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Four Definitive Benefits of Word-of-mouth Marketing

word-of-mouthmarketing.jpeg March 16, 2017 / Elena Prokopets

You may be surprised to know that 84% of “solopreneurs” earning over $100.000 per year receive most of their contacts through word of mouth. 

Yet the larger the company grows, the more it tends to rely on elaborate advertising instead of leveraging their most powerful asset – the people. Your employees and their personal connections can successfully do the marketing talk for you. In fact, the benefits of word-of-mouth marketing campaigns can be more powerful than those of traditional advertising. 

Consumers Trust Peer Recommendations The Most 

According to the latest Nielsen Global Trust in Advertising report, 83% of respondents claim that they trust recommendations from friends and family the most. Opinions and reviews posted online are the second most trusted source for 66% of consumers:

The latest Trust Barometer report from Edelman also highlights that the most trusted person today isn’t  “some expert”. It’s a “person like yourself”:

Marketers trust recommendations from other marketers; local and micro-influencers receive higher trust scores from their followers, and the “voice of the employee” now matters more than ever

Related: How to Build Brand Trust on Social Media

WOMM is Cost Efficient

In fact, if you are savvy enough you can generate massive publicity for your company without relying on paid advertising at all. 

Let’s take Tesla Motors as an example. 

The company has no CMO, no assigned ad agency or a dealer network. Their in-house marketing team consists of seven folks. Yet, Tesla cars are now selling faster than they are being manufactured. By comparison, Nissan has spent $25 million on advertising its Leaf EV model in 2012 and ended up with more modest sales numbers. 

So what is Tesla's secret? 

They have built a powerful community of fans and passionate brand advocates. Over 70.000 people are subscribed to /r/teslamotors subreddit. Their forums are always buzzing with heated discussions with company’s employees contributing to the talks and steering the conversations on social media. 

Elon Musk acts as intriguing spokesperson for the company and strategically utilized showmanship to drive the buzz for Tesla brand. Apart from movie cameos and interviews for big name publishers, Musk also appears personally accessible and often replies to tweets from fans, does AMA sessions and even partners with a popular blogger & comics artists running a series about him.

The two key lessons to learn from Tesla:

  • Tell stories that resonate with people.  Tesla fans don’t merely get excited about buying a new car. They feel thrilled to get a slice of the future and become part of the company story. 
  • Be approachable – Elon Musk isn’t the only approachable and friendly CEO out there. A number of top managers at Google can be reached on Twitter and often engage with the community through Google Hangouts:

 

WOMM is Directly Measurable 

The common misconception is that word-of-mouth marketing is hard to measure effectively. 

Most marketers try to measure its effectiveness by counting the number of all recommendations and discussions for any given product or the company as a whole.  Yet most consumers are more likely to take action on the recommendations made by family or friends, rather than a stranger. 

According to McKinsey research, a recommendation from a close member conveying a relevant brand message is up to 50 times more likely to trigger purchasing behavior compared to a low-impact recommendation (for instance, posted as a reply on Twitter or forum). 

Based on this trend, McKinsey team has developed a better approach to measuring the impact of word-of-mouth marketing: 

With Employee Advocacy, the word-of-mouth equity score remains high as the updates are shared with a close-knit network of friends, rather than a broad network of strangers. 

Word of Mouth Marketing Generates a Powerful Sentiment Around Your Company 

Word-of-mouth marketing is experiential. Most people tend to share their opinions when they are directly engaging with your product or company. The kicker is that we choose not not to share any opinions whenever the experience matched our expectations. 

A classic example here is that most people will publicly complain whenever an airline has lost their baggage, or their employer didn't keep it up the original promises. This kind of negative sharing can reach a threatening scale when it comes directly from your team. Most likely, you’ve already heard how one personal blog post of a former software engineer resulted in a massive PR crisis for Uber and a huge reputational loss. 

But successful brands know how to make the experiential element of WOMM work for them. Take Zappos as an example. The company consistently lands the top spot at "best places to work" listings; openly claims that they are investing more in great customer support and company culture than marketing, and keeps generating billion dollar revenues per year. Their employees are passionate brand advocates and genuinely enjoy sharing their experience with the company. In fact, Zappos has dedicated social media profiles for sharing sneak peeks of their day-to-days. Consumers follow the same lead and publicly praise the company without any additional incentives. 

Apart from generating a positive/negative sentiment around your company, WOMM can be also organically integrated into your HR practices. 

As Steve Klingensmith, Recruiting Manager Booking.com, pointed out in LinkedIn’s Global Recruiting Trends Report:

“Employee referrals are the single most important thing we do in recruiting. It is the number one source of good, quality hires. Unfortunately, most companies treat their referral program like an HR program. If you really want to succeed with referrals, you need to treat it like a marketing program”.

Having a comprehensive Employee Advocacy program in place means that your company receives a “person like me” treatment through your employee’s voice. As we already know, that’s one of the most powerful associations for leveraging anyone’s trust. 

Conclusion 

They key to succeeding with word of mouth marketing is to focus on establishing genuine connections, rather than merely accumulating more fans on social media. A good story told by trustworthy speakers can spread like wildfire as the examples of Zappos and Tesla prove. You just need to initially make your employees talk and empower them with the right tools. 

Elena Prokopets
March 16, 2017

by Elena Prokopets