Using Word of Mouth to Grow Your Business

Whether you’re looking to increase brand awareness, sales, or market share, word of mouth can be a powerful marketing tool. By engaging in word-of-mouth marketing, you’re building your brand image and creating connections that help you grow your business.

Experiential word of mouth

Creating customer experiences that make a lasting memory for your customers and prospects is a great way to improve your brand equity. Not only will it increase your customer retention rates, but it will also increase your sales.

Experiential word of mouth is the most common type of referral. According to McKinsey & Company, it accounts for roughly 50 percent of all word-of-mouth activity in any given product category. Its effectiveness has been documented in numerous studies, with research showing that word-of-mouth recommendations are responsible for about 20% of all purchase decisions.

Experiential word of mouth can be either active or passive. Active, experiential word of mouth occurs when a company exceeds the expectations of its customers by providing them with a product or service they may not have expected. For example, DollarShaveClub used a video to promote their blades. The results were dramatic: the video received over 12,000 orders in just 48 hours.

Storytelling

A vital marketing strategy is getting positive word of mouth about a brand or product. Many companies are turning to storytelling to get their message across; some even use it as entertainment.

Stories have been shared worldwide for generations, and some have been used to educate and entertain for thousands of years. In addition, word of mouth can promote a product, build brand loyalty, or even help create “viral” marketing.

Oral storytelling is a tradition that originated in Native American cultures. For example, the Choctaw tribe has a long history of storytelling, and they use their oral traditions to share creation stories and animal fables. Some cultures also use storytelling to teach religious beliefs, myths, and prayers.

Word-of-mouth communication is a powerful tool but can also be a source of negativity. Some brands have experienced wrath from consumers, including Victoria’s Secret and United Airlines.

Referral marketing

Getting referrals through word of mouth is one of the most effective ways to expand your business. Customers who tell their friends about your business are more likely to purchase from you. They are also more loyal to you, bringing in more money than they would if they did not tell their friends.

In the United States, referrals are the second most popular source of income for small businesses. Customers who are referred spend 2x more as those who are not guided. In addition, customers who are referred convert 30% better than those who are not. Customers who are referred have 16% higher lifetime value than those who are not.

One of the easiest ways to get referrals is to get happy customers to tell their friends about your business. Please encourage them to do this with rewards or giveaways.

Emotional attachments

Developing emotional attachments with brands is a crucial step toward creating brand loyalty. It can lead to increased brand loyalty, brand equity, brand engagement, and purchase intention. It has also been shown to enhance consumer satisfaction. Emotionally connected consumers are 52 percent more valuable to brands.

Brand attachment is a complex construct. Research on its role in brand relationships has been conducted across diverse contexts. However, there is limited research on its influence on the consumer.

The most notable research has focused on the psychological aspects of brand attachment. The effects of emotional branding have been investigated using a variety of scales. Lacaeuilhe’s (2000) brand attachment scale is one of the most widely validated scales. It was translated into English and subsequently validated by several other researchers.

Impact on brand perceptions, purchase rates, and market share

Using word-of-mouth marketing can have a powerful effect. It can increase market share, drive purchase rates, and influence brand perceptions. However, there are some issues with word of mouth that marketers must address.

Word of mouth can have many different origins. For example, a customer can recommend a product to a friend because the friend has had a positive experience with the product. Another potential origin of word of mouth is the complaint about a product or service. This type of word of mouth occurs when a customer has experienced something that deviates from expectations. A classic example is a complaint about lost luggage.

Positive word of mouth can reduce risk when making a purchase decision. It also increases purchase loyalty. Consumers are more likely to return to a business that offers good service. However, the effect of negative word of mouth can reduce market share by 20 percent.