“While most companies are busy inflating their paid social media budgets or expanding their video personnel, precious few are focused on the simple power of something less expensive, more personal, and typically more effective: word of mouth,” says Convince & Convert.

Word of mouth influences 59-91% of all purchases, yet surprisingly few—if any—companies have a strategy for it.

Some successful brands, however, are taking full advantage of “customer chatter.”

The Cheesecake Factory, for example, uses a meager 0.2% of their multibillion-dollar revenue for advertising. The brand relies on word of mouth because of research conducted by David Godes and Dina Mayzlin which discovered that a single conversation by each new customer generates about $200 worth of sales for a restaurant chain.

“Consider the numbers. According to Ted Wright, CEO of Fizz, word of mouth can spread from one excited customer to 40,370 people in only a year’s time. That’s a tremendous wave that turns your customers into volunteer marketers, using their reach and relationships to get you new customers at nearly no cost.”

Source: Convince & Convert

Three Reasons Word of Mouth is So Powerful

 

1. It’s Acutely Personal

“It’s nearly impossible—even with machine learning—to make an advertisement that’s personally targeted to each and every one of 40,000 potential customers,” says Convince & Convert.

But that’s exactly what your customers can achieve through word of mouth. How? Well, they know a lot more about their friends than you do so they can tell your story in a manner that will resonate with those friends more effectively than you can.

Social media can’t achieve that same level of personalization, making up only half of all word of mouth conversations. Surprisingly, though, direct spending on social media marketing in the U.S. is predicted to increase from $4.3 billion to $23.6 billion in 2019.

“While other businesses are busy constantly boosting their paid social budgets, think about how you can instead give your customers something to talk about.”

Source: Convince & Convert

2. It Spreads Fast

Picture this: It’s Saturday night and you and your friends want to eat out for dinner, but no one’s volunteering to spend the time combing through Yelp to research all the options.

Instead, everybody shouts out their favorite eating establishments or restaurants they’ve heard about from co-workers or family members. The next thing you know, your tribe is walking out the door with a destination in mind—and you’ve just learned about some great new places to try out in the process. Brilliant!

Surely, any brand would wish for totally organic recommendations like this!

3. It’s Trusted

Although research from Nielsen and Edelman shows that less than half of all consumers trust businesses globally, 83% of Americans trust recommendations from friends and family.

“Friends usually have no financial interest in pushing products or services, so the believability and persuasiveness of the recommendation or referral go up accordingly.”

Source: Convince & Convert

Conclusion

Smart companies recognize that the most effective way to promote their brands doesn’t involve a big price tag. Instead, they rely on creating “customer chatter.”

“83% of Americans are more interested in purchasing a product or service when they’ve received a verbal recommendation from a friend or family member.”

Source: Convince & Convert

It’s easy to get caught up in all your various marketing strategies and forget about the power and simplicity of word of mouth—one of the most effective ways of growing your business.

But consider this: If your customers are eager to spread the word about your brand, shouldn’t you be doing everything you can to help them?

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About Author

Sherene Funk

Sherene Funk is the author of the contemporary romance Autumn in Your Arms and the eBook The Small retailer's Ultimate Guide to Increasing In-Store Sales. She is a voracious reader who owns more books than she can ever read in this lifetime (but that doesn't stop her from collecting more). A graduate of Brigham Young University, she has published several humorous non-fiction articles and worked in advertising for many years before moving to her current position as a writer on modern retailing at Rain Retail Software. She researches non-stop to see what successful retailers do and loves to share what she learns with other small business owners through informative articles that address their unique needs.


Also published on Medium.

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