Here’s How Word-of-Mouth Marketing Works
Pokémon cards took off in the late 1990s, not because of TV commercials or print ads, but because of word of mouth.
Wizards of the Coast, the trading-card company that licensed the rights to Pokémon, visited comic book stores and specialty retailers across the country to give away samples, host demos and manage game tournaments. It got people talking.
“While they are more time-intensive and they are more expensive, we have found that those programs work about 100 percent better than traditional marketing,” said Charlotte Stuyvenberg, the company’s VP of marketing at the time, in Emmanuel Rosen’s book, The Anatomy of Buzz: How to Create Word-of-Mouth Marketing.
What Is Word-of-Mouth Marketing?
In his book Word of Mouth Marketing: How Smart Companies Get People Talking, marketer Andy Sernovitz defines word-of-mouth marketing like this: It’s when brands give people reasons to talk about their stuff, and make it easier for those conversations to take place.
Word-of-mouth marketing relies on people to spread the word about a product or service, enthusiastically sharing it with their families, friends, colleagues and social media connections.
Brands can’t force people to talk about stuff, of course. But they can provide buzzworthy experiences. That’s why word-of-mouth marketing campaigns often involve brands giving people “an experience you want them to share or talk about,” Virginia Miracle, chief customer officer at Upland Software, told Built In.
Giving away free product samples, sending company swag to unexpecting customers and inviting bloggers to brand-sponsored events are common practices for word-of-mouth marketers. Activities like these help accelerate word of mouth.
Why Is Word-of-Mouth Marketing Important?
Word of mouth is the primary factor behind 20 to 50 percent of all purchasing decisions, according to a 2010 article published by McKinsey. So if brands want to influence what people buy, they need to make word-of-mouth considerations part of their marketing strategy.
In The Anatomy of Buzz, Rosen proposes three reasons for the increased importance of word of mouth.
The first is noise. There’s lots of it. And to avoid being overwhelmed by it, people seek out the opinions and impressions of others in their networks. This allows them to properly decide what’s worth paying attention to. It acts as a filter, and saves them from having to do research or experience choice paralysis.
The second reason is skepticism. People tend to be suspicious of profit-seeking companies, and don’t wholly believe what brands have to say about themselves. So they rely on the recommendations of people they know whose tastes they trust.
The third reason: Consumers are connected to each other now more than ever. Of course, word of mouth existed long before the internet emerged. But with so many people connected through social media platforms and online communities, buzz travels at an unprecedented pace and scale.
Because the world we live in is full of noise, skepticism and connection, word-of-mouth marketing is necessary for brands to find their audiences.
“In order to compete, companies must understand that they are selling not to individual customers but rather to networks of customers,” Rosen wrote. And that’s especially true for tech: “In these markets the natural spread of word of mouth must be accelerated. Having a good product is not enough.”
How Effective Is Word-of-Mouth Marketing?
Word-of-mouth marketing is more effective than traditional marketing, according to Jonah Berger, a marketing professor at the Wharton School at the University of Pennsylvania. In his book Contagious: Why Things Catch On, he gives two reasons why.
The first reason: Word of mouth is more persuasive than traditional advertising. People trust their buddies more than billboards. They are more easily swayed by user-generated reviews than they are commercials. They trust the opinions of barbers, classmates and cousins more than the paid endorsements of celebrities.
The second reason word-of-mouth marketing is more effective than traditional marketing is that it’s more targeted. Super Bowl commercials may reach tens of millions of viewers, but the products or services they promote may not be relevant to the majority of people watching. When people share through word of mouth, though, they’re doing so because they think the other person might actually be interested. Parents only recommend car seats to other parents, not to everyone they know.
How Does Word of Mouth Spread?
Common thinking is that word of mouth travels like water, flowing down from brands’ marketing departments to the media to the cultural tastemakers to the general public.
“But real networks are not linear or predictable,” wrote Rosen in The Anatomy of Buzz. “If I were forced to use a water metaphor, I would say that buzz is more like underground water. It may trickle any which way: down, sideways, or even up.”
