Word of mouth marketing is the most powerful strategy for getting new customers– it’s harnessing the potential for referrals. All good businesses have a treasure trove of customers who love them and could refer them to friends, family or colleagues.
But most businesses take a haphazard approach to referrals. They just hope they happen. In fact, you need to develop strategies for word of mouth marketing. It’s not enough to provide a great product and service, while hoping for the best. Fortunately, word of mouth marketing is not that difficult or costly.
Why is word of mouth marketing important?
People trust their friends and believe their advice about 1000 times more than they believe your advertisements or marketing messagaes. If you are looking for a plumber, who do you trust more for a recommendation, your brother or your phone book? (For the purpose of this article, please assume your brother is reliable.)
Because your potential customers trust referrals, and you have lots of happy customers who can refer you, word of mouth marketing is a profitable proposition. Imagine if half of your customers sent you one referral each year. What would that do for your bottom line?
How do I improve my word of mouth marketing?
Ask your customers for referrals. If they like you, and you ask in a personalized way, your customers will be eager to help you succeed and share helpful advice with their friends, family or colleagues. This seemingly simple step is overlooked by almost every business I’ve been in contact with. It’s easy and effective, so you should start asking your customers for referrals today.
When asking customers for referrals, it is common to reward those customers, but you should reward the referral for buying from you as well. Some customers might feel awkward about recommending something to a friend that they are getting “paid” for – and their friends might be suspicious as well. If everyone involved receives benefit, that concern is lessened.
Besides offering rewards, you can provide your customers with a referral marketing piece that they can use to refer you. For instance, your could give them sample products or supply postcards they can hand out. This approach is effective because it helps them to remember to refer you, gives them something tangible to pass on, and your marketing message will have a better chance to be clearly communicated.
Sometimes, customers don’t have the opportunity to refer you right away, but they might in the future. Think of the plumber example- your brother might not have called a plumber for years. How will he remember which plumber was the best? To get your customers to remember you in crucial referral moments, develop a way to stay top-of-mind with your customers. Offer an informative, interesting or entertaining newsletter; ask them to ‘like’ your frequently-updated Facebook page, or get old-fashioned and mail them something. Madison Tree Care & Landscaping mails me a quarterly newsletter with tree care advice and cute company updates. It’s informative, but more importantly, it helps me remember them. Because I remember them, I refer them. (An added bonus to staying in touch with your customers is that they might just give you more business as well!)
Word of mouth marketing extends beyond the circle of people your customers know. If they write online reviews of your business on a site like Yelp.com, their referrals will live on for years and shape the opinions of people searching online for businesses like yours. So how do get customers to write online reviews? The same way you get them to refer you. Ask them; reward them; give them suggestions.
Small businesses are especially apt to benefit from word of mouth marketing because people feel good about buying from small businesses and referring them, especially if the business is local; knowing about it provides a level of exclusivity, or the owner has a likable personality. You just have to ask!
Couldn’t agree more with this article. Five years ago we set out a strategic plan to build a referral network that included other business professionals selling business to business, and it’s produced excellent results.
It definately isn’t without a fair amount of work, keeping those in the referral network informed of what you’re doing, and basically educated to the point where they feel comfortable giving referrals.
Over the last five years, I’d say of the top 10 new accounts we’ve pulled in, seven of them were referrals. Of course it’s also a two way street, where you figure out ways to incorporate those people into your own referral network.
I also spent three years in a BNI Chapter, which is all about referrals, and built some realtionships there that have long outlived my participation in the chapter.
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amanda Reply:
May 11th, 2011 at 1:44 pm
Hi Christopher – Thanks for sharing about Business Insurance Associates’ successful referral program. Success stories like these help the skeptics (and procrastinators) become more interested in word of mouth marketing.
You’re right that it can be a lot of work, but so is all marketing if you do it well. And once your referral network is up and running, capital investments are at a minimum. You certainly can’t say that about advertising.
Providing reciprocal referrals is a great point, especially for B2B business referrals. My readers thank you for the tip!
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