Word of mouth marketing – why referrals are important

7 min read
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There’s one sure-fire way to build a buzz around your business - word-of mouth referrals, also known as word of mouth (WOM) marketing.

In fact, you’ve probably heard about the concept of social proof or social currency. Essentially, this is when someone shares their personal experience of an exceptional product or service on social media, through an online review, or in real life.

Word of mouth referrals aren’t paid referrals, although creating an official loyalty programme is certainly smart. Instead, they’re spontaneous and sparked by joy and delight.

For example, I recently joined a gym, and I can’t stop singing its praises. It costs a little more than the gym I used to belong to, but it’s well worth it. The classes are challenging. The staff and instructors are friendly. The bathrooms stock spa-like products. Wipes and sanitiser abound - this is huge for a germ freak like me. It provides the type of experience that I want to share with everyone - in person and online.

And that word of mouth referral is exactly what a small or medium-sized business needs for a marketing strategy people trust. The importance of word of mouth marketing cannot be underestimated.

There are four steps to creating an experience that will have your customers swooning and telling others. Let’s examine each one in detail …

1. Have a killer product

Sorry, there’s no getting around this.

We’ve all heard about “lipstick on a pig” where you dress up a poor product or service with bells and whistles. But that’ll never work, particularly in today’s transparent world where customers will call out any company that dares to overpromise, then underdeliver. The only way to earn raves is to make your product or service rave-worthy.

For example, we know people love their Move Your Frame workouts and their own line of fitness wear. They are an enthusiastic bunch with tens of thousands following them on social media and proudly sharing images striking poses in their Move Your Frame fitness wear.

But can anyone possibly be that devoted to socks? Turns out, the answer is yes. If it’s the right sock. If you think socks are just socks, you’ve probably never bought a pair of Bombas. The brand donates one pair of socks for each pair purchased, and the founder, Randy Goldberg, said that once one million had been donated he’d get a Bombas tattoo - ballparking the 10-year range. But thanks to crazy brand loyalty, the one million mark was hit within two and a half years. And he has the ink to prove it.

2. Create a remarkable delivery experience

Let’s face it. Many products at their core are commodities.

You can get a pretty decent salad or cocktail at a wide variety of outlets. That’s why one of the hottest trends in dining is customer experiences - from dining in igloos to enjoying farm-to-table food at a table that’s literally on the farm.

Yes, the food quality and service matters, but it’s the experience itself that’s making the restaurants buzzy. Those purveyors have figured out a way to deliver meals that might otherwise be similar to other eateries in a way that makes people take notice.

That’s also the theory behind pop-up shops…creating an experience specifically for customers to share with their friends. Dolce & Gabbana’s Soho store in New York, dubbed “the Clubhouse for Millennials,” encouraged customers to try on and share clothing through wild backdrops and flattering lighting.

If you’re an ecommerce business, consider delivering your product via subscription - you’ll establish a steady stream of revenue, and you’ll also get fantastic referrals as your customers share their exciting surprise shipment by telling their friends or creating unboxing videos.

The best part of these services is when you provide something a little “extra.” Think way back to what might have been one of the “original” subscription services - Netflix. When your first DVD arrived, it came with a bonus - a coupon you could give your friends for one month of free rentals. Word of mouth spreads fast, and you felt like you were passing on a great bonus.

Stitch Fix personal styling for men, women, and children that send clothing to your door is coming to the UK in 2019. They offer a subscription service and they are known for adding that special personal touch with a note from your personal stylist who chose that month’s clothes. Even Amazon is getting in on the game with its free sample program, sure to inspire chatter (and orders) when you see what they selected for you.

Those little details are what inspire today’s tweet or tomorrow’s mention at the school gates. Small businesses can do the same with a personal note, a coupon or even a sticker to put on their laptop.

3. Put customers at the centre of your service policy and people

We’ve all tried to make a return where the sales assistant acts as if you must have stolen the item. As they demand your receipt and fanatically check the date, you almost feel annoyed that you shopped there in the first place.

Compare that with generous returns policies, like Amazon’s, which tops the poll for customer service, or at John Lewis. Many of us have heard stories repeated in customer service lore of excellent service from retailers like these. If you can’t go above and beyond like some of the large retailers be sure you adhere to the UK laws for accepting returns and giving refunds.

And most of us who have shopped at John Lewis have one of our own. For me, it was forgetting to return an ill-fitting top for nearly a month and being greeted with a friendly smile and a refund.

The Swedish furniture and homeware retailer Ikea gives customers a whole year to bring back unwanted goods as long as they’re unused and with proof of purchase. I once purchased some storage cases for under the bed only to find out they didn’t fit. Despite having opened the packaging on one of them, Ikea still took them back. You better believe I’ll purchase from them again.

4. Continue to surprise and delight - even after they’re on board

These days, when we purchase many of our necessities online, finding a parcel on our doorstep doesn’t offer the thrill it used to. Oh yeah, paper towels. But companies that are referral-worthy are those that have gone the extra mile to bring back that sense of surprise.

As a Waitrose customer I often get vouchers in the post offering money off my shopping. Rather than trying to lure in new customers, it’s their way of keeping me brand loyal. Or makeup brands like Sephora offer a fun free gift to club members during their birthday month.

And of course, you can create the same sense of awesome customer service without giving away merchandise.

Provide fancy gift wrap free of charge (think Tiffany’s iconic blue box).

Offer to carry a bulky item to your customer’s car. Throw in an extra stamp for your loyalty program. Hand a treat to the customer’s child or fur baby (with their permission) like Starbucks’ famed Puppuccino. These are the little touches that make a customer look on your product fondly - and head out to tell a friend.

The key is to remember that the relationship doesn’t stop when the sale closes. Instead, in order to reap the benefits of word of mouth marketing - to get customers to spread the word about your business - think of that as just the start.

Feel better informed about word of mouth marketing? The QuickBooks blog covers a wide range of business-related topics – it’s all part of our mission to help small businesses grow.

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