Word-of-Mouth and Referral Marketing Blog

Word-of-Mouth Marketing: A Complete Guide (2021)

Word-of-Mouth Marketing: A Complete Guide (2021)

The last time I purchased something online, it was the starter pack of produce bags by The Swag. My boyfriend’s sister had some and said they were amazing, kept her produce fresher for longer, and were super eco-friendly too.

That’s really all it took to convince me. Within a few minutes (and clicks), I had dropped $60 on four bags.

That’s the power of a personal recommendation. And as a business owner, it’s the kind of marketing tactics you can use to power your ecommerce brand.

Wondering how to use it for your business? In this guide, we break down exactly what word of mouth marketing is, why it’s important, and an eight-step strategy to get more customers through word of mouth recommendations.

What is word-of-mouth marketing?

Word of mouth marketing, often called word of mouth advertising, is a strategy based on personal recommendations. Person A recommends your product or service to Person B. They already trust the person they’re getting the recommendation from, automatically passing that trust and credibility through to the brand being referred.

Today, word-of-mouth marketing is the lightning speed behind growing an ecommerce business because personal recommendations can be shared online—especially through social media.

Now, much of these personal recommendations come from an influencer on social media, an online review, or a happy customer simply sharing their positive experience. And when done correctly, it can have massive effects. (More on that later.)

4 types of word-of-mouth marketing

There are several ways to run a word-of-mouth marketing campaign. But remember: The goal is to get the word out about your brand or product and build awareness.

Let’s take a look at some of the most successful types of word-of-mouth marketing.

Buzz marketing

You have a new product or service you’re launching in a few months. Now’s the time to start generating buzz so your launch date doesn’t turn out to be a flop. But how exactly do you generate buzz? Here are some ideas:

  • Create a waiting list for an upcoming product launch. People get to the top of the list by sharing the link on social media, emailing it to a friend, or liking a tweet about the launch. Customers at the top of the list get first access.
  • Share teasers of upcoming products on social media without revealing too much information. Gymshark got people talking about its Black Friday sale with Instagram posts teasing its “biggest ever Black Friday sale”.
  • Run a PR stunt to get the local or national press talking about your business. Running store Distance, for example, got people talking by encouraging them to run faster than Paris’ new speed limit. The retailer used screen camera images as the foundation of its ad campaign:

Outlaw Runners

Via Adweek

The purpose of buzz marketing is to find ways to be seen (and heard). So, find where your audience likes to hang out and consume content, then find a way to go viral there.

Content marketing

There’s a divide between your brand and its audience. Content is the buffer that can fill the void and create a connection. This is possible using various formats, including video, blogs, podcasts, and imagery (like infographics and slide presentations).

The idea is to present valuable information in an entertaining way. Otherwise, your content will be overlooked—or worse, never consumed and shared, making the whole thing a waste of time.

The best way to achieve this is to create content that starts conversations. Here are several ideas for turning your content into a marketing tool:

  • Tell real stories about real people. Find someone to interview or write a case study in a storytelling format.
  • Ask provocative questions. Choose topics others can contribute to by offering their own experiences, advice, and answers.
  • Become a thought leader. Have an angle everyone’s missing? Get everyone talking about it.
  • Be the go-to resource. Share guides, tutorials, and insights on topics relevant to and sought-after by your audience.

If you can get people talking, the odds of them sharing your content increase. Content is a primary ingredient in building a community around your brand. Just one new person who reads your case study might have a friend looking for what you offer.

Referral marketing

A referral network is an incredible resource to have. It’s like hiring a dedicated team of promoters that drive business to your company (without the high cost). But referral marketing doesn’t happen by chance; it requires a strategic approach to get consistent results.

Here are three prominent methods for getting consistent referrals to your business:

  • Affiliate marketing. Partner with one, two, or dozens of affiliate marketers in your industry to promote your products in their blog posts, articles, videos, eBooks, and on social media channels. Give them free products, or a portion of each sale made through a unique product link, in exchange.
  • Incentivized referral agreements. Create a referral program that rewards existing customers for telling their friends about you. For example, offer a 5% kickback for the new customers’ first order, or a set rate of $10 per referral.
  • Free referrals from loyal customers. These indirect referrals come from loyal customers turned brand advocates. They can be customer reviews, ratings, and testimonials posted on social media, search, and your website.

Pay attention to how your referrals are coming in to see which methods you should build a strategy around.

