If you’re like many small business owners, you may think that word-of-mouth marketing is the best kind of promotion there is.
For many businesses there’s definitely an argument for that being the case. After all, it’s free, and it comes from people who already know and like your product or service.
What could be better than that?
But do you ever feel your business could earn more customers and income if you introduce others ways of marketing?
Or maybe you’re completely satisfied and happy with word-of-mouth being your main way to get new customers. Do you simply want to know how to increase your chances of getting more word-of-mouth referrals?
In today’s business world, it’s more important than ever to get your name out there and attract new customers.
But with so many marketing channels to choose from, it can be tough to know where to start.
If you’re on a tight budget, you may be wondering if word-of-mouth marketing is enough to get the job done.
The answer is yes… and no.
The power of word-of-mouth marketing
There’s no doubt that word-of-mouth marketing is powerful.
After all, Nielsen said in a 2021 study that 88% of consumers say they trust recommendations from people they know more than any other type of marketing.
And when customers are happy with your product or service, they’re more likely to tell their people they know about it—which can help you attract even more business.
That being said, word-of-mouth marketing only works if you have a steady stream of satisfied customers. And even then, in real-life, people don’t tend to have many opportunities to shout about you. However, there are probably more opportunities online, and often more people can see the recommendation.
Here’s a closer look at how word-of-mouth marketing can help your business—and when you may need to supplement it with other marketing efforts.
Many seem to be relying on word-of-mouth
When I go networking around where I’m based in Leamington Spa, in the UK, I’m surprised by how many business owners say they get their customers from word-of-mouth. Most don’t do any other form of marketing.
It happens a lot.
So word-of-mouth is obviously a good thing.
But relying on word-of-mouth can be risky.
Is word-of-mouth enough on its own to get new customers? Let’s take a look at the pros and cons of relying on word-of-mouth marketing to grow your business.
The Pros of Word-of-Mouth Marketing
There are several reasons why word-of-mouth is such a powerful marketing tool.
First, it’s free. You don’t have to spend any money on advertising or promotion if you’re relying on word-of-mouth to get new customers.
Second, it’s credible. When someone hears about your product or service from a friend, business associate or family member, they’re more likely to believe that it’s a good product or service because they trust the person who told them about it.
Third, it’s viral. If you can get a few people talking about your product or service, they’ll tell their friends, who’ll tell their friends, and so on and so forth.
Before you know it, you’ll have hundreds or even thousands of people talking about your business.
The Cons of Word-of-Mouth Marketing
Of course, there are also some downsides to relying on word-of-mouth marketing.
First, it’s not always easy to control. You can’t necessarily predict when or how someone is going to talk about your business.
Second, it can be slow. It might take months or even years for word-of-mouth to really start working in your favour.
And third, it might not reach everyone. There are always going to be people who don’t hear about your business through word-of-mouth—which is why it can be helpful to getting more customers, to supplement word-of-mouth with other marketing efforts.
What are the dangers of relying on word-of-mouth advertising?
Often WoM marketing is seen as the holy grail of marketing because it’s free and it feels more organic than other forms of marketing.
But is it really all it’s cracked up to be?
There are two main dangers of relying on word-of-mouth advertising
- You’re at the mercy of your customers’ schedules
- You’re limited to your local area
Let’s take a closer look at each of these dangers.
1. You’re at the mercy of your customers’ schedules
If you’re relying on word-of-mouth marketing, you’re essentially relying on your customers to do your marketing for you.
And while that might work fine in the short term, it’s not a sustainable long-term strategy.
Because people’s schedules and ability to recommend you will change, and when they do, your word-of-mouth marketing efforts will suffer.
For example, let’s say you own a small bookshop in a town with a population of 10,000 people.
- You rely heavily on word-of-mouth marketing because you don’t have the budget/confidence/knowledge to advertise in places like Google/Facebook Ads, or more traditional print, radio and TV ads.
- Things are going great—you have a steady stream of customers coming in—until one of your best customers moves away to another town. Now, that customer was responsible for bringing in about 10% of your business, which is a significant loss. And unless you can quickly replace them with another customer who is just as enthusiastic about your store, your business is going to suffer.
It’s a simple example, but there are some realistic variations on this example. Have a think about how you could be impacted if your source of referrals dries up.
2. You’re limited to your local area
Another problem with relying on word-of-mouth marketing is that you’re often limited to your local area.
Yes that are many examples where you’re networking across the UK, and can get referrals from across the country, but often WoM is focused locally.
Unless you have customers who are willing to travel long distances to visit your shop or use your services, you’re not going to reach a wider audience.
And even if you do have customers who are willing to travel, they can only spread the word so far before they run out of people to talk to who are interested in what you have to offer.
So relying on word-of-mouth advertising is not a sustainable long-term strategy for businesses because it’s difficult to scale and reach new audiences.
If you want your business to grow, you need to have a solid marketing plan in place to supplement your WoM marketing.
Is a recession bad for Word-of-mouth?
There are a couple of ways to look at WoM in a recession.
On the one hand, you could say that a recession is actually good for WoM because people are more likely to trust recommendations from people they know from other forms of marketing.
After all, we’re all looking for ways to save money, and if our loved ones or trusted colleagues tell us about a great deal on a product or service, we’re more likely to take their word for it.
On the other hand, you could also say that a recession is bad for WoM marketing because people are less likely to have extra money to spend on non-essentials.
If a recession hits, buyers will start to care more about cost and less about quality and service.
So even if people we know do recommend a great new restaurant or shop to us, or recommended a bit of software, or another type of service company, we, or our company, may not have the disposable income to take their advice.
Decent businesses are closing
The sad truth is that even if you have a great product and give good service, you can still go out of business.
I’ve seen this happen many times recently.
The number of businesses that I’ve seen fold since the start of COVID a few years ago is very sad. This has continued into the global downturn. Businesses that have poured their heart and sole into getting amazing 5 star reviews, and yet somehow they’re failing.
I’m sure you’ve seen it too.
There are fewer buyers when the economy is not doing well.
People spend less money and put off buying things.
Yes, some WoM businesses will still be thriving, but many say the same thing: It would be helpful to have a marketing foundation to rely on now that referral leads have decreased.
And recessions are also a good opportunity to work hard on the marketing that’s more likely to get a return.
Word-of-mouth is an incredibly powerful marketing tool—but it’s not the only tool you should be using.
You should also supplement word-of-mouth with other marketing efforts like content marketing, social media marketing, and email marketing.
By using a combination of different marketing strategies, you’ll be able to reach more people and ultimately grow your business more effectively than if you were relying on word-of-mouth alone.
But of course, there are lots of small businesses who are focused on word-of-mouth and are very happy with it.
I talk to lots of business owners who are content with W-o-M, if that’s you, keep it going. But make sure you’re investing in your WoM so that it continues through the hard times like recessions, or other dips in your industry.
There are also lots of ways you can enhance what you’re doing with word-of-mouth to get even more referrals.
If you’re looking to grow sales, then getting even more clever with your wider marketing and reaching your audience in new places should be seriously considered.