Word-of-mouth advertising has been called the world's best kept marketing secret.
No matter how much money the movie industry spends on advertising, we still consult our friends about which movies to see. And our friends and relatives are the number one source of information about places to visit.
Some categories are more dependent than others on word-of-mouth referrals. Topping the list, for example, are decisions about choosing a doctor, a mechanic or lawyer. We tend to rely less on word-of-mouth, however, in choosing where to buy a car, obtain a personal loan or get a haircut.
Word-of-mouth exists because it is impossible for consumers to know everything about everything.
When a product is complex and difficult to evaluate and when there is risk involved in the decision - as is the case with the purchase of many services - consumers often look to others for advice.
We tend to look to people we know, or those with whom we have strong ties. And if their advice is good, we regard these people as expert sources in the future.
Word-of-mouth has many benefits for companies. Leads attracted to your business via word-of-mouth cost less and such sales are easier to close. As well, referrals tend to generate better quality customers in terms of profitability and loyalty compared with those attracted via price promotions in advertising campaigns.
Marketing consultants Mercier Gray found that 60 per cent of consumers purchased products solely through personal recommendation and that only 29 per cent had ever bought a product as a result of seeing it in a TV ad.
A study conducted by General Electric found that the recommendations made by people customers know carry twice the weight as advertising.
Yet most of today's marketing still focuses on the use of advertising to influence customers.
Although word-of-mouth is an extremely effective tool, few people know how to develop it. The best word-of-mouth advertising programs happen by design, not by chance. Word-of-mouth can be managed.
Here are some tips to help you do just this.
No matter how much money the movie industry spends on advertising, we still consult our friends about which movies to see. And our friends and relatives are the number one source of information about places to visit.
Some categories are more dependent than others on word-of-mouth referrals. Topping the list, for example, are decisions about choosing a doctor, a mechanic or lawyer. We tend to rely less on word-of-mouth, however, in choosing where to buy a car, obtain a personal loan or get a haircut.
Word-of-mouth exists because it is impossible for consumers to know everything about everything.
When a product is complex and difficult to evaluate and when there is risk involved in the decision - as is the case with the purchase of many services - consumers often look to others for advice.
We tend to look to people we know, or those with whom we have strong ties. And if their advice is good, we regard these people as expert sources in the future.
Word-of-mouth has many benefits for companies. Leads attracted to your business via word-of-mouth cost less and such sales are easier to close. As well, referrals tend to generate better quality customers in terms of profitability and loyalty compared with those attracted via price promotions in advertising campaigns.
Marketing consultants Mercier Gray found that 60 per cent of consumers purchased products solely through personal recommendation and that only 29 per cent had ever bought a product as a result of seeing it in a TV ad.
A study conducted by General Electric found that the recommendations made by people customers know carry twice the weight as advertising.
Yet most of today's marketing still focuses on the use of advertising to influence customers.
Although word-of-mouth is an extremely effective tool, few people know how to develop it. The best word-of-mouth advertising programs happen by design, not by chance. Word-of-mouth can be managed.
Here are some tips to help you do just this.
- Memorable service Word-of-mouth does not happen overnight. It ultimately depends on the quality of your customer service.
This is rarely based on one thing you do. Rather it is the result of hundreds of little things you consistently do a little bit better than your competition. Things like exceeding customer expectations and delivering on your promises.
People often remember your customer service more distinctly than your product, so focus on making the experience memorable. Absolutely nothing will help you to generate referred business if your company cannot deliver a superior experience. - Be positive Train your employees never to say anything negative about your company to customers or to friends. Reward those who speak positively. It's also good policy not to badmouth the competition.
If your organization uses volunteers, ensure they also understand their roles as ambassadors. Train them the same way you would employees. - Talk to customers Ensure your customers know how important referrals are to your business and let them know how much you appreciate them.
Plant word-of-mouth seeds. When clients express their satisfaction with your goods and services, acknowledge their kind words with a sincere thank you. Then, take it a step further and let them know how much of your business is as a result of referrals from satisfied customers like them. - Incentive programs Some organizations use incentive programs to generate referrals. Tactics such as paying cash for referrals may work. However, too often they smack of a bribe in exchange for a list of names of your friends.
Instead, offer free samples that let you introduce clients to products or services they might not have otherwise tried. You could also give discounts against future purchases, memberships or other gifts. For example, one winery bottles special reserve wine, not available for purchase, to thank customers for referrals. - Maintain a presence One of the best things you can do is to simply stay top of mind with your customers. Ensure your company maintains a presence by sending a quarterly newsletter, or by inviting them to special events if appropriate.
- Network Another key to building a word-of-mouth referrals is networking. The only people who are going to give referrals to you consistently are people who know and trust you.
You need to spend time with the right people in structured professional environments, building friendships and lasting professional relationships. - Help others Referrals are like boomerangs. What goes around comes around. So be sure to remember those who have sent you referrals when you are asked for the name of someone who can help.