In my time as a marketing consultant, I have encountered many business owners who rely solely on word-of-mouth marketing to keep things running. It’s easy to see why lots of people get into the habit of living off the contacts they already have – when it’s working, it’s great! By focusing on repeat customers and encouraging them to recommend you, things can keep ticking over quite well.
However, while I’ve seen plenty of businesses living happily ever after with the referrals they’re getting, this narrow approach to getting your brand out there can sometimes come back to bite you. This type of marketing alone isn’t guaranteed to win you new business forever.
So in this post, I’ll explore the pros and cons of word-of-mouth marketing so you know when it’s time to expand your approach to give your business the best chance of growing.
The Pros: When Word-of-Mouth marketing works
The point of this post is not to discourage you from investing time and effort into word-of-mouth-generated business. Quite the opposite! I have an entire post dedicated to how valuable this type of marketing can be. And here are the reasons why:
It’s quick and cost-effective
The contacts you already have are worth their weight in gold. When they have already had a positive experience with you, they will have developed trust in your brand. This means that they are likely to shop or work with you again and, more importantly, recommend you to people in their personal network. You can speed this process up yourself by asking for reviews and referrals!
Unlike other types of marketing, here you are leveraging the positive relationship you already have with your existing customer base to spread the word organically. This is so much cheaper than having to invest in other types of advertising. No paid ads required – your happy customers do the talking for free here!
Word-of-mouth marketing is a trusted method
A 2024 study by IPSOS found that 89% of respondents trusted brand recommendations from friends and family, making it the most trusted source in the survey.
This is ideal when launching a new product or service or when promoting a special offer. You have an instant pool of potential customers who you can offer early access to. Once you have them in the door, it’s the perfect opportunity to send them referral codes, to encourage them to have friends sign up or purchase, too.
By reaching new people via their friends, family or colleagues, they are far more likely to trust that your product or service is worth it than they would encountering you through an ad.
It’s likely to attract your ideal customer
Another major pro of word-of-mouth marketing is that if you’ve already attracted your target customer, this approach is likely to bring more of that same type of person to your business. People know their friends/family well, and will generally recommend you to like-minded people, who are looking for the same products or services.
For example, if you’ve launched a baby clothes brand, and you already have several customers with toddlers, chances are they will have a pool of friends at a similar life stage, with similar disposable income, looking for the very same products.
The Cons: When Word-of-Mouth isn’t enough
This all sounds great, doesn’t it? And for a while, it can be! But here’s the thing. Relying on word-of-mouth marketing alone is not a great way to make your business more resilient to external or internal changes.
The well can run dry…
First things first – eventually, your customers will run out of people to recommend you to. Especially if you sell something more expensive, a product that someone will only buy once a decade. Once the friends, family and colleagues who were interested have bought theirs, that well has run dry.
Also, it’s difficult to widen your circle if you only rely on people who already know you. And customers aren’t going to recommend you forever either. The longer ago a customer’s purchase is, the less likely they are to send their friends your way.
Word-of-Mouth marketing is hard to control
Another con to note is that, unlike other strategies, word-of-mouth marketing isn’t something you can easily control. Often, you have no way of knowing who people will refer to you, when, for what and why.
While recommendations are great, unless a previous customer has full knowledge of your business and all of the services or products you offer, this can limit the success of word-of-mouth marketing. If they’ve bought one thing from you, and refer others only to the same thing, you can miss out on a lot of potential sales.
It also relies heavily on your existing customers really understanding your ideal client. Particularly when it comes to services! Managing expectations can be tricky if they are only able to share their personal experience, which might have been limited.
Timing is also a factor here. It’s common for your ideal client and/or your products and services to shift over the years. Someone who worked with you four years ago might not realise this, and refer people who no longer fit that profile. If they recommend you for a service you no longer provide, it’s disappointing for all involved!
The bottom line is that word-of-mouth marketing is passive. Which, when it’s ticking along successfully is handy. But when it isn’t working, that lack of active participation and control can become a problem.
The business landscape can change in an instant…
Another important consideration is the business landscape. If 2020 taught us anything, this can change in the blink of an eye.
Whether it’s something major, like the pandemic, or a more minor shift in the economy or cultural landscape, relying solely on word-of-mouth marketing can leave you high and dry. With no backup plan in place, no additional lead generation or community engagement, what do you do if the group of people you’ve relied on can no longer afford your products or services?
Like anything else in business, having all of your eggs in one basket is always a risk. Gradually introducing a new strategy because you want to test the water is exciting. Being forced to try to make a new strategy work because your only source of leads has evaporated? Much less so!
So what’s the answer?
Having a healthy balance in your marketing strategy is the best way forward when it comes to promoting your business. If word-of-mouth marketing is currently working for you, embrace it – that is fantastic! It’s such a good sign for your business, showing just how happy your customers have been with their experience.
However, from the very beginning – or from now, if you’re years into running your business – make sure to broaden that net.
To start with, find ways to work with your existing customers outside of just asking for recommendations. Why not develop a subscribe-and-save offer that gives them a small discount for repeat purchases? Or, if they’ve already signed up for one of your services, offer them a discount on an upgrade, to help them work with you for a longer period of time?
On top of that, start exploring other marketing strategies that will help you land new customers and grow your audience. From attending networking events to creating a blog, I have lots of content here that can help you find the right option for your business. Here are a few ideas to help you get started!
- 3 steps to raise your brand awareness with social media marketing
- How to set up a successful marketing collaboration
- How to get started with your small business SEO
- Digital advertising for small businesses
- How to create your successful small business content strategy
By learning to balance word-of-mouth marketing with your other key strategies, you’ll future-proof your business for any changes that come your way. So enjoy the recommendations when they come, while tracking your other platforms, and you’ll be set up for success.
KEEP READING:
To read more about this topic, have a look at these:
10 Things I’ve Learned Running My Own Small Business
7 Successful Ways I Market my Small Business On and Offline
How to Choose the Right Marketing Channels for Your Small Business
How to make Word of Mouth a Powerful Marketing Tool for your Business