For Rosen, there are two things brands can do to successfully generate word of mouth. One is to have a buzzworthy idea. The product or service they’re selling needs to be talkable, interesting, delightful, outrageous. People need to actually love it, or they won’t be motivated to talk about it. In short, it needs to be contagious.
The second key is for brands to do things that accelerate natural contagion, to make the word spread faster.
How can brands do that? Word of mouth is such a fickle, elusive thing. It’s not like paid search and social ads, where you can just turn the spigot up or down. To borrow Rosen’s metaphor from earlier, we’re dealing with multi-directionally traveling water here.
In Word of Mouth Marketing, Andy Sernovitz outlines a five-step plan of action brands can use to stimulate the spread of word of mouth.
Locate the Talkers
Find people — such as customers, fans, bloggers and influencers — who will talk about you.
Give Them Something to Talk About
Give these people a reason to talk about you. Give them a special offer, send them a new product, let them test out a yet-to-be-released feature. Anything to get a conversation going.
Leverage technology to help the message spread. This includes referral forms, blogs, forums and coupons.
Join the conversation. Reply to people’s social media comments and engage people in discussions, wherever they take place.
Monitor what people are saying about you. Set up alerts, read blogs relevant to your category and listen to social media.
Word-of-Mouth Marketing Examples
Pabst Blue Ribbon
By the early 2000s, sales for the American beer brand Pabst Blue Ribbon had been in decline for more than two decades. The company that owned PBR wanted to find a way to improve sales, but it didn’t want to overspend on traditional advertising, so it hired Fizz, a marketing firm, to turn things around.
In Fizz: Harness the Power of Word of Mouth Marketing to Drive Brand Growth, author Ted Wright describes how he and PBR’s brand manager discovered something unique in the consumer data. Despite overall declines, they noticed that sales had been increasing in a select handful of cities, such as Portland and Pittsburgh. So they traveled to interview PBR drinkers from these cities to see what was going on.
Turns out, many of the PBR drinkers they encountered were what they called hipsters — skinny-jean-wearing, fixed-gear-bike-riding, tattooed creative types. They liked PBR because it was cheap, unpretentious and authentic.
So Fizz and PBR decided to forgo traditional advertising efforts — nothing says inauthentic like a glitzy TV commercial — and instead attended events where hipsters tended to cluster. They went to gallery openings, messenger bike races and skating parties. In these spaces, unassuming PBR reps chatted with folks about their passions and art initiatives, occasionally handing out branded swag and a six pack.
“The program worked because we gave influential people a great story to share,” Wright wrote, “the story of an honest, unpretentious beer brand that genuinely supports individualism and creativity.”
By 2006, PRB had a combined annual growth of 55 percent.
Today, PBR continues to support artists across the United States by commissioning murals and opening galleries.
In 2006, Fiskars, the company that makes gardening tools and crafting supplies, was losing market share within the craft community. To change that, it tapped creative agency Brains on Fire to build an ambassador program.
Brains on Fire scoured internet forums and blogs, interviewing hundreds of people, before eventually recruiting four scrapbooking influencers to serve as Fiskars brand ambassadors. They were dubbed the Fiskateers.
The Fiskateers were tasked with running a scrapbooking blog, where they would document their crafting experiences. Sometimes they’d connect with other scrapbookers at offline events too, such as trade shows and crafting classes held at local retail stores.
And they were empowered to invite other passionate scrapbookers into the Fiskateer community, where they’d share tips and tricks and discuss their projects. Soon, the program ballooned into thousands of Fiskateers.
Fiskars’ retail sales and online brand mentions increased. It became a well-respected brand within the craft community. And the company leveraged the Fiskateers as a way to gather product insights, which they were able to fold back into their product development and marketing strategies.
Several times a year, Jeep invites Jeep owners to participate in off-roading expeditions called Jeep Jamborees. These events are part of a tradition that dates back to 1953, in which participants gather in their decked-out SUVs and voyage across rugged terrain for a few days.
In The Anatomy of Buzz, Rosen describes what makes the Jamborees so effective for word of mouth: “For two days participants eat, drink, sleep, dream, and think Jeep. When they get back to the office on Monday, Jeep is pretty much the only thing they can talk about.”
As Ed Brust, a car executive, told Brandweek: “A Jamboree makes for good cocktail talk.”
