The downside is that poor service travels 10x as fast as people talking about how great you are. If you encourage reviews from unsatisfied customers your brand reputation can be scarred.
That said, word of mouth recommendations are the cheapest and most effective way to get new clients. Invest in your customer experience and you will grow your brand and reputation.
But what is word of mouth marketing and how can you drive more sales through recommendations from friends?
Word of mouth marketing occurs when satisfied customers promote a brand independently of normal advertising channels.
This could occur through conversations, blog posts or social media. When this happens organically, it is a powerful channel that can be the engine of viral marketing.
This form of marketing can be a great way to create loyal customers. Customers that are so happy they recommend you to others.
Word of mouth marketing is a powerful tool, but it takes hard work.
Getting happy customers requires exceptional customer service and community development to build enthusiasm. You need to create a positive experience for your customer base and over deliver on your promises.
Social proof can be a strong indicator that a business can be trusted. Nielsen found that 83% of survey respondents said recommendations from friends was the most credible form of advertising.
This influences purchasing decisions and increases sales conversions from potential customers.
It also leads to network effects in building brand loyalty. Happy customers become loyal to your brand and market you to their peers. They are also more open to helping with other marketing such as case studies, online reviews and community building on social media.
You can grow by finding similar audiences to your current customers. This helps you to deliver personalised marketing at scale without relying on paid advertising campaigns. In turn, your customer acquisition costs will reduce as recommendations from loyal customers increase.
Put simply, the best way to increase referrals is to improve the experience for your customers and employees while highlighting your unique value proposition.
Sometimes, the easiest way to market yourself is to provide exceptional customer service. Simply answering the phone and responding to enquiries fast can make you stand out.
Remove any friction in the buying process like unnecessary form filling or no return policies. Allowing returns and refunds can ease the purchase decision as customers may change their mind.
This makes it easier to buy from you and encourages repeat purchases.
Make sure your customer support teams are adequately staffed and empowered to make decisions. Provide the training they need to answer customer queries quickly and effectively.
You will be amazed at the impact fast responses have on customer satisfaction scores. Even if it's not the response the customer wants to hear.
I have been on multiple calls with customer service where they were unable to action my request. Yet, I still came away happy and willing to refer that company. The reason? I was treated like a person and the service reps weren't just reading from a script.
They actively looked into my problem and got back to me with a response fast. This showed that they valued my time as much as their own.
It's not just about dealing with complaints. Make sure you do what you say will. Turn up to appointments on time. Meet deadlines and communicate timescales regularly. You are better off under promising and over delivering than committing to a time you are unlikely to keep.
Ensure that your customers can contact you on any marketing channel where they are active. Make it easy to contact you with any issues.
This could be
Ideally, you should be making it easy for them to contact a live person. Make your telephone number prominent and visible.
If you have a chat bot on twitter and encourage direct messaging, make sure you reply and escalate to a person as soon as possible.
Users expect fast responses on social media and will amplify complaints to their followers if they don’t get it.
In many instances, customers want self help. Use a knowledge base to answer frequently asked questions that don’t require waiting for customer support. This could include topics like delivery times, refund policies and product specifications.
Personalise your approach and keep in touch. Send thank you gifts or birthday messages to long term clients. If you are a seasonal business, send reminders on the anniversary of their last purchase.
Refer to clients by their name.
“Names are the sweetest and most important sound in any language.” - Dale Carnegie - How to Win Friends and Influence People
No one likes to receive an email addressed to 'Dear <firstName>'. This approach shows both laziness and indifference to your contacts.
Use marketing automation or a CRM like HubSpot to segment contacts based on their purchase history or interests. You can use this to send personalised marketing that is relevant to them.
If customers think you see them as just another name in a database then they are unlikely to make a personal recommendation.
Your staff could be a great source of referrals. Establish an employee incentive scheme with bonus or rewards every time they recommend you to family and friends. You could further incentivise with a competition and prize for most referrals in a year.
