information to help others. What are your audience’s pain points? What questions do they have? What information are they looking for? For example, if your audience consists of wine lovers, create a guide for wine tasting or answer common questions about how to make wine.
– Stories. Stories enhance feelings of trust and empathy. They also help convey important information in an empathetic way. Share your story or your customers’ stories using your products. This helps readers visualize using your products and encourages them to share the story within their networks.
2. Provide High-Quality Service and Experiences
The secret to word-of-mouth marketing is to create something worth talking about – whether it’s a product, service, or experience. The good news is that the barrier is low. Research shows that 94% of consumers in the U.S. will recommend a brand they rate as having “very good” service. But this experience encompasses many different sectors in retail, from your product to customer service and visual merchandising.
Do your best to make customers feel happy and satisfied, whether in-store or online. Train sales staff on what constitutes a positive experience, how to ask discovery questions, and using upselling techniques. Aim to create unique and functional in-store experiences for customers. You can create beautiful window displays, utilize visual merchandising, or create useful and innovative promotional signage.
Miriam Jesier is a client of Les gourmandises d’Olivier, a French candy shop that transformed its entire business online within four days during the pandemic. They are thriving thanks to word-of-mouth marketing. According to Miriam, “It involves having an Instagram presence, but many customers recommend things because macarons and croissants aren’t things you can trust with just anyone.”
3. Empower Brand Advocates
Happy customers are the ideal people to refer products to their family and friends. Encourage them to do so by recognizing and honoring their loyalty to the brand. User-generated content, such as photos, videos, and texts published online by your customers, is significant. Current customers will feel valued if you share their posts on your brand’s social media profile, and found that 85% of users believe user-generated content is more credible than other types of content.
“User-generated content from your users and followers can be more impactful, engaging, and shareable. That’s why you should learn how to encourage people to create user-generated content. Start by encouraging your followers to use your brand’s hashtag or tag you in their Instagram content about your brand. You can also run contests and share giveaways with user-generated content as part of the eligibility requirements.” – Courtney Quigley, Business Reputation Consultant at Rize Reviews
4. Empower Fans and Experts
The sub-power of customer satisfaction, empowerment, is a great way to generate word-of-mouth referrals. It makes customers feel confident in their choices. The simplest way to do this is to get customers involved in the product development process. This shows that you care about them and their stories and experiences, and that you value their feedback.
Three ways to empower fans include:
– Gathering feedback for new products by sending out post-purchase surveys using tools like Typeform and Shopify Email.
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Live streaming with subject matter experts and fans to give them a voice.
– Joining their preferred channels.
The clothing company Gymshark has empowered fans through live video streaming. Its community mainly consists of fitness enthusiasts and professionals. To enable everyone, it pushed personal trainers to host live workout sessions on its Facebook page. Trainers were given paid work when most of their income disappeared; others could get their workout when gyms closed.
5. Build an Active Audience on Social Media
Did you know that 71% of consumers are more likely to buy based on social media referrals? Social networks are great word-of-mouth marketing channels because they expand. A happy customer heading to LinkedIn, for example, can influence hundreds of others to buy the same item (depending on their audience size). One way to get more word-of-mouth referrals is to build your own social media community. Communities create a sense of camaraderie around shared interests and goals. They also:
– Boost engagement.
– Bring people closer to your brand.
– Increase visibility.
– Provide inspiration to customers.
– Build trust and attract followers.
Miriam describes how the candy shop Les gourmandises d’Olivier is building its presence on social media through word-of-mouth: “Great product + friendly macaron-making classes for Instagram. The sweets are very good. But making macarons is unique and Instagram-friendly. It attracted many people looking for great things to do at home. An influencer reached out, and Sandrine was puzzled. She just told the lady: bring your sweetheart on Valentine’s Day, and we will make macarons, free of charge. The rest is history; the content produced engaged many people.”
“Engage with local fans. There are some people, wealthy individuals, who spend thousands of dollars online and come to the store for their daily (or almost daily) dose. They tell all their colleagues and friends about it. So when you come to buy one croissant, you discover that you can buy many and make them at home at your own time without dealing with COVID restrictions.”
6. Become a Local Thought Leader
Brick-and-mortar retailers have a significant advantage over purely online businesses: they can build a local community presence. Small and medium-sized business owners have a better understanding of their community. They can actively engage and provide value to the people around them. There are many ways to do this, such as:
– Organizing events related to your business (or for charity).
– Participating in or sponsoring existing events.
– Having a volunteer program or employee incentives.
– Donating to local causes through one-time actions or a portion of your profits.
– Joining community boards or organizations that can help your business (such as arts or music councils, health boards, etc.).
One retailer putting this into practice is Better Life Bags, a business located in Detroit, Michigan. Its founder, Rebecca Smith, built the business entirely on a mission to support women in the local community: “Our mission is to employ women who face various obstacles in the workforce to make our custom bags from leather and fabrics. They are embraced into our family at Better Life and given an opportunity to succeed in life, family, and friendship.”
7. Gather Online Reviews
Nowadays, word-of-mouth can come from outside the customer’s social circle. Online reviews from customers now impact purchasing decisions. Reviews help customers feel they can trust the business. 94% of consumers say positive reviews make them more likely to purchase from a business. Despite their value, when are you asking past customers to leave a review? Only one-third of businesses do this actively. Recent reviews affect whether a customer will buy from your business or not. Data indicates that 86% of consumers say they will consider reviews from the past three months. This means that older reviews get less attention and reduce returns over time. So what can you do to get customer reviews regularly? The simplest way is to ask:
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Ask customers for their reviews personally, via email, or through text messages.
– Add review links to order confirmation messages.
– Train sales teams to always request feedback after taking payment in-store.
– Offer incentives – such as entering a contest or earning points for a loyalty program – in exchange for reviews on sites like Yelp.
Examples of Word-of-Mouth Marketing Campaigns
Casper
Casper is a DTC company known for its remarkable short-term growth. It sold $20 million in its first 10 months through word-of-mouth marketing and a limited advertising budget. The brand has a fun social media strategy that includes sleep-related articles, quick response times, and giveaway events. Along with high-quality products, these elements work together to create the perfect storm: customers being ready to share its products organically. “Getting customers to share about Casper has been a crucial part of the company’s strategy since the beginning, because it didn’t have an advertising budget to compete with mattress giants,” says Philip Krim, co-founder of Casper.
Threadless
Threadless is a Chicago-based T-shirt marketplace founded in 2003. It helps artists sell their T-shirt and accessory designs online. In the first two years, over 10,000 members joined the site and sold merchandise worth six figures – largely through word-of-mouth marketing. Part of its strategy involved contests. Its founder, Jake Nickell, organically promoted a T-shirt design contest using blog comments and social media posts. Friends and family participated in the contest without being asked.
In-N-Out Burger
In-N-Out Burger is a beloved burger chain in the United States. Its fame (and estimated annual revenue of about $957 million) is primarily due to brand advocates and word-of-mouth marketing. Locals love In-N-Out because the food is always fresh. The restaurant makes everything the traditional way, without freezing or pre-packaging. Additionally, customers discover a secret menu when friends and family tell them about it.
Zappos
Zappos is an online shoe and clothing retailer based in Las Vegas. The company was founded in 1999 and was acquired by Amazon in 2009 for $1.2 billion. Its growth strategy? Word-of-mouth marketing. It’s another case study showing how excellent customer service can drive early success for a retailer. Zappos went above and beyond to delight customers: they sent flowers to a customer who returned a pair of shoes.
Source: https://www.shopify.com/retail/word-of-mouth-marketing
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