Word-of-Mouth Marketing: What Is Word-of-Mouth Marketing?

Word-of-mouth marketing (WOM marketing) is a type of marketing that relies on personal recommendations from an existing customer base along with paid brand ambassadors and influencers. It’s often used as a companion to traditional forms of marketing such as paid advertisements, promoted search results, and content marketing. It hinges on the concept that organic word-of-mouth recommendations can lead to greater customer conversion rates than other marketing strategies.

There are two main word-of-mouth strategies: organic word-of-mouth marketing strategies and paid word-of-mouth advertising.

• Organic word-of-mouth marketing: This marketing tactic relies on happy customers guiding other people's purchasing decisions by recommending a product or service. They can remark on their positive experience via online reviews, social media shoutouts, and face-to-face testimonials that occur offline.
• Paid word-of-mouth advertising: This marketing tactic offers financial incentives to people who promote new products. One example is social media influencer marketing, where professional influencers get paid to create social media posts promoting certain brands. Another variation is referral marketing, where existing clients get coupons, cash, or free products when they recruit new customers. Yet another variation is incentivizing people to write customer reviews or post hashtags on social media. Such customers may also receive free products, coupons, or cash back in exchange for sharing their customer experience.

The purpose of word-of-mouth marketing is to build brand awareness by highlighting happy customers. Consumers tend to trust word-of-mouth recommendations from friends and family over any other form of marketing. Word-of-mouth referrals can even lead to viral marketing as families and social groups adopt similar brand loyalties. This can help explain why certain products deeply appeal to certain populations even when traditional marketing campaigns are absent.

Whether you're a small business with an e-commerce site or a large company looking to crack a new market, word-of-mouth marketing offers several clear benefits.

1. 1. Social proof: You do not have to convince social groups that a product is cool or trendy if people organically demonstrate it for you. Word-of-mouth marketing statistics often show customers consider word-of-mouth recommendations to be key to their purchasing decisions.
2. 2. Often more affordable than traditional marketing: A marketing campaign based around TV commercials can rapidly drain a brand's ad budget. Word-of-mouth marketing comes with lower upfront costs, and it leaves open the possibility of viral marketing where a branding message surges naturally through a population.
3. 3. Immense flexibility: A word-of-mouth strategy makes it easy to recalibrate a message on the fly—something that is very difficult with pre-produced commercials. You can customize messages to target audiences, and you can recruit new social media influencers in the middle of a campaign. You can also tweak referral programs to target new customer populations.

The following word-of-mouth marketing examples show how this type of marketing strategy can work in the real world.

1. 1. A simple call to action: For a case study in simple word-of-mouth marketing, think of a podcast host asking their audience to rate their program "five stars" and leave a review. They often remark that reviews help new listeners find the show, which is a way of saying that others will be influenced by word-of-mouth customer reviews.
2. 2. Referral programs for loyal customers: Some companies offer special referral incentives to existing customers. They might offer "buy one, get one free" subscriptions that a customer can share with a friend. They might offer cash back when the person recruits a new customer, payable the first time the new customer makes a purchase. These offers leverage a person's social currency, and they double as customer retention because a lot of the incentives only kick in if the referring party remains a customer.
3. 3. Social media marketing: Increasingly, companies recruit professional social media influencers (as well as prominent bloggers) to offer testimonials to their audiences. These online personalities may be given referral links or referral codes that pay them a small cut from every purchase a customer makes using the code. Alternatively, they may be offered a flat fee for an endorsement with no mandated conversion rates.
4. 4. Free goods to review: On some major e-commerce platforms, a select group of people receives free products in exchange for their reviews. While there is no stipulation that the review be positive, users who typically leave positive reviews can help spread brand awareness.

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