The Definitive Guide to Referral Marketing

3: The Journey To Maximizing Word-Of-Mouth For Your Business – The Definitive Guide To Referral Marketing
CHAPTER 3

The Journey To Maximizing Word-Of-Mouth For Your Business

"Give people a reason to talk about your stuff, and make it easier for that conversation to take place." –  Andy Sernovitz, author of Word-Of-Mouth Marketing

If you want to get more word-of-mouth, you first need to understand it well. And you're in luck– it's fundamentally very straightforward!

All word-of-mouth, or "people talking about your product", can be understood as a 3-part phenomenon:

  1. Discovery: Somebody encounters an idea.
  2. Wow: This person is convinced that the idea is worth sharing.
  3. The Share: The person shares the information with others.

One person's share functions as the next person's point of discovery. When this happens over and over again, you get word-of-mouth.

So, you recognize what the process looks like, you can start thinking about how to turbocharge it. How do we do that?

A. Start with Wow: Create Unexpected Utility and tell a Meaningful Story

There's an endless amount of work that can go into crafting a Wow. We've read pretty much everything that’s been written about the subject, and what we've found is that all of it fits very nicely into one of two main categories:

A1. Unexpected Utility: Solve a specific problem dramatically well, at lower-than-expected cost.

"What we want to do is make a leapfrog product that is way smarter than any mobile device has ever been, and super-easy to use. This is what (the) iPhone is. " - Steve Jobs in 2007, launching the iPhone


The graph above is a good example of unexpected utility: A new product is created that literally breaks from the continuum of people's expectations about what a product can do.

It's been less than 10 years since Steve Jobs unveiled the iPhone, yet it's surprisingly easy to forget how amazing the response was. People were ecstatic! Why?

Because they recognized that the iPhone would allow them to do more with less. The iPhone allowed people to listen to music, watch videos, call their friends and surf the Internet all on a single device.

Examples: What are other examples of Unexpected Utility?

  1. Dropbox were making all sorts of customer acquisition mistakes- yet they somehow got over 1 million users within 7 months of launch, almost entirely through word-of-mouth. Why? Because people got to give their friends the gift of free storage.
  2. The Coolest Cooler is a cooler that has Bluetooth speakers, a blender, a USB charger, an LED lid light... and that's not even half of it. What happens when people can tell their friends about something so cool? It becomes the #1 most funded Kickstarter project of all time, raising over 265 times of its $50,000 target– $13 million dollars!

Actionables: How do you create Unexpected Utility?

Let's be honest. If there were a simple step-by-step formula to creating Unexpected Utility, we'd all be starting billion-dollar companies. Creating things with Unexpected Utility is really, really hard, messy and unpredictable.

We can't teach you how to do it– that's outside the scope of this guide. We can, however, point you towards a list of recommended reads that we've put together to help you think more clearly about it.

A2: Meaningful Storytelling – Sharply define your brand against everything else.

"At the end of the day, brand helps customers answer THE question, Which one should I buy?" – Marc Barros, Contour co-founder

1986, a film called Top Gun featured Tom Cruise as a fighter pilot with Ray-Ban shades and a badass attitude. It swept through the theaters to become the highest-grossing film of the year.

That year, Ray-Ban Aviator sunglasses sales jumped 40%. Air Force recruitment was so high, the USAF actually set up recruitment booths in the theaters!

That's the power of a compelling story.

Actionables: How do you tell a Meaningful Story?

  1. Have a mission, values and an enemy. 'Fake Grimlock' suggests using 3 questions to calibrate your 'Minimum Viable Personality'. How does your product change your customer's life? What do you stand for? What do you hate? GoldieBlox, for instance, is practically defined by its mission to correct the gender imbalance in engineering.
  2. Figure out your brand archetype. The Hero and The Outlaw, by Margaret Mark & Carol S. Pearson, describes 12 archetypes that most successful brands fall into. Harley Davidson is the Outlaw. Nike is the Hero. What's yours?
  3. Decide what your story is. According to the Heath brothers in Made To Stick, there are fundamentally 3 kinds of stories:  Challenge, Connection and Creativity. Figuring out your story makes it easier for your advocates to tell others about it.

