Word of Mouth Referral Programs

Looking to scale your business? Word of mouth marketing is your secret weapon.

If you want to get the most out of your business you need to master Word of Mouth Marketing (WOMM). It’s the most scalable way to sustainably grow your business.


Kate Caldwell

· 5 min read
Looking to scale your business? Word of mouth marketing is your secret weapon.

The original "viral marketing," Word of Mouth relies on satisfied customers spreading brand awareness by talking about your business to friends and colleagues. For a potential customer, an endorsement from someone they trust carries much more weight than a traditional advertisement. When a friend or colleague goes out of their way to praise a company, people listen.

By finding ways to reliably encourage your customers to recommend your business to their friends, family, and colleagues you can grow your customer base without breaking the bank.

Why is Word of Mouth Marketing so Powerful?

Word of Mouth’s power to affect your business comes from two advantages.

  • It’s "free" – One of the biggest challenges for businesses is to acquire customers profitably. Spending too much to acquire customers has resulted in many business failures. By leveraging WOMM advertising you can get new customers without having to pay for them. It’s the most cost-effective way to gain new customers.
  • It scales – As one person "passes" awareness of your company to another, your business continues to gain new customers for free. The multiplier effect means that company growth is happening organically.

Word of mouth is especially valuable for businesses that can collect recurring revenue from each customer.

What Influences WOMM?

When a person decides to praise a company to someone else it’s usually because that company has stood out for some reason.

It starts with an exceptional Customer Experience

In their book Lean Analytics, Alistair Croll and Benjamin Yoskovitz define word of mouth advertising as "The conversation generated by satisfied users." So the first step in a successful word of mouth campaign is customer satisfaction. A great customer experience, going above and beyond what is expected to delight customers, has been a proven strategy for companies like Apple, Zappos, and Amazon.

Marketing researchers have found that when people talk about a business, its usually in one-on-one conversations or between a small group rather than a person blasting out a message to all their social media followers. True word of mouth spread comes from small interactions between colleagues and friends.

While word of mouth can be a natural by-product of a great company, there are ways you can tip the scales and make it more likely your customers will talk about you.

Getting Your Customers to Talk about You

The key to getting word of mouth to work for you is to get customers to talk to you, easier said than done! Think about what companies you hear about from friends and colleagues and figure out why people feel compelled to talk about it, then try and emulate it.

Delight Customers

It’s not just the way you handle customer complaints, it’s everything about the customer experience, from your marketing language to your 404 pages.

  • People love anything free, so you might experiment with including free-gifts to select customers.
  • Anything unexpected has a good chance to stand out and be remembered. Unsolicited perks could get people talking.
  • Seek out the big fish. A way to "hack" your word of mouth marketing efforts is to identify which of your customers are influencers, meaning they have the ability to have others listen to them. You could also target influencers that aren’t customers and do whatever it takes to get them to promote you.

Social Media and WOMM

Because so much of our lives take place online, particularly on social media, social media platforms play an important role in augmenting word of mouth initiatives.

Leverage Influencers

Use social media research tools like BuzzSumo, Social Mention, and Spark Toro to find influencers that potential customers follow and do whatever you can to make them a customer and promote your business.

What about “Viral” Marketing?

Word of mouth marketing and viral marketing have a lot in common. You can think of viral marketing as WOM + Social Networks, where the online network effects come into play.

Amplifies Your Other Marketing

For many, getting to a point where every customer is bringing on another isn’t realistic. But that doesn’t mean you should turn your back on referrals. You can think of word of mouth as a force multiplier that augments your other marketing campaigns.

If someone sees an ad for your site, it may or may not register. But if they see an ad for your company after having a conversation about you with someone they trust, the chances of them taking note go up significantly.

Tracking and Measuring WOMM

Because it often takes place off-line, in the day-to-day conversations people have, it can be difficult to measure and track word of mouth marketing.

Monitor blogs and social media to see what people are saying about your business. Find anywhere users could talk about you and listen for what is and isn’t working. Your social media channels and review sites are a good place to start. Social listening tools like Sprout Social, Hootsuite, or Keyhole can help you listen in on the conversation.

Net Promoter Score

One of the most powerful metrics to evaluate your business is Net Promoter Score. The Harvard Business Review’s Frederick F. Reichheld explains Net Promoter Score measures “customers’ willingness to recommend a product or service to someone else...the percentage of customers who were enthusiastic enough to refer a friend or colleague."

To determine your NPS, ask customers to answer the question "How likely is it that you would recommend [YOUR COMPANY or PRODUCT] to a friend or colleague?" An email survey is likely the easiest way to do this. Separate responders into promoters (gave you a nine or ten) and detractors (responded zero – six) and subtract the percentage of detractors from promoters.

"Tracking net promoters—the percentage of customers who are promoters of a brand or company minus the percentage who are detractors—offers organizations a powerful way to measure and manage customer loyalty," says Reichheld. "Firms with the highest net-promoter scores consistently garner the lion’s share of industry growth."

The “Viral Coefficient”

Ideally, the metric you are trying to capture is the "Viral Coefficient," which marketing researcher David Skok defines as "the number of new customers that each existing customer is able to successfully convert."

KC Karnes on Clevel Tap explains how to calculate your viral coefficient. Viral coefficient = C x R x CR / 100, where C = number of customers, R = average number of referrals per customer and CR = average conversion rate for referrals.

The holy grail of word of mouth marketing is to get a viral coefficient above one, which means that every new user is bringing in at least one more user. This self-sustaining process means your business grows on its own! Of course, for most businesses, this is a dream, but one that you can hope for.

A word of mouth campaign that consistently and reliably brings in new customers can be a game-changer to growing your business sustainably. If you are serious about sustainably growing your business word of mouth marketing is your secret weapon. Use it to super-charge your company's growth by creating a self-sustaining referral machine.