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  • Word-Of-Mouth Marketing: How To Grow Your Business Through Referrals
 
Tito Philips, Jnr.
Monday, 11 February 2013 / Published in Marketing, Thought Bank

Word-Of-Mouth Marketing: How To Grow Your Business Through Referrals

megaphoneIn my work with entrepreneurs, especially small business owners in my country Nigeria, one re-occurring theme is their approach towards marketing. Each time I’m in a consulting or strategy session with a client and I ask the question; “how do you get clients?”

I hear almost the same answer; “through referrals”. So out of curiosity, I ask a second question; “you mean from satisfied customers?” And then I get a surprising answer; “not really, from my family and friends who know about my business.”

Every time I get these responses, I no longer wonder why they are complaining about low or no sales. I no longer wonder why their business is not growing as fast as they wish it to.

You cannot expect to grow your business, especially in terms of revenue/sales if you simply expect your family and friends to do the marketing for you.  As a matter of fact, you are not yet in business until you make a sale from a total stranger!

Two Kinds Of Word-Of-Mouth Marketing

  • Passive Referrals:

This is a passive mindset towards marketing, popularly known as “man-know-man” marketing. It basically means a form of marketing based on networking or existing relationships or one’s circle of friends or connections. The underlying philosophy is this; sales are determined by the caliber of people in your network or the caliber of people you know.

Every time you depend on your connection, network or existing relationship with someone you know to make the sale, then you are not yet fully in business. The people within your existing network and the people they know are too small a target market to sustain your business. Are your family and friends and their friends of friends the only potential customers out there?

  • Active Referrals:

This kind of Word-Of-Mouth Marketing revolves around one idea; testimonials. What are testimonials? Testimonials are personal recommendations or favourable comments from customers who have bought your products/services and were satisfied enough to spread the word to their network. This is the essence of word-of-mouth marketing; testimonials.

To grow your business, you need a sustainable marketing strategy that will allow you to make sales from outside your network. Why? Because until you do, the real power of referral marketing will never be at work for you!

Word-Of-Mouth Marketing Defined

As you must have been told, this is perhaps the best form of marketing, right? When without much personal efforts on your own part, the news about your business, products or services just seem to spread and eventually leads to more sales, right?

Not totally!

There is a big difference between referrals coming from customers than those coming from your network. Sales made through referrals from satisfied customers carry more credibility because it comes from a third party; people who know, like and trust your brand. While sales made through your existing relationships carry less credibility because it comes from a second party; people who know, like and trust you.

The level of interest a customer has in your business comes from their personal experience with your products/services and that carries more weight in the eyes of a potential buyer than your relational ties. When customers buy from you and enjoy a favourable experience as a result of using your products/services, the value of your brand increases.

To a large extent, they aren’t personally interested in you as much as they are interested in your brand –products/services you offer and their benefits. It is this positive experience that they talk about to their own family and friends or existing networks that compels these people to buy from you too. They are buying with an expectation in mind; to enjoy the same favourable experience as their friend or family member did.

Let me share my experience.

During the profitable days of cyber café business in Nigeria, we were able to grow our business primarily through word-of-mouth marketing. Satisfied customers simply invited their friends to come check us out and they in turn invited their friends. In the end, our customer base grew from 0 – 1700 registered browsers as a result of word-of-mouth marketing.

Out of these people, less than 10% of them did we personally know or had any previous relationship with. They were complete strangers who heard about the cyber café from their network of friends and not our own network of friends.

As a result, the power of third party endorsement was at work. They came with certain expectations based on their friends’ testimonials and those expectations were met because we had systems in place to ensure the same brand experience for every customer.

How To Create Active And NOT Passive Referrals

The right and most effective approach to creating a sustainable word-of-mouth marketing system is through testimonials. Use the following 5 questions below to gather testimonials from your satisfied customers as recommended by small business marketing guru, John Jantsch.

  1. Why did you hire us/buy from us in the first place? (Here you are looking for clues to what helped them decide to buy, what build trust, what resonated in your marketing and sales processes.)

  2. What’s one thing we do that you love the most? (Stick to one thing and help them get as specific as possible)

  3. What’s one thing we do that others don’t? (Again one thing – this may sound a lot like the second question, but what you are really trying to do here is get some industry comparison going – you might get some stories of how others have failed them in the past and there offer some interesting opportunities.)

