Word-of-Mouth Marketing: Everything You Need to Know for 2023

Imagine that you and your partner are trying a new Italian restaurant in town. You have the most delicious food and the service is outstanding. The atmosphere transports you back to your honeymoon in Italy. On the car ride home, you text numerous friends, “You must go try this restaurant. The decor is stunning and the cacio e pepe is to die for!” Naturally, your friends are going to look on the internet for a reservation ASAP.

This restaurant just benefited from word-of-mouth marketing, or a consumer organically spreading the word about a business.

‍​​I. Introduction

Situations like the one outlined above are relatively commonplace. People share recommendations with their personal networks all the time. And these recommendations are powerful because they drive consumers to action. In an RRD study, 40% of consumers actually purchased a product after discovering it via word of mouth, higher than any other advertising channel.

Why does word-of-mouth marketing influence so many consumers to purchase? It mostly boils down to trust. According to a Nielsen study, 92% of consumers trust recommendations from friends and family.  

So how can you, as a Shopify store owner, take advantage of this impactful marketing tactic? This guide will help you better understand word-of-mouth marketing and formulate a plan to strategically encourage these natural interactions, thereby driving sales.

II. Types of Word-of-Mouth Marketing

According to Engagement Labs, 66% of word-of-mouth marketing in the US takes place face-to-face (defined as offline interactions, including phone, email, and text).

The remainder of word-of-mouth interactions take place online in a variety of different forms, including:

• Reviews and ratings:

Have you ever read the reviews of a product on Amazon before purchasing? This is a form of word-of-mouth marketing in that you are relying on the word of others who have purchased the product to guide your decision. According to Inc., 84% of consumers trust online reviews as much as a personal recommendation from a friend.

• Social media sharing:

A popular channel for word-of-mouth marketing is, of course, social media. For instance, let’s say your friend shares a sweaty selfie on Instagram after working out and tags the workout studio. That business is now on the radar of your friend’s entire Instagram following. Instances of word-of-mouth marketing on social media like this usually involve user-generated content (UGC). UGC is any content that’s been created by people, not brands, and is an authentic way to show that customers are pleased with your product/service.

• Influencer marketing:

While influencers aren’t necessarily your close friends, according to an Oracle study, 37% of consumers trust influencers over brands themselves. Thus, influencers can be a powerful tool for promoting your brand via word of mouth as well. To get an in-depth look at influencer marketing and learn how to best implement this marketing strategy for your Shopify store, check out our Influencer Marketing Guide.

• Referral programs:

A referral program is another great way for businesses to encourage word-of-mouth marketing. For example, the ride-sharing service Lyft incentivizes current customers to refer a friend to the app by offering a $10 ride credit when the friend takes their first ride.

No matter the form that word-of-mouth marketing takes, there is no denying its effectiveness. A 2014 study by the Word of Mouth Marketing Association showed that word-of-mouth interactions, whether online or offline, accounted for $6 trillion in annual consumer spending.

Let’s examine the psychological principles behind word-of-mouth marketing so that you can better understand how to get people talking about your brand.

III. The Psychology Behind Word-of-Mouth Marketing

In his book Contagious: Why Things Catch On, Jonah Berger, Wharton School of Business marketing professor, shares 6 principles that cause things to be talked about and shared.

Each of the six principles is defined below, along with an example of a brand that used that principle to spark conversation.

1. Social currency: Things get shared when we think it will make us look good

Example: In early 2021, everyone was talking about the new audio-only social media app, Clubhouse. What got people talking? When Clubhouse first launched, the app was invite-only and included users such as Elon Musk and Drake. This created social currency because people wanted to talk about their membership to this exclusive group. ‍

2. Triggers: Things get shared when they are top of mind

‍Example: One example of a trigger is a slogan. If someone says the phrase “give me a break”, you might think of Kit Kat’s famous jingle. Similarly, if you hear Fleetwood Mac’s “Dreams”, you might think of Ocean Spray cranberry juice thanks to Nathan Apodaca’s viral TikTok. These phrase and song associations keep brands top of mind and thus, more likely to be talked about.

3. Emotion: Things get shared when they arouse strong feelings in us

Example: One ad that stood out amongst the 2021 Super Bowl commercials is Toyota’s, featuring Paralympic gold medallist Jessica Long. This moving commercial appealed to the public’s emotions and therefore, created a lot of buzz.

