3 Reasons Word of Mouth is the Best Way to Grow Your Business

The marketing department is under new management. The only problem? Most people don’t recognize the new boss.

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

Some of the most successful companies have realized the most potent way to promote their brands doesn’t come with a big price tag; they rely instead on creating customer chatter. The amazing thing about word of mouth is that it influences 59-91% of all purchases, yet NOBODY has a strategy for it.

You have a marketing strategy. A digital strategy. A social media strategy. A PR strategy. But you don’t have a word of mouth strategy. We just take it for granted that our customers will talk about us. But will they? And what will they see?

We need to start doing word of mouth on purpose, instead of on accident.

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.

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.
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Imagine the potential if you were able to do the same thing for hundreds or thousands of customers on a daily basis. You can.

Every business should aim to create what my co-author, Daniel Lemin, and I call “talk triggers”. Talk triggers are strategic, operational differentiators that compel word of mouth. Your customers cannot help but tell someone about that special, different thing that you do.

A talk trigger could be a direct text line to your CEO, funny posters in your restrooms, or treats you leave on hotel pillows. It can be just about anything, as long as it’s consistently deployed, relevant to your brand positioning, and creates conversation reliably.

At The Cheesecake Factory, for example, the main talk trigger is the restaurant’s extensive menu. It’s an incredible 5,940 words long. We surveyed hundreds of customers and found that 38% of them have mentioned the giant menu to someone else, in the past 30 days. That’s a very effective talk trigger for the restaurant, and why you almost NEVER see an ad for the brand.

Care to guess how much of this multibillion-dollar company’s revenue goes toward advertising? A scant 0.2 percent. The Cheesecake Factory relies on word of mouth because research by David Godes and Dina Mayzlin found that a single conversation by each new customer generates about $200 worth of sales for a restaurant chain.

Here are three reasons word of mouth offers such incredible power:

1. Word of Mouth is Intensely 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. Yet that’s precisely what your customers can do through word of mouth. They know much more about their friends than you do; let them tell your story in a way that will connect to those friends in ways you cannot.

Even social media fails to achieve that same level of personal touch—it accounts for only half of all word of mouth conversations. Yet, direct spending on social media advertising in the U.S. is expected 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.

2. Word of Mouth Saves Time

We’ve all been there on a Saturday night: you and your friends want to go out to dinner, but no one wants to take the time to comb through Yelp and research every available option. Instead, your friends shout out their favorite spots or mention a few new locales they’ve heard about from co-workers. Within no time, your group has picked a destination (and you’ve learned about a few new places in the process).

Nearly everyone would choose this sort of organic recommendation.

3. Word of Mouth Capitalizes on Trust

Consumers are more than willing to take a friend’s word for it. While research from Nielsen and Edelman shows that barely half of all consumers trust businesses globally, 83 percent of Americans trust recommendations from friends and family. It’s simple, really.

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

We live during a time in which the algorithms of advertising strategy have become infinitely complex. It’s far too easy to get tied up in those algorithms and forget the fundamentals of business growth. You simply have to get the word out. If your customers are eager to do that for you, you should be doing everything you can to help them. So what’s your talk trigger?

 

Lots more on this topic in my new book, written with Daniel Lemin. Go to TalkTriggers.com for free tools and downloads.

Also, we have a comprehensive new study about the power of word of mouth called Chatter Matters: the 2018 Word of Mouth Report. Grab it for free here.

 

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