Hardly anyone would bother telling a friend or family member about a cool Jeep commercial or billboard they saw. But a weekend off-roading through the Ozarks in your 4x4 with fellow Jeep enthusiasts? You’re going to at least post about it on Instagram, or mention it to a coworker in the break room.
Potbelly Sandwich Shop, a restaurant chain founded in Chicago, has a strong presence in the Midwest. But because other parts of the country are less familiar with the brand, the company uses word-of-mouth marketing to generate awareness when it expands into new regions.
When Potbelly opened its first stores in Austin, Texas, the company got hold of a mailing list of people who had moved to Austin from Chicago. Potbelly sent each of them a hand-signed letter in the mail, inviting them to introduce their friends to a “taste of home.” Each letter included tickets for 10 free sandwiches.
By doing this, Sernovitz wrote in Word of Mouth Marketing, “You turn a customer into a talker — a talker who you’ve helped look cool for buying lunch for the whole crew.” He continued, “Those 10 tickets are a multiplier, something that turns a single word-of-mouth recommendation into many recommendations.”
Superhuman is a tech startup whose email app is designed to give users a fast inbox experience. The product is aimed at so-called email power users — people who receive and respond to hundreds of emails each day — and it costs $30 a month to use.
Superhuman has acquired thousands of paying customers through word of mouth, not through traditional advertising or an enterprise sales team.
How? For starters, it’s an invite-only app, and many of its first users were decision-makers and high-powered executives. Superhuman also requires a pre-qualification process to join, and each new user goes through a personal onboarding session with someone from the company.
“The perceived status of being accepted as an early user of Superhuman has helped Superhuman’s acquisition and conversion,” wrote Kevin Kwok, a former venture capital investor. “Users don’t share Superhuman because they need others to use it for it to work; they share it because they want to.”
Superhuman also accelerated the buzz through simple-but-effective design features built into the product itself: At the bottom of every email, there’s a link that says, “sent via Superhuman,” which takes you to a landing page when you click on it. And by using a shortcut keystroke, users can quickly generate a referral email with a link to send their friends.
“It was all word of mouth. It was all referral,” Rahul Vohra, CEO of Superhuman, said of his company’s quick early growth in an interview with Mixergy. “The untold truth about most consumerish companies is that growth happens through word of mouth.”
What About Viral Marketing, Referral Marketing and Influencer Marketing?
Word of mouth marketing is often confused with other types of marketing: viral marketing, referral marketing and influencer marketing. But there are important differences between the concepts:
Viral marketing involves creating content or stunts that you hope resonates with culture. You can’t plan for virality; it’s like catching lightning in a bottle — “an occasional outcome that happens if you hit the lottery,” Virginia Miracle said.
In contrast, “you can actually make a plan for word-of-mouth marketing,” she added. “You can plan that you’re going to bring an experience to 500 important users of your platform, and you’re going to invite them to share, and you’re thinking about their motivations.”
Referral marketing is often mistaken for word-of-mouth marketing. The key difference is that referral marketing hinges on an incentivization mechanism — the business offers you a discount if you refer a friend and they sign up or buy. Word-of-mouth marketing, though, focuses on the intrinsic motivation of consumers to spread the word.
“Done correctly, good word-of-mouth marketing means you will never have to ask for referrals. They will simply be given to you,” Wright wrote in Fizz. “Remember, influencers don’t need to be reminded to influence ... it’s what they do.”
Word-of-mouth marketing is not the same as influencer marketing either. At least, not the popular conception of influencer marketing, in which internet-famous thought leaders are paid to endorse products they might not even use personally.
Typically, word-of-mouth marketing uses customers of the brand to drive authentic buzz.
“We looked for people who were very passionate, and then we would ... shine a light on them and say, ‘Look at this person and how awesome they are,’ because they bring the authenticity,” said Spike Jones, general manager, strategic services at Khoros, recounting his experience as a word-of-mouth marketer.
Word-of-mouth marketing is effective because it involves creating influence around regular people who are passionate, rather than hiring famous influencers.
“It’s not the Kim Kardashians of the world,” Jones said. “It is the Phils of the world.”