Social media marketing

Social media is awesome for one thing: building an audience for your brand. By 2025, 56.7% of the world’s population will be active on at least one social network. But even if you reach people who don’t want to buy your product, they likely know someone who will.

Here are some examples of how to get in front of people who will make a word of mouth recommendation:

  • Engage followers. Post regularly so followers feel connected to you and want more updates. Ask questions, respond to comments, and interact with your followers. People love when brands engage with them directly—they appreciate being heard and valued. And if you do respond quickly, they’re more likely to return.
  • Build relationships. Create meaningful connections between your brand and your target market. Use the features on social networks like Twitter chats, Facebook Live streams, LinkedIn videos, Instagram stories, and YouTube live broadcasts to connect with new audiences and strengthen existing relationships. These events allow you to talk face-to-face with real humans while creating valuable content for your channel.
  • Use influencers. Influencer marketing has become increasingly popular because it allows businesses to tap into someone else’s following (and leverage their credibility to gain exposure). But it works best when there’s already a relationship. Focus on building rapport before asking them to promote your brand.

Why is word-of-mouth marketing important?

Word-of-mouth marketing is an important strategy. Why? Because one happy customer can influence the purchasing decision of a potential customer (or even a group of prospective buyers).

The more you can nudge those happy customers towards making a recommendation, the more chance you have at increasing revenue and growing your customer base.

Unfortunately, so can the word of an unhappy customer. This is the power of word-of-mouth marketing. Let’s take a closer look at the benefits it offers.

Ugmonk Analog

Increase revenue

Think of your favorite brands. How long have you been with them (or plan to be)? When you like a company, you’re more likely to shop with them frequently for years.

One way to achieve this as a company is to build a base of happy customers so they’ll actively promote your brand and products. When this happens, you get more new patrons with a high lifetime value. In other words: More money for your business.

“Initially, when we used relatives and friends for WOM, the sales were just boosting up. Later on, when we used social media and reviews for our products, it became a complete game-changer.

We sent samples of our jewelry pieces to famous bloggers and influencers who loved them and gave very positive reviews! Our online website gained a 15% increase in traffic and a total of 25% more orders, which were fully attributed to word of mouth marketing.”

— Aviad Faruz, Founder of Faruzo

Build brand trust

It’s hard trusting someone you don’t know. And it should be. After all, you know little to nothing about them—hence why relationship-building is vital as an ecommerce business. Some 92% of people trust recommendations from word of mouth.

Without it, you’ll struggle to earn the trust of potential customers. They don’t know the person running the business on the other side of the screen.

What consumers trust the most

Then once you get that trust, you have to continue working to maintain those relationships so their brand loyalty doesn’t break or shift to a competitor.

Do you regularly ask your customers for feedback and reviews? If not, it’s time you start. These are testimonials proving the value and quality of your products or services. You can increase the chances of someone leaving a review just by asking. Amazon sellers know this—this is why you’ll typically find a card in your box with a review request.

8 word-of-mouth marketing statistics

Word-of-mouth marketing sounds amazing. But where are the numbers to back these claims? Let’s review some statistics that prove word-of-mouth marketing is worth every penny.

Nearly 60% of Gen Z women make buying decisions based on referrals

If you’re targeting young women today, then word-of-mouth marketing should be on your radar.

According to a recent Statista report, 59% of Gen Z women base their buying decisions on recommendations from friends and family. This puts them over social media influencers—another reason to take your customer satisfaction rate seriously.

Most influential advertising channels when making purchasing decisions among female Gen Z in the United States as of May 2021

Over 80% of satisfied customers will refer products and services

Every customer experience with your brand should be a good one. Focus on offering an amazing experience and a simple buyer’s journey to increase referrals. This way, you can get a share of the 83% of satisfied customers that recommend a product or service after having a positive experience.

Friend recommendations are 2x as important as other sources

Recommendations from trusted influencers are great. But people you personally know will always hold more weight when it comes to making a purchase decision. One report shows people pay 200% more attention to referrals made by friends than any other source.

Again, if you’re offering great products and experiences, then it’s a no-brainer for customers to refer your brand to others.

Over 90% of people are more/less likely to buy based on an online review

Don’t underestimate the value of an online review. This reaches beyond the reviews you find on Google and Yelp. Online reviews come in various forms, including social media posts, podcast episodes, and blog posts.