    1. Challenge is the underdog story of overcoming adversity- rags-to-riches, zero to hero. Think Rocky the movie, and Nike the brand.
    2. Connection is about relationships. Consider this Budwiser's #BestBuds ad about the friendship between a dog and a horse, or Guinness's ad about men playing wheelchair basketball to bond with their friend.
    3. Creativity is about a-ha moments, finding new ways to do things. All of Mentos' "The Freshmaker" ads fall under this category.

B: Seeding Discovery: Acquire as many early users as you can, and convert influencers to your cause.

In a perfect world, once you build your 'Wow!' offering, everybody will drop everything to find out about your product.

Unfortunately, most people are busy and overwhelmed. Worse still, you have limited resources, so you need to get as much bang for your buck as possible.  How do you do it?

There are broadly two parts to seeding discovery.

B1. Seeding Users: Get yourself in front of as many ordinary fans as you can, one by one.

"Sell one. Find one person who trusts you and sell him a copy. Does he love it? Is he excited enough to tell ten friends because it helps them, not because it helps you? If not, you must stop what you’re doing and start over." – Seth Godin

Ordinary users are the bread and butter of every business.  The purpose of a business, as Peter Drucker put it, is to create and keep a customer. Word-of-mouth works best when it's being spread by actual, paying customers.

Actionables: How do you get your first customers (who'll talk about you)?

For a comprehensive list of early customer acquisition stories, check out our popular blogposts How 13 Successful Companies Fought For Their First Customers and How 8 (more) Successful Companies Fought For Their First Customers.

Here are some of the tactics employed by these companies:

  1. Literally reach out to them in person. It's especially easy to build relationships with people online today– search for people on Twitter and Instagram, and follow them! Then respond to their tweets with useful information whenever you can.

    1. Tinder and Alibaba manually travelled to their first users/customers in person, and got them to signup on the spot. Same for Stripe.  (Airbnb manually approached people and helped them get listed, with professional photos.)
    2. Bonobos started out selling pants in real life, person-to-person, before even starting an ecommerce store.
  2. Join and contribute to existing online communities. Identify relevant forums, subreddits, hashtags and other spaces where your would-be customers hang out. If you sell beautiful men's shoes, for example, you should become an active and valued member of /r/MaleFashionAdvice.

    1. Etsy, Beardbrand and many other companies started out by identifying existing communities and serving them well.
    2. You can even start your own. Reddit and Quora started out using their own service, and Black Milk Clothing started its own Facebook Page that did really well.
  3. Piggyback off of events and spaces where your customers hang out. Twitter is a behemoth now, but it really first took off at SXSW, by streaming tweets about the conference on huge plasma screen TVs in the halls. Daily tweets exploded from 20,000 to 60,000.

Use this knowledge to create assets and experiences that delight your customers.

B2: Courting Influencers – Execute an influencer outreach plan based on win-win outcomes.

"Beardbrand's community was moving along as normal, when I was contacted by a New York Times reporter. [...] The conversation with her was the catalyst that officially brought the team together to launch the Beardbrand store." – Eric Bandholz, Beardbrand founder

In his seminal book The Tipping Point, Malcolm Gladwell claimed that there were 3 kinds of people who were especially relevant to the spread of word-of-mouth epidemics– Mavens (product experts), Connectors ('social butterflies') and Salesmen (masters of persuasion).

There have since been criticisms of Gladwell's ideas as oversimplistic, but the basic principle still makes a lot of sense– some people have more influence than others.

When Ashton Kutcher tweeted about Opena Case, for example, the site got so many hits that it broke several times over.

Actionables: What do successful influencer outreach plans look like?