  4. If you were to refer us what would you say? (This is your chance to have them describe what you do best as though they were telling a friend. This point of view can be very powerful and this answer might actually turn into a testimonial. In many cases that’s precisely what I’ve done with answers to this question.)

  5. Can you tell me about three other companies that you love? (This question does a couple of things. It allows you to better understand what they think best of class looks like and why and it helps you build a list of potential strategic partners. Think about it, your shared client thinks you both rock!)

Your Turn

How has word-of-mouth marketing benefitted your business?

Who are the majority of referrals you have; active or passive?

What particular actions or steps did you take to implement a sustainable word-of-mouth marketing system for your business?

Share your comments below, can’t wait to hear from you!

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14 Comments to “ Word-Of-Mouth Marketing: How To Grow Your Business Through Referrals”

  1. Harry says :Log in to Reply
    February 11, 2013 at 4:14 am

    Tito – I really like your idea of active referrals. While many customers will spread word about your business if they like your product and services helping them do so will only help you. This is where active referrals help. By providing them avenue to spread the word through social media or other channels can only help your business. Thanks for the article.

    1. Tito Philips, Jnr. says :Log in to Reply
      February 11, 2013 at 2:27 pm

      Thanks Harry!

      Yea, you are right about using social media as a customer referral tool. On the subsequent follow up article, I will delve more into this!

  2. Wale David says :Log in to Reply
    February 11, 2013 at 11:46 pm

    hi. Tito. just getting to know your blog… waoooooooohhh learnt quite a lot. thanks.

    1. Tito Philips, Jnr. says :Log in to Reply
      February 12, 2013 at 3:41 pm

      Thanks Wale,
      Welcome to the community!

      1. Wale David says :Log in to Reply
        February 13, 2013 at 1:08 am

        coool!!!!!!!!!!!

  3. Sarah Park says :Log in to Reply
    February 17, 2013 at 4:27 pm

    Thanks for sharing these tips. Word of mouth marketing is also one of the effective ways to promote a business. Though you always have to make a good impression because a bad image is most likely to spread as well.

    1. Tito Philips, Jnr. says :Log in to Reply
      February 17, 2013 at 8:44 pm

      Hi Sarah,

      Thanks for the comment. The effectiveness of word of mouth lies in the testimonials from your customers. Unless your brand is telling a remarkable story through the impact of the products/services you provide, your customers would have no testimonials to spread amongst their family, friends and network.

  4. Margaret says :Log in to Reply
    November 17, 2015 at 5:10 pm

    Thank you Tito for inspiring me.
    I will make effort to inspire others too as I improve my marketing strategy..
    I market on TV, radio and others but mouth to mouth is the best strategy that has made me stay in business for these 15 yrs..especially when they get satisfied. With the service you give to them,
    Am an event service provider dealing with BRIDEs and enjoy when my customers personally bring others to me.

  5. Robin khokhar says :Log in to Reply
    December 23, 2015 at 3:23 pm

    I was not using Word of Mouth concept but now i think i must it.
    Thanks fro the amazing and inspiring post.

  6. smsmarketing seminar says :Log in to Reply
    January 21, 2016 at 3:36 pm

    Now! that we know (How To Grow Your Business Through Referrals) Am doing you a favour by telling you to come to an smsmarketingportal seminar when you add what you learn from this blog with what you will learn from this seminar i promise you, it’s this year you are going to make that kind of money you want infant if you come to our seminar and put what you learn in practice you are going to buy a car this year this seminar is taking place at Alhaji masha Blk 9 Flat 2 surulere for more info call 08177414166

  7. wrestler says :Log in to Reply
    April 2, 2016 at 6:30 pm

    very good article…

    Thanks for posting this Information………

  8. Sanjeet Veen says :Log in to Reply
    September 3, 2016 at 5:26 pm

    Word of mouth advertising ( WOM ) best for business growth. Today, many business doing word-of-mouth marketing tactics to build their customer base. Thank you very much for this amazing blog with nice ideas and thoughts.

  9. Michael Schmidt says :Log in to Reply
    December 30, 2016 at 4:35 pm

    Great article! We just started an SEO company, and already we are getting referrals from new clients…that is the way to go. Thanks again, and keep up the good work!

  10. Linda says :Log in to Reply
    July 22, 2017 at 10:14 am

    Inspiring post.thanks for sharing.

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