Everyone’s talking and people are listening. Based on a BrightLocal survey, 94% of people are more likely to buy from a business if it gets a positive review. But the same goes the opposite way: 92% are less likely to buy from a brand with a negative review.

Online reviews

84% of consumers care most about your star rating

There are several factors consumers look at when gauging how trustworthy an ecommerce brand is—like what people are saying about the business and products. The images associated with the reviews are important. But to the majority (84%), it’s about your overall star rating.

Next in line are:

  • Honest reviews (81%)
  • Recency (80%)
  • Sentiment (79%)

Review factors

You need at least four stars to appeal to 77% of consumers

Your star rating is a big deal, especially for e-commerce businesses. One report shows 24% demand a 4.5 to 5-star rating, while 28% look for at least a 4-star.

If you want to appeal to the majority, aim for a 4-star or higher. You can do this by responding to poor reviews in an attempt to have the rating improved. The more you work on your customer service, the easier it’ll be to prevent bad experiences.

Half of consumers want fresh online reviews

How fresh you ask? In the past, a review posted within the last month was good enough. But there’s a growing trend for even fresher reviews. A recent report found half of buyers want testimonials no more than two weeks old.

If you’re holding on to a raving testimonial from earlier this year, it won’t suffice. It’s critical to have a strategy that always asks new customers to share their positive experiences.

Review recency

You need at least 4-6 reviews to be trusted as a business

If you’re a new business or an established brand with outdated reviews, you need at least four fresh testimonials. Data shows that 31% of people look at four to six reviews before feeling they can trust a business.

Only 4% of people trust a business with a single review. A quarter will trust you if you have two to three testimonials.

Number of reviews read

How to create a word of mouth marketing strategy

We know a satisfied customer is at the core of your word-of-mouth marketing campaign. The real question is: How do you push those happy customers to share your products with their family and friends?

Here are eight steps to create a word-of-mouth marketing strategy that drives new revenue your way.

  1. Offer a quality product that solves a problem
  2. Provide impeccable customer service
  3. Give easy and seamless purchase experiences
  4. Ask for reviews and ratings (then share them)
  5. Encourage user-generated content
  6. Create an official referral program
  7. Connect with industry influencers & thought leaders
  8. Provide a unique and share-worthy experience

1. Offer a quality product that solves a problem

The first—and perhaps most overlooked—step in a word-of-mouth marketing strategy is to actually have a product or service worth bragging about. No marketing campaign can outlast a bad product or experience. Be sure that what you’re offering is something that your potential customer will actually like.

This is where customer reviews can prove to be doubly powerful. Not only will they serve as social proof, but they will also inform you of any potential barriers to success (if they leave a poor review).

Don’t want to wait to amass enough reviews to know whether or not the products you offer are good quality? Test them out for yourself and answer these questions:

  • Is this easy to use?
  • Does it significantly improve my day-to-day life? How?
  • Will I continue to use it? Why or why not?
  • Would I recommend it to my friends? Why or why not?
  • How could this experience be improved?

Intimately understanding your product will help you better understand your target audience, as well as improve your word-of-mouth marketing campaign.

Authentic word of mouth

2. Provide impeccable customer service

Another crucial aspect to consider when beginning your WOM advertising campaign: Even if you have the most amazing product ever, if your brand is a pain in the ass to deal with, customers won’t return to shop with you.

And they will not recommend your brand or products to others.

After all, there are over seven million online retailers in the world. Surely at least one of them sells the same products that you do. And if they provide better customer support to their current customers and they share a positive online review—you can expect your potential customers to go to them instead of you.

If your customer service is good enough, your customers will be more than happy to talk about it.

Tuff and Needle customer service

3. Give easy and seamless purchase experiences

One of the easiest ways to convert a potential customer into a satisfied customer is to make the purchasing process as easy as possible.

Seriously… think about the last time you were stuck in traffic. All you had to do was get from point A to point B. And when the traffic was so unbearably bad that it turned your mood sour, it didn’t affect your feelings about point B.

But you likely won’t take that route again (or at least not at that time).

Your store is like that route. Don’t provide any roadblocks along the way.

To improve the customer experience while shopping on your site, take a look at these factors:

  • Website layout and how aesthetically pleasing it is
  • Site speed and page load time
  • Shopping cart design and how many steps there are to checkout
  • Site architecture and how easy it is to find the products that customers want
  • General conversion rate optimization tricks that can be used throughout your website

Why is this important? Because a good website design can increase your conversions by up to 400%, and a whopping 93% of consumers say that good design influences their purchasing decision.