  • Make the journalists' job easy. The Mellow team personally reached out  to over 100 journalists for their media push. Check out their comprehensive press kit for a great example of how to make it really easy for other people to tell your story.
  • Buzz begets buzz, so have some traction to share. As relative unknowns, Ministry of Supply avoided pitching the major sites. Instead, they wrote customized emails to all sorts of blogs that had any sort of relevance to their product– everyone from fashion to space-related blogs. They met their funding target of $30,000 within 5 days. TechCrunch and Forbes came knocking soon after,  and the campaign ended with over $400,000 in funding.
  • Identify and work with influencers. KISSmetrics's Guide To Influencer Targeting describes how fashion ecommerce sites like Modcloth are especially effective at this. It introduces important variables to consider, like Context, Reach and Accessibility– just because somebody is popular in general, for example, doesn't mean that they'll be useful to your brand in particular.  

C. Just Add Grease: Make it convenient for your advocates to share.

"How easy is it for an end user to spread this particular ideavirus? Can I click one button or mention some magic phrase, or do I have to go through hoops and risk embarrassment to tell someone about it?" – Seth Godin, Unleashing The Ideavirus

So you've got a great product that provides unexpected utility, and it's set against a backdrop of meaningful storytelling. You've gotten (and delighted!) your first set of users, and you've gotten some media and influencer attention.

What do you do next, to increase shares? Here is a list of things you can do to make shares easier and more likely:

  1. Help your advocate identify the person she ought to share your product with.  A 2010 Advisor Impact study discovered that one of the main reasons satisfied customers don't make referrals is because they aren't entirely who they ought to make the referral to. So tell them outright!
  2. Capitalize on triggers. In his book Contagious, Jonah Berger talks about how people share Rebecca Black's Friday every Friday, and how Geico's Hump Day ad spikes on YouTube every Wednesday. If you can peg your offering to a trigger, you'll be shared more.
  3. Stay top-of-mind by exploiting the Familiarity principle. Branding is about creating an association between a business and an idea. To do this, you should design your product for maximum visibility. Retargeting is a great way to stay top-of-mind of potential customers.
  4. Make it easy to click-to-share. You want to remove as much cognitive effort as possible from the share. The important thing is to make these appropriate and relevant. Click-to-tweet is a popular tool.
  5. Good default sharing messages. Help people put into words what they're thinking. Upworthy is excellent at doing this with their headlines. Battle for the Net is also incredibly good at using powerful sharing messages.
  6. Incentivize the share. These don't necessarily need to be monetary. You could make it a game, or give people some sort of social reward. World of Warcraft gives people in-game mounts as rewards for recruiting their friends.

There are many, many more ways to get more social shares, of course. (Here are some useful blogposts by WordStream and MarketingLand that list out more tactics.)

We'll drill more into the details of the above in later chapters.

Conclusion: Maximizing word-of-mouth is very hard work, so start by Wow-ing yourself.

"Tweet" and "Like" buttons aren't word-of-mouth. Rather, word-of-mouth comes from content, thoughtfulness, solved problems, and ease of use—in short, the whole experience of a product or service." – Sean Ellis, Startup Growth Engines

The most difficult part of getting word-of-mouth isn't actually a matter of tools, tactics or frameworks. The hardest part is motivating yourself and your team to do the actual legwork.

When you actually study the success stories, this becomes very apparent:

How do you get all that energy, focus and commitment?

You start by making something that you truly, sincerely believe is better than everything else in the market. Only when you've sufficiently Wow'd yourself will you have the energy to take it upon yourself to learn and apply all the tactics and frameworks.

Getting more word-of-mouth then isn't simply about moving a needle in the service of "buzz".  Buzz matters, yes, but only as a sign that people care about what you're doing.

As a sign that you've made something people love.

ReferralCandy can increase your sales with a customer referral program.

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CHAPTERS

Building a referral program

5
Anatomy of a referral program
6
Using incentives effectively
7
Communicating your offer well
8
Measuring success with analytics

Running a referral program

9
Multiple ways to run a referral program
10
All the ways things can go wrong
11
Play the long game - give it time
12
Epilogue