Why Word of Mouth Is The Best Advertising

February 2, 2018
Peter McEllhenney

A lot of people say word-of-mouth advertising is the best kind of advertising. I agree.

That’s because word-of-mouth advertising (and referrals are also “word of mouth”) gives you potential customers and clients with three exceptionally valuable qualities:

1.   The Need for your product or service.

2.   The Motivation to buy your product or service.

3.   The Confidence you are the right person to buy it from.

Some word-of-mouth advertising is passive. Your friend tells you about this great new restaurant she tried and this persuades you to try it.

A lot of word-of-mouth advertising is active however. It begins with a person asking a friend or a colleague a question. Do you know a good roofer? Do you know a good real estate lawyer? Do you know a good yoga studio?

People ask questions like these only when they actually need a roofer. The Need for a roofer is a precondition of asking for a recommendation in the first place. So is Motivation. People ask their friends to recommend a roofer only when they have decided to fix their roof. Not when they are still thinking about whether they want to fix it.

Further, people ask for recommendations only from people they trust. No one asks their no-good cousin who has gone bankrupt four times to recommend a financial consultant. They ask their sister-in-law who is a successful business person instead.

So people who come to you through word of mouth are highly likely to buy from you as a natural result of their behavior. They have qualified themselves as good prospects by the fact they have asked someone they trust to recommend a business like yours in the first place.

They are more likely to buy from you than customers you acquire through other sources. And they are likely to take less time to make their decision to buy. They are great prospects.

So Word-of-Mouth Advertising is All I Need Right?

I’ll answer that question with my two favorite words: “It depends.” Most of the time, word of mouth can’t get you a lot of customers fast. If you open a donut shop in a neighborhood and everyone who eats one exclaims “This is the best donut I’ve ever eaten!” then yes. And sales of some products and services do go viral the way some content goes viral on social media.

For most businesses, word of mouth takes time to work. And then word of mouth is only enough on its own if your business is small to medium small in size. That’s because there is a natural limit to the size of the social and professional networks of your customers and clients. They only know and can talk to so many people. If the total network size of your customers is not large enough to generate all the business you need or want, then you are going to have to do more work.

Can Other Advertising Enhance Word of Mouth?

Yes it can some by keeping you top of mind with people who will give you word of mouth. One of the reasons you should communicate regularly with your customers is to encourage them to buy from you again. Another reason is to keep you top of mind so your customers remember your name when a friend asks them to recommend a business like yours.

Advertising can also make people familiar with your name before someone recommends you. As we discussed last time, people instinctively like things that are familiar and trust them more.

Typical kinds of advertising for this purpose are email campaigns with existing customers, building a community of followers on social media who are genuinely interested in what you do, and all sorts of image advertising.

If you asked me how long this kind of advertising takes to work, I would say six to twelve months. If you asked me how much more new business it creates, I would say ten to fifteen percent.

This Is Why Other Advertising Is So Expensive, By The Way

Other forms of advertising are much more expensive than word of mouth because other forms generally don’t deliver potential clients and customers with high levels of Need, Motivation, and Trust.

Search engine advertising like Google AdWords comes closest because it establishes Need and Motivation. People searching on the phrase “emergency plumbers Philadelphia” probably have a problem they need addressed right now. But their trust is likely low. If they already knew a plumber they trusted, they would call her. Not search the internet.

Other forms of advertising can’t really establish need, motivation, or trust at all. So they have to solve this problem with big numbers: advertising to a lot of people a lot to find enough customers to meet their business goals. Lots of advertising costs lots of money. A whole lot more than word of mouth costs.

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