So, yeah. Clean that website up.

4. Ask for reviews and ratings (then share them)

Word-of-mouth marketing might sound a little like black magic as if when you provide a good thing, everyone will go raving about it.

Unfortunately, that’s not always the case. You have to push for those word-of-mouth recommendations by asking for reviews and ratings. Granted, it may take a little bit of work, but it’s definitely worth the effort:

  • 85% of consumers trust online reviews just as much as they trust an organic word of mouth recommendation
  • People read on average 7 reviews before making a purchasing decision
  • 49% of consumers only purchase products or services with a 4 (out of 5) star rating

In this way, online reviews serve as a virtual personal recommendation, so it’s worth gathering them—especially with 90% of consumers searching reviews before purchasing a product. And 86% of consumers trust word-of-mouth recommendations.

Given that we live in a digital age, online reviews and ratings serve as modern personal recommendations.

It doesn’t end there, though. The people that choose your product based on those online reviews, up to 59% will tell their friends and family about it.

And considering that it takes just 1,000 customers to generate half a million conversations about a brand, those customer reviews are a massively important part of the foundation of your WOM marketing strategy.

If you’re unsure how to politely ask for reviews, you can:

  • Send a follow-up email post-purchase offering a discount on future purchases if they leave a review
  • Personally reach out with a very simple email follow-up, sharing that you’d love to know how they enjoyed the product and how you can improve
  • Make it super easy (and obvious) to leave reviews on your site

Etsy has a beautiful system asking for reviews. When I purchased this cross stitch pattern one day when I was feeling especially crafty, I received this email a few days later. It’s super simple and allows me to leave a review directly from my inbox.

word of mouth

5. Encourage user-generated content (UGC)

With digital marketing, all you need is a good internet connection and a little bit of cash to get started.

The problem? Millions of other people are doing it and traditional advertising can leave you bankrupt before you even make a sale.

So how do you reach your potential customer and convince them to make a purchase without paying for traditional marketing?

The answer: By letting your happy and loyal customers do the marketing for you. For free.

This is the idea behind user-generated content (UGC) and is most brands’ modern word of mouth marketing strategy. It’s also why social media marketing and influencer marketing, in particular, have become such powerful tools for businesses.

UGC is a powerful tool in both raising brand awareness and influencing purchasing behavior. In fact, 60% of consumers say this type of content is the most authentic type.

Frank Body did this exceptionally well. Their WOM strategy was so good that I first heard about it from my brother before I even saw it on social media. And, of course, upon hearing about it, I turned to social media to check it out.

word of mouth marketing

The bottom line? If you can make it cool to share your product on social media, your word-of-mouth marketing campaign is on its way.

6. Create an official referral program

If you don’t want to wait for the personal recommendations to trickle out to your target audience, take matters into your own hands and launch a referral program.

There are tons of referral apps out there that can help you do this, including your very own, ReferralCandy. These apps give a little extra push to your happy and loyal customers to spread the word about your brand.

It sends an automated email after purchase, offering your chosen incentive to customers if they refer a friend. When the friend makes a purchase using the original customer’s code, the incentive is paid out.

All you have to do is choose the incentive for your program and let the app do the rest.

Take for example Christy Dawn, an environmentally conscious, ethical fashion brand that’s popular among celebrities and influencers. The brand started its referral program with ReferralCandy back in 2016 and has since generated 26x ROI.

They achieved this by using strategies like “Give $30, Get $30” to get customers to refer friends. The concept is simple: You spend $30 or more with a shop. You refer a friend and they’ll get a $30 coupon for the same shop.

It’s genius because people love to give. It makes people want to spend just so they can send a free gift to someone they know.

Christy Dawn referral program

7. Connect with industry influencers & thought leaders

Influencer marketing is incredibly powerful. You’ve likely seen all the #ads on social media already. People grow to love influencers, for whatever reason, and so they trust their recommendations on any given brand or product.

Truthfully, though, it’s quite difficult to do. It’s difficult to get in touch with an influencer worth your money, and it’s difficult to afford an influencer who actually has any influence.

In fact, it’s not uncommon for social media stars to charge up to $10,000 per sponsored post, depending on how many followers they have and the channels they’re using. (YouTube, in particular, is where the big bucks are.)

But it’s still a worthy contender in this list of ways to create a powerful word-of-mouth marketing strategy because it works. Eight out of 10 consumers have purchased something after it was recommended by an influencer.

