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Word of Mouth Marketing: What is it?

by OnDeck Australia,   Aug 25, 2021

Word of mouth marketing (WOMM), also known as word of mouth advertising, is arguably the most sought-after and impactful form of marketing in the business world. However, the very nature of word of mouth marketing makes it difficult to measure and even more difficult for you to directly encourage as a business owner.

In this post, we’ll take a look at what word of mouth marketing is and the strategies you can employ to leverage it for your business.

What is word of mouth marketing?

As the name suggests, word of mouth marketing refers to when your business is promoted organically through conversations your customers have with their friends and family. In today’s digital age, word of mouth marketing also includes social media posts that your satisfied customers voluntarily make about your business.

The power of word of mouth marketing is based on the inherent mistrust that the average consumer has when they encounter marketing material. According to Neilsen data, the vast majority (92%) of consumers believe and trust recommendations from friends and family over all other forms of advertising.

The cafe and restaurant industry is an excellent example of how powerful word of mouth advertising can be. Think about all the times you visited a restaurant just because you had a friend or loved one recommended it to you.

What are the benefits of word of mouth marketing?

The most apparent benefit of word of mouth marketing is that, when it occurs organically, it doesn’t cost you anything. Even when you spend time and resources to try and encourage word of mouth marketing, the potential return on investment far outweighs the expenditure and, if you’re lucky, will snowball and sustain itself long after you’ve implemented your strategy.

  • Increase sales without ad spend: Purely organic WOM marketing means that you’re attracting customers without spending any more to acquire them.
  • It helps to build your brand authority and generate a community around your business. This can make it easier for you to research your target customers and find out what people really want (not what you think they want).
  • When you have people talking positively about your business, investors, and other current or potential stakeholders, take note of this. This can make it easier for you to acquire funding and grow your business.

How do you promote word of mouth advertising?

While word of mouth marketing is something that mainly occurs organically as a by-product of delivering a great product or service, there are ways you can encourage positive conversations about your brand. The key to successful word of mouth marketing is getting people to speak enthusiastically about your business while remaining sincere and trustworthy to the intended audience.

Here are some strategies you can use to leverage word of mouth marketing for your business:

Provide an experience worth mentioning

All other word of mouth marketing strategies are pointless unless you actually deliver a product or service that people will want to recommend. There’s no way to encourage positive word of mouth unless there’s a foundation of quality for people to spread the word about.

Of course, delivering an inferior product or service will generate negative word of mouth around your business. The notion that ‘there’s no such thing as bad press’, may apply to the celebrity world, but being the subject of negative conversations isn’t going to help your brand.

If you deliver a product or service that is genuinely unique, you’ll generate far more word of mouth. While you may not be considered the absolute best in the industry, the fact that you’re offering something distinct will generate far more conversations around your business.

Implement an amazing rewards program

It’s no secret that having a rewards program in your business helps you retain customers and prevent them from going to competitors. Additionally, the quality of your rewards program will also help you generate word of mouth marketing for your business.

If your rewards program provides excellent value, customers will tell others that they should take advantage of it themselves. Look at how your competitors reward customer loyalty and try to go a step further – this will make shopping with you more attractive to savvy customers.

Encourage user-generated content (UGC)

User-generated content (UGC) are social media posts, images, videos, or any other type of digital content that is created by users concerning your brand. User-generated content is organic, honest, and helps word of mouth marketers by giving them a measurable result.

There are several ways you can go about encouraging user-generated content:

  1. Incentivise the creation and sharing of content by offering rewards like discounts or a free gift. You aren’t bribing your customers because you’re simply asking them to share their experiences, whether good or bad. Most of the time, people only make an effort to create content if they had a positive experience with your brand.
  2. Create a hashtag that identifies content created by your customers and gives them a chance to participate in a competition or generate a greater following for themselves. Beauty and clothing brands are adept at this since people love to flaunt their new clothes or makeup products on social media platforms like Facebook, Twitter, and Instagram.
  3. Incorporate user-generated content in your official messaging and on your website. People like to feel a little famous by being included on your website or featured in one of your official social media posts.

Share customer testimonials and reviews

Think about the last time you researched a purchase. You probably sought out reviews to see what people really thought of the product or service. Reviews and testimonials reassure the consumer that the claims you make about your product or service have a basis in reality and aren’t just being contrived to take their money.

This is known as ‘social proof’ because it acts as proof your business is legitimate and that consumers can trust your brand. Of course, these reviews need to be honest (fake reviews are easy to spot and can severely diminish trust in your brand’s reputation).

Don’t just settle for written reviews and testimonials. Encourage video feedback if possible. A video testimonial will be much more engaging and persuasive than a written one.

Respond to negative reviews in a professional, honest manner

Sometimes getting negative feedback is unavoidable. Things go wrong. A staff member might have a bad day. A delivery truck might break down – whatever the cause, you have an unhappy customer on your hands, and you need to deal with them gracefully.

It can be tempting just to ignore negative feedback, but this has the predictable effect of making you look guilty and too cowardly to address a complaint. Sometimes negative feedback is genuinely unjustified, and you can set the record straight for all to see (make sure you do this in a professional manner, don’t gloat).

If you have genuinely failed the customer, then you should acknowledge this and offer some kind of compensation (replace an item for free/give them a full refund etc.)

If you need extra capital to finance a new marketing initiative, like word of mouth marketing, a business loan from OnDeck could help. We provide finance between $10,000 to $250,000 on 6-24 month terms with low loan origination fees of 3%.

Frequently Asked Questions

What is a word of mouth marketing strategy?

A word of mouth marketing strategy is any plan you create to get people to talk about your brand voluntarily. This could be offering an incentive for customers to post about their experience with you on social media or implementing a new rewards program that people will want to recommend to their friends and family.

What is meant by word of mouth marketing?

Word of mouth marketing incorporates the phrase “by word of mouth”, relating to how a customer finds or hears about a business. While it literally refers to your business being referenced in oral conversation, word of mouth marketing can take on various forms.


Prepared by OnDeck Capital Australia Pty Ltd ABN 28 603 753 215 (“OnDeck”) for general information purposes only. Content may belong to or have originated from third parties and OnDeck takes no responsibility for the accuracy, validity, reliability or completeness of any information. Information current as at August 2021. You should not rely upon the material or information as a basis for making any business, financial or any other decisions. Loans issued in Australia are subject to the terms of a loan agreement issued by OnDeck. Loans are subject to lender approval. OnDeck® is a Registered Trademark. All rights reserved.

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