What is Word-of-Mouth Referral Marketing?

The marketing strategies that were once used to engage a widespread audience and capture maximum leads have become futile. Today, consumers trust friendly testimonies and recommendations more than gaudy brand ads or campaign posters.

Abdul Wahab

Abdul Wahab

· 9 min read
What is Word-of-Mouth Referral Marketing?

As the markets become volatile and consumer preferences are constantly shifting, businesses must adapt alongside to stay in the game.

The marketing strategies that were once used to engage a widespread audience and capture maximum leads have become futile. Today, consumers trust friendly testimonies and recommendations more than gaudy brand ads or campaign posters.

When building credibility and trust with prospects, it's best to put your existing relationships into action. Encourage your current customers to spread word about your brand within their social networks, in exchange for rewards for that matter, and advocate for your offerings to pull in fresh leads.

With cost-effective customer acquisition, higher lifetime value, and improved retention rates, word-of-marketing is quickly rising to the top as an effective marketing tool. if your looking to harness organic growth for your company, now's the time.

What is Word-of-mouth Marketing?

Word-of-mouth marketing (WOMM) is a form of advertisement where people talk about a product or service they like to their friends, family, or other people they know. It's like sharing your positive experiences as a recommendation for others who might want to try out the same.

Word of mouth capitalizes on personal recommendations and day-to-day communication between individuals to spread information about a brand, ultimately influencing the purchasing decisions of prospects. It’s not a company or paid advertisement boasting about how great their stuff is, but regular people sharing honest thoughts about a product or service.

Imagine you talk about a new restaurant that you recently tried and loved the food and ambiance enough to recommend it to friends. There’s a high chance they might try it too based on the trust they have in your opinion. That's word-of-mouth marketing in action.

Word-of-mouth marketing happens both in person and online with social media being the key determinant today. People share their opinions and experiences on platforms like Facebook, Instagram, and Twitter, and review websites like Yelp or TripAdvisor.

Types of Word-of-Mouth Marketing?

For any business to tap the potential of word-of-mouth marketing, it must first provide excellent products and exceptional customer service that follows along.

Remember, if customers are willing to share the positive highlights of their interaction with you, they won’t be reluctant to share the negative ones too, putting your brand image in jeopardy. As a business owner or marketer, here are four ways you can run your word-of-mouth marketing campaign:

Viral Marketing

Sometimes businesses need to engage an audience beyond their immediate customer base to maximize their outreach, especially ahead of a product launch. Be it for public awareness or invoking anticipation in the audience, tapping viral growth is often on the mind of every business owner.

In viral marketing, businesses create compelling content, videos, memes, or blog posts, that are so interesting or shareable that they spread rapidly among people. When individuals come across such content, they feel compelled to share it with friends, family, or followers, creating a “snowball effect” of new leads.

The Dollar Shave Club created a humorous video that introduced their subscription razor service. The witty script, catchy music, and straightforward message resonated with viewers and prompted them to share the video widely.

Dollar Shave Club’s viral launch video.
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Referral Marketing

Unlike virality which taps an all-around growth, referral marketing relies on the networks of existing customers to target and acquire new leads. People are naturally inclined to recommend products or services to others with which they had a positive experience.

In exchange for sharing the offering with their social networks or completing the desired action customers are awarded with special referral incentives. These incentives often include discounts, freebies, or cashback.

Dropbox, a cloud storage service, acquired millions of users through its referral program by offering storage space as an incentive.

Dropbox refer-a-friend webpage.
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Content Marketing

Content marketing revolves around creating and publishing valuable and consistent content around a product nearing its launch date. The strategy is meant to generate awareness about a brand in the general public and engage high-value clients that align with the cause.

Marketers usually produce high-quality content that addresses the needs, interests, and questions of their target audience. By providing valuable information and solutions, they establish themselves as experts in their industry, inspiring prospects to come aboard.

The outdoor clothing company Patagonia publishes articles and videos about environmental conservation and outdoor adventure to attract environmentally-conscious consumers.

Patagonia public awareness post.
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Social Media Marketing

As the name suggests, social media marketing leverages various social media platforms to build a brand's online presence, engage with its audience, and promote products or services.

The strategy focuses on creating and sharing content, interacting with followers, and running targeted advertising campaigns for maximum outreach. Facebook, Instagram, Linked In, and X, are the most widely used social media channels to generate buzz and leave room for user-generated content.

Coca-Cola introduced the “Share a Coke” campaign to encourage people to find bottles of Coke with their names on them and share photos of their personalized bottles on social media resulting in viral growth.

Coca-Cola “Share a Coke” campaign feature ad.
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What Makes Word of Mouth So Important?

One happy customer can create a ripple effect of new, warm leads that join in with the same level of trust and anticipation. Around 83% of Americans are likelier to purchase a product or service if it follows through word-of-mouth.

Word of mouth usually comes in from the nearest and dearest, whose recommendations you’d believe wholeheartedly. Seeing someone you know raving about a new brand, will probably entice you to follow the lead. Let’s take a closer look at why word-of-mouth referrals are a top priority for any business.

Cost-Effective Marketing: While advertising and promotions often require significant budgets, word-of-mouth typically relies on existing customers or advocates sharing their positive experiences voluntarily.

Amplification: When someone shares their positive experience with your product or service, it can lead to a chain reaction. Their friends might try it too and pass it onto their networks, expanding your user base without additional costs.

