The Advantages of Word-of-Mouth Marketing

As a small business with a tight ad budget, word-of-mouth marketing can be your saving grace. Also known as viral or business marketing, word of mouth is the informal dissemination of messages about your company and products through networks of friends, families and co-workers. While you have less control over word of mouth than other paid forms of marketing, it does carry several key advantages.

Pure word of mouth is free. You don't normally pay the participants in conversations who discuss their experiences with your company with others. If a customer tells a friend "Company X has the best service in the area," you absorb no cost, but you benefit from the positive message. Some companies have attempted to take more advantage of word of mouth by offering referral bonuses and incentives to existing customers. Even in this scenario, you only incur a cost if you get the customer.

One of the strongest benefits of word of mouth relative to traditional ad techniques is its credibility. Hearing a message about a company or product from a friend, family member or co-worker usually carries more weight than hearing a paid message from a biased advertiser. The closer the relationship between your happy customers and the people they discuss your products with, the more impact their words have.

A common marketing challenge is getting optimum message efficiency within your target market. When you pay to run an ad on TV, radio, newspaper, print, Internet or billboards, you usually reach some audience members not in your target market. This is essentially wasted investment. Word of mouth tends to have strong market efficiency since your customers would most likely share their experiences with people like them, or people they believe would care about hearing their stories. One teen talking up how cool his cell phone is to classmates at school is a great example.

Consumers continue to find ways to avoid advertisements as much as possible. DVRs enable TV commercial skipping, and pop-up blockers diffuse pop-up ads. Flipping channels on broadcast media and simply ignoring print ads also result from consumer ad intolerance. Word of mouth is one of your best hopes to cut through negative audience attitudes about advertising. It is essentially a stealth mode of marketing where consumers don't realize they are being marketed to. Instead, they simply react to messages about your brand shared by people they trust.