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Sound Business Practices

Word-of-Mouth is an Effective Marketing Tool

 

By Sandy Hershelman

Word-of-mouth is the center of the marketing universe. Research has found word-of-mouth marketing to be a major influence on consumer behavior, even more important than advertising or the personal sales pitch. In fact, advice from other consumers has a greater influence than the effects of all intentional marketing combined.

When Promotion Marketing Association asked consumers about the top influencers of their purchase decisions: 48.5 percent said word-of-mouth; 27 percent said advertising. A PlanetFeedback poll showed 61 percent of consumers trusted word-of-mouth, 47 trusted percent print ads, 42 percent TV ads, and only 21 percent trusted direct mail.

Word-of-mouth is cheap, highly infectious and very effective. It's much easier to sell a prospect who's been referred to you. After all, he's halfway sold before he even walks in your door.

Referrals tend to generate better quality customers in terms of profitability and loyalty, than those attracted by a low-price promotion. Studies have shown that 90 percent of advertising isn't credible, but 90 percent of word-of-mouth can be trusted.

The success of word-of-mouth marketing depends on quality customer service and quality product, consistently. Rarely is there one little thing you've done that creates excitement. It's usually the result of repeatedly outperforming the competition. That might not necessarily mean cheaper and faster, but it does mean delivering what you promise and exceeding your customers' expectations.
When your customers have a good experience, they'll tell three friends. When it's a bad experience, they'll tell 11 people.

That's why it's important to welcome customer complaints—and make that point obvious. The vast majority of dissatisfied customers won't voice complaints to those with authority; they'll just take their business elsewhere and let all of their friends know why.

Word-of-mouth can "just happen," but it's smart business to give it a boost.

Make sure your customers realize how important referrals are to your business—and how much you appreciate them. Do this tactfully. When a client tells you what a great job you did, thank him sincerely, and then tell him how much of your business comes from referrals.

Your existing customers are gold. (Well, most of them are.) It will cost you six times more in marketing dollars to attract a new customer than to do more business with your existing client. Don't let your customers forget about you. A Christmas card, or a reminder for an oil change/teeth cleaning/kitty shots, is a great way to keep in touch. A phone call, just to see how they're doing, is even better.

Collect testimonials from your customers. Use them in your brochure and mailings, and on your Web site. One of the most effective print advertising campaigns I ever suggested was to use customer testimonials in ads. The long-running campaign has generated lots of positive buzz. People love to see their friends' faces in ads—and they trust the message.

Make sure your cheerleaders are knowledgeable about your business. If mom, sis, and the neighbor are clueless about what you do, they really aren't helping the cause. Give them a script, if necessary.

Without employee support, your word-of-mouth campaign will fail. Train your employees not to badmouth your company, or the competition. Instead encourage them to spread (true!) stories of outstanding customer service. Educate them and reward them.

An aside: Make sure your employees are properly trained before allowing them on the front line. They are your business' first impression. If they look incompetent, the customers may go elsewhere—and tell their friends they left because you employ idiots.

Depending on which marketing book you read, offering cash for referrals is praised or slapped down. The fear is that it feels to many like they're selling their friends' names. Instead of money, offer a special thank you gift, free consultation, or a discount on future services or purchases.

Networking is key to successful word-of-mouth marketing. A person is going to refer someone they know and trust. After all, a referral is a reflection on the referrer, as well. If the person he or she sent your way has an awful experience, the referrer also looks bad.

Promote your name and business by becoming known as a source of knowledge. Offer yourself as a speaker at a seminar, or at the local chamber of commerce meeting. Write articles or informative ads for local publications. Present relevant information your audience can really use, not a thinly veiled commercial.

Free samples can work wonders to attract attention. Better yet, have an event. Brainstorm with your staff about something fun that will attract potential customers. A drawing for prizes, free classes for the public, a fundraiser for a worthy cause—each has its marketing potential.

Remember though, word-of-mouth is just one piece of the advertising puzzle. Few of us can afford to rely on it entirely. And, it often takes a really long time to reach its peak. Word-of-mouth campaigns can have the shelf life of a Twinkie. The positive comments will still be spreading, decades after the first happy customer said, "What a great company!"

Every business generates word-of-mouth, be it good or bad. It's your job to make sure it's good!

More business management articles. . .

© 2004 Sandy Hershelman. All rights reserved.

 

 

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Date Last Modified:5/28/05
Copyright © 1999-2005 Sandy Hershelman. All rights reserved.