Emotional Connection: People are more likely to remember and connect with stories and experiences shared by others. Positive emotional connections to your brand help foster customer loyalty.

Feedback Loop: When customers share their experiences, they may also offer suggestions for improvement creating a direct feedback loop to enhance customer experience.

5 Word-of-Mouth Referral Marketing Strategies

Good word-of-mouth can build a strong reputation for a business over time. Besides forwarding a steady stream of referrals on board, positive word-of-mouth also helps during tough times because loyal customers may stick around and keep talking about the business.

Apart from the typical word-of-mouth hype, marketers now have various referral lead-generation channels at their disposal like, customer referral programs, affiliate programs, and employee/partner programs.

Nevertheless, it’s best to instate an overall WOMM strategy to leverage organic sharing. In case you’re starting out firsthand, here are some effective referral marketing strategies to get you going.

Associate Triggers to Popularize Your Brand

Given the outbreak of startups and their never-ending product lineup, your offerings may get lost in the noise unless you keep investing in ongoing advertisements.

Experts suggest making your brand or its offering hyped enough so it becomes synonymous with a hip word or trigger. The triggers work like little cues that keep your audience on the same page with your businesses, preventing them from falling out of the loop.

When customers encounter something noteworthy or different, they are more likely to talk about it with others. For example, the "Stories" feature on Snapchat was a unique trigger that encouraged users to share content more frequently. Here’s a trigger design by Approachable Design.

Approachable Design’s homepage.
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Devise a Referral Strategy that Appeal to Your Audience

In the consumer-driven market, every product, service, and even advertising strategy must appeal to the audience first. Remember your audience takes prominence, if you don’t subject to their needs and preferences your competition will.

In terms of marketing, identify what digital marketing strategies would appeal best to your audience. Perhaps, an interactive contest, a behind-the-scenes video with influencers and brand leaders, or a pie in the cake in terms of referral rewards? Offering your prospects what they want is an effective way to enforce your social currency and generate word-of-mouth.

Try to develop emotional connections with your customers by aligning your brand with values that matter to them. When people feel a strong emotional connection with your brand, they are more likely to share their experiences.

Enterprises like TOMS, which donates a pair of shoes to a child in need for every pair purchased, evoke strong emotions and often get shared because of their social impact.

TOMS save the children's community webpage.
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Value Your Audience’s Time and Effort

Incentives are just a one-time magic. it may allure customers the first time, but wouldn't help retain any if your offerings don't live up to the expectations.

If your product or service is unparalleled to any other in the niche or simply value to money, your customers will most probably stick through till the end and share it with others.

Providing value, either in the form of a good product or excellent customer service, is the best way to retain clients. Stand firm on customer's expectations and you may earn your brand a positive review, foster loyalty in new customers, and extend your word of mouth.

Leverage Consumer Emotions

if there's one better way of ensuring customer loyalty than special perks, its emotional attachments. Customers who feel strongly about your brand will stay loyal through hard times, even if a more logical counterpart comes along.  

If you can create experiences that taps into audience's emotional psychology, be it something happy, sad, or thought-provoking, they'll be instinctively impelled to share it with others, even if they don't relate to the product firsthand. Here's an example of how a Thai Insurance commercial became a global sensation.

Thai Life Insurance commercial ad.
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Surprise your customers with unexpected acts of kindness and generosity. A little extra effort barely goes unnoticed, helping create positive emotions and memorable experiences. Stay connected and relatable with your audience, so that these positive feelings convert into powerful stories to be shared with customers later on.

Tell Your Brand Story

Often times a story can project more about your brand than you ever could. A perfectly curated brand story highlights the value you offer in a way that taps into their emotions. If customers  learn about your brand on a deeper level, behind the projected facade, they will boast it as their own to their contacts.

Sharing the origins of your brand, the people behind it, and its values humanizes your business. People relate to stories about real individuals and the challenges they've overcome. Humanized brands are seen as more trustworthy and relatable, making customers more inclined to share their experiences.

Mouthfoods is an excellent example of an eatery brand telling the tale of indie creators from artisenal chocolates to handmade pastas.

MouthFoods instagram post.
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Closing Note

Unlike the standard perception around word-of-mouth marketing, the strategy is shaping new businesses, turning startups into full-fledged companies. With the introduction of technology, marketers can now leverage human connections from across the world, transforming an upcoming launch into an overnight sensation.

Though with the changing atmosphere around marketing, the only way to be effective through word-of-mouth is to try out various strategies at once. Tell an amazing story, encou user generated content around it, and set up a referral program to generate fresh leads. Feels mind-boggling? Sign up with Prefinery to oversee your next campaign soar like a breeze.


Is word-of-mouth marketing effective for all types of businesses?

Word-of-mouth marketing can be effective for a wide range of businesses, but its impact may vary depending on the industry and the nature of the product or service. The strategy fares greatly for businesses that offer exceptional customer experiences, unique products, or those that constantly address specific customer needs and passions.

How can I encourage word-of-mouth marketing for my business?

To encourage word-of-mouth marketing, you can:

  • Provide exceptional products or services that people genuinely love.
  • Offer referral programs with incentives for customers who refer others.
  • Create shareable content that resonates with your target audience.
  • Engage with customers on social media and respond to their feedback.
  • Foster a sense of community around your brand.

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