Why is word-of-mouth marketing important?

It can be said that personal recommendations are one of the most valuable assets in marketing. In this article, you’ll learn why word of mouth is so relevant in today’s world and why social media plays such a major role in it.

Word-of-mouth marketing, also sometimes called word-of-mouth advertising or WoM marketing for short, is the recommendation of products or services from customers to other (potential) customers. It doesn’t matter if recommendations are communicated verbally or in a written format. Sharing them via digital channels such as email, social media or review sites are also considered forms of word-of-mouth marketing.

One example of word-of-mouth marketing is (positive) attention that a brand receives on a social media platform. This could be a user tagging your brand in their posts or tagging their friends in posts about your brand. Likewise, consumers may share their positive experiences about your brand among their friends in a WhatsApp chat group. One way a company can actively encourage WoM marketing is by asking their customers for a review and then advertising these (positive) reviews in newsletters, on their social media accounts or on their website.

Though their names might suggest otherwise, referral marketing and network marketing, or multi-level-marketing (MLM), are not the same as marketing by word of mouth. In contrast to WoM marketing, in these marketing models the person who recommends the product receives a commission. This results in the recommendation being less authentic, which leads us to the next point in our article.

Word of mouth is more important than ever in today’s crowded marketing space. Products or services that come recommended are often viewed as being more trustworthy. For example, if a smartphone enthusiast recommends a certain brand to their friends, they’ll most like regard the brand more positively compared to a recommendation given by the brand itself (i.e. advertising). Objective opinions and recommendations from an expert are often received as being even more credible.

Word of mouth is especially valuable for products that people often only buy after checking recommendations and objective test results first. Technical products such as hair dryers, blenders and headphones are just a few examples. Their performance and ability to function with everyday use are evaluated by reading through multiple online reviews. Makeup products also tend to sell better if other consumers can vouch for their good coverage, long hold and accurate skin tone match.

As mentioned previously, (positive) word of mouth leads to higher brand trust. This type of marketing can also be inexpensive, as satisfied users usually recommend products and services without any monetary compensation. At the end of the day, less marketing budget is needed.

Word-of-mouth marketing shows the relevance of a product or service for potential customers through real-life scenarios. Unlike the stories or contexts sometimes depicted in advertisements, recommendations provide examples from the everyday lives of real customers. For instance, if your neighbour recommends a hedge trimmer and you see that the device truly does a good job on your neighbour’s yard, you already have a good reason to purchase the product.

Word of mouth is happening a lot on social media and in forums. Companies can use this to their advantage through targeted social media marketing or social commerce.

Let’s look at another example of WoM marketing in social media. Suppose you are looking for a new coffee machine and end up on a forum for coffee specialists. Most of the people in the forum recommend a specific brand-name machine that makes great coffee and requires little maintenance. After doing more research on different social media channels, you reach the conclusion that the product must be a good investment. This is a typical example of how people tend to value the opinions of experts in product and service categories that they are not very familiar with themselves. Additionally, a recommendation can save a customer time that they may have spent combing through numerous product tests.

eWoM or electronic word-of-mouth marketing refers to word-of-mouth activities that take place digitally and mainly in written form. Given the vast number of online stores, product test sites and forums, consumers have a lot of opportunities to discover product and service recommendations.

Digital channels enable word-of-mouth marketing to reach a lot of people and potentially go viral. The reach of product recommendations is no longer restricted to one’s personal circle of friends and acquaintances but can now be shared with strangers too.

In addition, consumers can find product recommendations that come directly from online stores. Comparison sites with real product reviews from other consumers have also become popular places for customers to consult before making new purchases.

Word of mouth helps consumers find their way through all the products, offers and marketing campaigns they encounter every day. Whether it’s TV commercials, banner ads or promotional content during their favourite podcast, customers are confronted with advertising everywhere. Personal recommendations can thus help to cut through the noise and let customers focus on what’s truly important.

Word-of-mouth marketing can feel like a breath of fresh air to consumers who have grown weary of the attention-seeking approach of traditional advertising. Since word of mouth is a personal exchange that takes place between two or more people, it is often seen as more credible than branded messaging.

Nowadays, more and more money has to be spent on digital advertising to ensure one’s message gets in front of their target audience. WoM marketing offers a way to cut costs because satisfied customers recommend the brand for free.

Let’s remind ourselves of the AIDA model and how it lays out the stages in the customer journey: attention, interest, desire, action. Word of mouth covers all these stages by first drawing attention to a product. Then the personal aspect generates interest and ultimately desire, leading to the concrete action of a customer purchasing the product. This last stage might be prompted by a tip about where the product can be purchased at the cheapest price.

Viral marketing and buzz marketing are marketing strategies that share a few things in common with word-of-mouth marketing. This is why they are sometimes used interchangeably. All three marketing strategies try to generate discussion around a brand by gaining the attention of as many people as possible in a non-traditional way. Word of mouth is an important part of both viral and buzz marketing, but the latter two have their own distinguishing characteristics as well. Let’s take a deeper look.

With a viral marketing strategy, a company aims to get a message out to the biggest possible audience as quickly as possible. Social media is often used for this type of strategy, with the hope that the marketing campaign will be spread from one social network to another, resulting in the brand receiving even more attention.

Viral marketing campaigns are often entertaining or unusual and try to appeal to a very broad audience. Surprising flash mobs or eye-catching 3D billboard campaigns can be part of special guerilla marketing tactics.

Sometimes a campaign goes viral because of its emotional appeal. This was the case with the ‘Real Beauty Sketches’ campaign from Dove in 2004. A great referral marketing campaign can also go viral, as was the case with Dropbox. The size of their user base skyrocketed between 2008 and 2009 when the company started to offer 500 MB of free storage for each new user that current users managed to sign up.

Successful viral videos often have many millions of views. With social media plugins, businesses can encourage people to share the company’s marketing content on social media, ensuring that it has an even wider reach.

Buzz marketing takes the basic idea of word of mouth but uses scaling tactics to generate even more awareness for the brand. The goal is to get consumers talking about the brand or its products and services, i.e. to buzz about them. The attention generated is artificial, as it’s actively influenced or promoted by the brand itself, often using compensation as an incentive.

To reach the desired buzz, companies can, for example, offer people free samples and encourage them to share their experiences with the product. Or they can rely on influencer marketing to launch a new product or to increase the sales of an existing one.

Word-of-mouth marketing is a relevant marketing tactic that relies on recommendations from people who have personally used a product or service. It helps consumers to make purchase decisions and is a more credible form of advertising. Additionally, it can help companies cut down on their marketing costs. The reach of WoM marketing can further be increased by digital channels such as social media, online store reviews, product test websites and forums (eWoM marketing).

Companies have long recognised the value and advantages of word-of-mouth marketing as it’s one of the most authentic and honest forms of advertising. These qualities are becoming increasingly important for consumers when they make purchasing decisions.

On the other hand, many consumers are also becoming increasingly suspicious of eWoM, preferring to double-check who rated and recommended a product and where the recommendation has been posted. After all, influencers are often used for word-of-mouth advertising, and due to the (often generous) compensation they receive, it can be difficult to determine how reliable their recommendations are.

That’s why the following rule still applies: personal recommendations that come from people we trust are the most significant. With people we know, it’s also easier to determine when to take a recommendation with a grain of salt. This is not always that easy to do online. That’s why it’s important for companies to maintain credibility and increase brand trust, ideally leaving word-of-mouth marketing to their customers.