Word-of-mouth advertising is considered one of the most effective forms of marketing, and many companies have adopted strategies that focus on giving people reasons to talk about their positive experiences with their products or services. Businesses are very aware that people generally prefer to consult family and friends before making many buying decisions, including choosing a lawyer or doctor, buying a car or finding a mechanic or hair salon.

Effective Recommendations

One of the major advantages that word-of-mouth advertising has over other forms of marketing is the inherent power of recommendations. People are conditioned to trust recommendations from family and friends; they tend to value them more highly than anything companies themselves can say through various advertising methods. More companies are recognizing the importance of the effectiveness of recommendations and are going the extra mile to keep customers happy and willing to promote their products and services.

Inexpensive Marketing

Word-of-mouth marketing is a cost-effective method of spreading information about products and services. While companies must purchase most forms of marketing, such as print advertisements and TV or radio air time, word-of-mouth marketing requires no out-of-pocket expenditure. By merely providing a quality product or service, and doing so in a customer-friendly way, companies are banking on the fact that their happy customers will tell families and friends about their experience.

Enhanced Products and Services

Because word-of-mouth marketing relies on loyal customers to promote products or services, companies have to keep their customers happy and satisfied. To do this, they can't produce goods and services that are barely average in value. The preponderance of word-of-mouth advertising -- especially online -- is driving the creation of vastly improved products or services. It's also led to an enhanced level of customer service and the careful consideration of customer feedback.

Stronger Brand Image

Companies that have realized the great potential in word-of-mouth marketing continually strive to stand out from the crowd, rather than be one of many. The driving force behind this marketing strategy has led companies to focus greater efforts on building customer loyalty, since it's through loyal customers that word-of-mouth advertising is successful. The more customers are encouraged to be loyal to a product or service, the greater the level of promotion they do for it, something that enhances the company's brand image.