10 Reasons Why Word-Of-Mouth Marketing Is Important For Growth

BY IN Uncategorized, 13.09.2022

Word-of-mouth marketing is one of the most powerful, inexpensive, and untapped marketing techniques for business growth. It refers to wowing your customers to such an extent that they sing your praises to their friends, family members, colleagues, and social media. It works because people trust others more than they trust ads and messages from brands. 

Indeed, brands do not have much control over what people spread about them. Nevertheless, several strategies are used so that businesses can get customers to talk positively about them.

word of mouth marketing

10 Reasons why word-of-mouth marketing is vital for business growth

Word-of-mouth marketing has been around since time immemorial. Let’s get to know what makes this marketing technique so effective. We’ve given word-of-mouth marketing statistics wherever possible to affirm our statements. 


  • People trust other people’s recommendations 


Studies say that people trust recommendations from others more than they trust advertisements and brand messages. 75% of consumers admit that they don’t believe in brand ads. Nielsen research surveyed people across 58 countries and found that 84% considered word-of-mouth the most trustworthy source. 

People are four times more likely to purchase products recommended by people they know. That’s why the quality of leads brought by word-of-mouth is high. Marketers give them a rating of 4.28 out of 5


  • Word-of-mouth increases brand awareness


Spreading awareness about your brand is vital for the success of your business. Businesses often try to improve their brand awareness and market presence by advertising. This involves spending a lot of money. Word-of-mouth, on the other hand, brings you brand awareness for free. 

Your happy customers talk about their experience with your brand and its offerings in a positive light to their circle. This creates a rippling effect, especially if you stay true to their words. 


  • Word-of-mouth generates loyal customers


Studies also have found that referred customers are more loyal. The rate at which they churn and leave a company is approximately 18 % lower than that of customers acquired through other sources. This is the power of word-of-mouth marketing. 

When a happy customer sings your praises on social media or at a family meeting, the listeners often tend to buy from you. Eventually, they also tend to become your brand advocates. For, word-of-mouth recommendations from trusted people create a domino effect. 


  • Word-of-mouth facilitates customer retention


Customer retention is vital for any business. Loyal customers tend to buy more from a brand. A study states that a company’s profitability increases by 75% for a 5% increase in customer retention. Word-of-mouth marketing can improve brand affinity

For, a referred customer usually tends to stick to a brand to which he has been referred by a friend or family member. A study says that they have a 16% higher lifetime value. Additionally, such customers also tend to generate higher profit margins. So, word-of-mouth marketing can be one of your best customer retention strategies. 


  • Word-of-mouth is authentic


Nowadays, people like authenticity more than ever before. When a firm employs word-of-mouth marketing, it facilitates the creation of a community around trust and authenticity. Building relationships with people who’re genuinely interested in your brand and its offerings rather than advertising to the masses is much more valuable. 

Whenever you launch new products, your dedicated customer community raves about them and buys them as they’re already in love with your brand. Besides, they’ll also engage with your brand on social media, speak highly of you, organically post about you, and thereby bring you a better return on your investment. 


  • Word-of-mouth propels purchasing decisions


Studies say that the main factor behind many purchasing decisions is word-of-mouth. If you make a list of all the things you’ve purchased and analyze the reasons behind purchasing them, you’ll be surprised to find that many of them were influenced by the suggestions and input of others. 

40% of consumers state that they’ve bought something online after seeing it used by an influencer on social media networks such as YouTube, Instagram, etc. 49% of consumers agree that they depend on recommendations from influencers when making buying decisions. 


  • Word-of-mouth accounts for more sales than ads


A study found that word-of-mouth brings in five times more sales than paid advertising.  This study was conducted in selling items under diverse categories ranging from mobile phones to skincare products. 

An estimate says that word-of-mouth marketing accounts for 13 percent of consumer spending, driving $6 trillion annually. So this is another reason why word-of-mouth marketing is crucial.


  • Word-of-mouth influences the customer journey


As consumers, we’re interested in listening to the opinions and experiences of others on the products and services we’re planning to buy. So, we ask others. A study says that word-of-mouth is the only factor that gets listed as one of the three most prominent influencers of consumer decisions at every stage of the consumer journey. 

Though the degree of influence at each stage varies, the strongest inference is that word-of-mouth can be employed to pull away customers from their former patterns. 


  • Word-of-mouth costs less


Word-of-mouth costs much lesser than other marketing techniques and advertising. It’s organic and free as your customers market on your behalf of their free will. Even if you run a referral program and incentivize your customers for each referral they bring, it would still cost low. 

This is because the returns you’d generate from this small referral fee investment will be much bigger. Just calculate how much the customer thus referred will buy from you over their average lifetime of association with your brand. 


  • Word-of-mouth can disrupt consumer decisions


Word-of-mouth can induce someone to consider a brand or its offerings in a manner that advertising cannot. An individual may conduct an in-depth study about a product and have all sorts of ideas regarding what to buy, where to buy it, etc. But if someone he trusts relates to him a bad experience, he’d reconsider his options.

That’s the disruptive power of word-of-mouth on consumer decisions. That’s why brands should take great care in ensuring that their consumers are delivered good experiences at their online and offline stores. If something undesirable happens, they should take immediate measures to fix it as soon as possible. 

How to tap into the power of word-of-mouth?

Research says that three factors that influence word-of-mouth marketing are 

  • Brand loyalty
  • Brand trust
  • Brand buzz

So, for effective word-of-mouth marketing, brands should take measures to generate brand loyalty, brand trust, and brand buzz. You can drive these by selling high-quality products and services, staying true to your promises, having good company values, being customer-centric, delivering WOW experiences, offering great customer services, having a good returns policy, etc. 

Here are how you can carry out word-of-mouth marketing. 

  • Referral programs
  • Influencer marketing
  • User-generated content (UGC)
  • Affiliate programs
  • Contests and campaigns to encourage social media sharing

In conclusion

In this blog, we’ve discussed the importance of word-of-mouth marketing under several heads. So, you’d have understood how indispensable it is for your growth. If your business hasn’t yet employed this marketing, do it as soon as possible. A tool like InviteReferrals can help you tap into its power. 

Author Bio:

Shivani Goyal
Shivani Goyal

Shivani is a content writer at InviteReferrals, which provides referral software that allows businesses to attract new customers from existing customers through referral campaigns.