If you need help connecting with influencers, you can easily find thousands of them on any given influencer marketing platform, such as:

If you choose to go this route, spend some time truly identifying your target audience and imagining the kinds of influencers that have that audience as their following.

But if you’re a little shaky about partnering with influencers, then here’s a true story for you:

Contact Lens Singapore, a contact lens seller, wasn’t new to word of mouth, but it lacked a marketing strategy to amplify its results. A lot of its referrals came from online channels like forums and online communities.

After seeing the growth potential, the owner decided to amplify his referrals by partnering with influencers. He already had a few in his circle and wanted to incentivize referrals. The brand teamed up with ReferralCandy and set up a referral program that yielded more attention and increased sales.

Contact Lens Singapore-Influencer Marketing

8. Provide a unique and share-worthy experience

As amazing and helpful it would be to have happy customers upload a beautiful image to their social media accounts and thoughtfully tag your brand, that’s probably not gonna happen.
At least not without a little creativity on your part.

You’ve got to make people want to share your products with others by offering an incentive or by making it “cool” to do so. You can do this by creating a movement or by building an authentic community online.

However you do it, you need to find a way to make their experience with your brand worth sharing.

3 word of mouth marketing examples

Curious about how other brands are using word-of-mouth marketing to benefit their business? Here are three real-world examples to inspire your own campaigns.

Ugmonk

Ugmonk is an ecommerce platform that has grown dramatically through word of mouth. Selling t-shirts, accessories, and productivity systems, its founder and designer, Jeff Sheldon, estimates that more than 50% of customers come through a word-of-mouth recommendation.

“Word of mouth is extremely important for Ugmonk. In fact, that’s been our main form of marketing since we started 13 years ago.

For us it’s all about making remarkable products where people can’t help but tell their friends about them. So we spend a ton of time on product design and development to make products that people truly love and want to talk about.”

— Jeff Sheldon, founder and designer, Ugmonk

Ugmonk word of mouth

Rent the Runway

Rent the Runway was one of the first ecommerce brands to trial subscription-style online products. Customers using its platform subscribe to a monthly membership. They get a certain number of designer clothing items delivered (or “leased”) each month.

The ecommerce brand is now worth $750 million. A large part of that valuation comes from its word-of-mouth strategy.

One report found that 94% of the retailer’s customers are acquired organically. As its Chief Revenue Officer, Anushka Salinas, explains, “When we added customer photo reviews to the site, it drove major organic growth. Our most effective marketing is sharing the experiences women have in Rent the Runway.”

“The way we’ve gone about customer acquisition to date, though, through user content, word of mouth and referrals mostly, has resulted in very little churn. People who do churn say they plan to reinstate.”

— Jennifer Hyman, CEO and founder, Rent the Runway

Rent the Runway

Evolve Skateboards

Evolve Skateboards is a designer and manufacturer of high-performance electric skateboards. It began its roots in Australia and now sells across 40 countries. The brand won awards for its product and excellent customer service. So it’s no surprise the company chose to use word-of-mouth marketing to amplify its presence.

Again, when you have a great product and customer support, you’re bound to get positive reviews and referrals when you have a great product and customer support.

But they didn’t want to sit back and let the sales roll in. They took a proactive approach by partnering with ReferralCandy to turn their customers’ reviews into powerful sales messages using social media.

Their referral program consisted of three things:

  • Offering 20% voucher for referrals (and giving new referred customers a free starter pack)
  • Promoting their referral program to existing customers using emails (post-purchase)
  • Making the referral program easy for customers to share with others

Evolve Skateboards email

The results:

  • Over $1M in referral sales
  • 28x ROI on the referral program
  • 20K customers enrolled in the program
  • Over 1K social media shares

Ready to start your word-of-mouth marketing strategy?

There is no quick fix for word-of-mouth marketing and it’s not something you can do on a whim. Instead, it’s something to build into your existing business model so that it works for you even when you’re not spending any cash. If you follow these steps above, you will lay a solid foundation from which your brand can grow naturally.

Marquis Matson

Marquis Matson is an SEO analyst, content marketer, and writer. She specializes in search engine optimization for ecommerce sites in the yoga and wellness niche. She lives as a digital nomad, spending time in Ecuador, California, Thailand, India, Australia, and more. You can find her on LinkedIn, Twitter, at marquismatson.com, or contact her directly at marquis@anafore.com.

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