You can also encourage employees to leave reviews on Glassdoor. This will highlight what it is like to work with you and whether you are a business that can be trusted.
Most importantly, your employees are on the front line talking with customers every day. Gather feedback on ways to improve service and brand building.
How regularly do you check in with past customers and encourage them to buy again? When done tastefully, this can be an effective method to increase sales and lower marketing costs.
They know you provide great service already so a reminder to buy again is less expensive than advertising to new customers.
What if they're not ready to buy again? Ask them if they will be the face of a case study you are writing about the benefits customers have had from your product or service.
Organise community events and encourage them to invite their network. If you provide a service, these events could be an educational seminar addressing a common challenge your clients have. If you sell products then hold demo showcases.
Ask for referrals with every customer interaction. Encourage positive reviews and testimonials on social media after you have completed a job. Make the most of review platforms like G2, Trustpilot and Google My Business reviews.
You can automate requests using tools like Zapier or your email marketing software to send a referral request a few days after the sale. By remembering to ask, you will easily get more re-orders from customers you've worked with in the past.
The clothing company Charles Tyrwhitt does a great job of this with direct mail. They send a personalised letter with a beautifully designed voucher to redeem in store or online.
This stands out as many firms rely on digital marketing and avoid traditional advertising tactics. The quality of the penmanship, paper and design suggests more effort has been made.
It is easier to recommend you if there is something unique and remarkable about your business. If you have a focused marketing strategy, you will emphasise how you differentiate from your competition.
Highlight your differences and encourage your customers to do the same. Apple is a great example of using a USP to promote their brand and word of mouth. A relentless focus on innovation creates demand (and promotion) from design conscious technophiles.
User generated content marketing promotes interactivity. This then increases engagement on social media to raise interest in your product.
Tie this in with an influencer marketing campaign for added impact. If your target audience trusts the words of an influencer, word of mouth will spread fast.
Follow the examples of other companies that have grown through word of mouth. Below are a few examples.
The challenger bank Monzo used a golden ticket scheme to encourage referrals. The ticket allowed users to bump friends to the top of the queue for early access.
This gave a sense of power and influence to the sender as they could help friends access a scarce resource. Or at least, it created an illusion of scarcity.
Uber actively promotes referral codes by offering a free ride to both sender and recipient.
The referral link is prominently displayed on their app and website and promoted through email marketing.
Constantly refining their word of mouth marketing efforts enabled them to scale rapidly as they built a network effect loop. Network effects occur when the more users are on a platform the better the experience for others.
Dropbox also used word of mouth to create network effects. Instead of payment they provided 500mb extra space for each friend referred.
Given the option to pay more to store more files, many chose to encourage family and friends to sign up.
This had a double win effect for Dropbox as it created a viral loop. Increasing access created power users who were more likely to refer and make more use of the platform. Thus, the program helped them both acquire and retain customers.
Drawing on their legion of fans, Tesla’s referral marketing included tiered offers. Referrers could receive bonuses that varied over time.
Rewards ranged from factory tours to supercharger miles. It has even included a free car if they referred enough people.
This has helped to drive interest in the firm. Bloggers, influencers and media personalities have actively promoted Tesla to their audience.
Netflix shared user reviews on social media to generate interest. They also encouraged viewers to share what they were watching to prompt discussion on key plotlines.
Their algorithm recognises the content that could go viral. This feeds a recommendation engine that promotes trending shows to similar audiences. This helps to generate buzz and virality.
They have also actively used viewer watch history as part of their social marketing.
Referral programmes are not easy to scale if your users do not have networks of similar people to your ideal customers.
Uber users knew others that needed to get from A to B, AirBnB users knew others with homes. If your ideal audience is manufacturing procurement managers then you may be limited. They might not have a huge network of other procurement managers.
Word of mouth can be a powerful and inexpensive form of marketing. It should form a key part of your growth strategy.
In essence, your word of mouth marketing strategy should achieve the following.
Looking to grow your brand through referrals? Get in touch with our team for a strategic audit tailored to your needs.