Word-of-Mouth Marketing

Word-of-mouth (WOM) marketing is a promotional strategy in which customers share their experiences with a company’s products or services with other people. When those conversations are positive and widespread, they act as highly trusted and cost-effective promotion.

Why WOM Matters

• Consumers trust personal recommendations: a 2021 Nielsen study found 88% of people trust recommendations from people they know more than other advertising.
• WOM can increase sales, brand awareness, and customer loyalty without large advertising budgets.
• Positive WOM often leads to cascading interactions—one good experience can spark many more conversations.

How WOM Marketing Works

WOM ranges from natural, unsolicited conversations to company-facilitated efforts (often called “seeding”). Businesses can encourage conversations by:
* Exceeding customer expectations through product quality and service.
* Making it easy to share experiences (social media, reviews, referral links).
* Engaging directly with customers, especially via social customer service.
* Creating shareable moments—events, surprising touches, or novel product uses.

Digital WOM

Digital WOM uses the internet and social platforms to spread customer experiences:
* Review sites, social networks, blogs, and forums amplify reach and speed.
* User-generated content (UGC), influencer posts, and online reviews heavily influence purchase decisions.
* Businesses should monitor and respond to digital conversations to build trust and address issues.

Common WOM Strategies

• Referral and loyalty programs that reward sharing and repeat business.
• Contests, giveaways, and product sampling to stimulate trial and conversation.
• Encouraging reviews and testimonials from satisfied customers.
• Working with influencers—transparently—to reach new audiences.

Benefits

• High credibility: personal recommendations carry more weight than ads.
• Cost efficiency: earned WOM often requires less direct spend than traditional media.
• Stronger customer bonds: direct interaction and responsiveness build loyalty.
• Viral potential: exceptional experiences can spread organically.

Risks and Ethical Considerations

Fabricated or undisclosed promotions can erode trust and damage reputation. Best practices include:
* Full disclosure of paid relationships or incentives (aligns with endorsement guidelines).
* Honest communication—represent who you are and state genuine opinions.
* Measuring impact without manipulating or deceiving audiences.

Andy Sernovitz summarizes ethical rules concisely:
1. Say who you represent.
2. Say only what you believe.
3. Never lie about your identity.

Practical Tips for Businesses

• Delight customers at key moments—exceed expectations on product quality and service.
• Make sharing easy: optimize reviews, social sharing, and referral links.
• Solicit and showcase authentic customer stories and testimonials.
• Train customer-facing teams to listen, resolve issues, and invite feedback.
• Track WOM through mentions, reviews, referral activity, and conversion rates.

Key Takeaways

• WOM marketing leverages customer conversations to build awareness and trust.
• It’s highly effective because people trust recommendations from friends and family.
• Companies can encourage WOM by delivering exceptional experiences and enabling sharing, but must prioritize honesty and disclosure.
• Digital channels amplify WOM quickly—monitoring and engagement are essential.

Sources

• Nielsen, “Trust in Advertising Study” (2021)
• Federal Trade Commission, Endorsement Guides commentary
• Word of Mouth Marketing Association, Ethics Checklist