4. Public: Things get shared when we see other people doing those things  

‍Example: Nike’s recognizable logo, the “swoosh” symbol, is a public reminder about the brand. Nike increases its chances of being talked about regularly because its logo is publicly visible during countless sporting events and throughout everyday life on people’s hats, shoes, etc.

5. Practical Value: Things get shared when they are useful and will help others

‍Example: If you’re at the mall and notice Sephora is having a major sale, you might text your friend who is a skincare junkie and let her know. Practical value is at play here because you are offering your friend useful information. Promotions are a great way to spark word of mouth using this principle.  

6. Stories: Things get shared when they make a compelling story

Example: Do you remember Dove’s Evolution advertisement from the early 2000’s? It depicted how a final advertising image is anything but natural, involving lots of makeup, special lighting, and major Photoshop edits. This advertisement told a compelling story, which prompted people to start talking about the unrealistic standards portrayed by the beauty industry and Dove’s desire to change that.

These 6 principles can be used to inspire customers to talk about your brand with others.

Now, let’s talk about how to put these ideas into practice and create a word-of-mouth marketing strategy. ‍

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IV. How to Create a Word-of-Mouth Marketing Strategy

With any marketing strategy, it is crucial to first identify your target audience, or who exactly you want to reach with your messaging.

Once you have defined your target audience and are aware of their wants and needs, then you can use that information to create a unique brand experience for them. Some companies, like Nordstrom, create a memorable brand experience that stimulates word-of-mouth conversations by providing outstanding customer service. Other companies standout with thoughtful packaging or a personalized thank-you note in each purchase order. Providing a customer experience that exceeds expectations is the most basic way to get customers talking about your brand.

As part of your word-of-mouth marketing strategy, it’s also important to consider how you will motivate customers to leave feedback and reviews on your product/service. According to Google, 53% of shoppers say they always do research before buying a product. So, you want to make sure that when consumers research your product, they find many positive reviews that will encourage their purchase. Some ideas include: an insert in each purchase order with a QR code taking people to a customer-feedback survey, or a follow-up email after a purchase asking customers to rate their experience.  

Another way to spark word of mouth is with influencer marketing. Utilizing influencers to spread the word about your brand to their networks can help to expand your audience and increase your brand’s credibility. Famous Finder for Shopify helps you identify influencers who are already your customers so that you can set up a partnership and seamlessly tap into their networks.

If you’re feeling overwhelmed about how to get started with your word-of-mouth marketing strategy, continue reading for more helpful suggestions.

V. Tips for Effective Word-of-Mouth Marketing

Keep these tips in mind as you create your word-of-mouth marketing strategy:

1. Make social sharing easy

In order to facilitate word-of-mouth interactions, make it easy for customers to share their experiences with others. One example of this is below. In their donation receipt emails, Facebook gives users the option to share the fundraiser with their networks with the click of a button.

2. Take the effort out of referrals

Casper, a DTC mattress company, makes it super simple for customers to share referrals with their network. Not only do they give their customers the option of which platform to use for sharing, they also provide a suggested text. Below is a photo of the pre-populated text that appears when a customer wants to send a referral via email. All the customer has to do is type in the person’s name and email - simple!

3. Ensure your referral program is double-sided

If you decide to put in place a referral program, incentives for both the referrer and the referee can help ensure the program’s success. Dropbox, a cloud storage company, offers referrers additional storage space for inviting their friends to the platform, and the referees also receive additional storage space upon signing up. Harry’s, a shaving subscription service, also follows this double-sided model, giving both parties $5 off. This takes advantage of the psychological principle of practical value discussed above.

4. Respond to negative reviews

As discussed above, part of your word-of-mouth marketing strategy should involve encouraging customers to leave feedback and reviews. You are bound to get some negative reviews, but addressing them promptly will show future customers that your company takes these matters seriously and treats its customers well.

5. Don’t forget about your employees

The people that work for your business are influencers in their own way in that they have clout within their personal networks. Foster a strong company culture that encourages employees to talk positively about your brand to others.

As you implement your word-of-mouth marketing strategy, remember to track the results so that you can determine its efficacy.

VI. Measuring the Success of a Word-of-Mouth Marketing Campaign

How do you know if your word-of-mouth marketing strategy is delivering positive results? There are a few ways that you can track the success of your campaign, depending on the specific tactics that you’ve decided to implement.

1. Online review tracking and analysis

It’s important to keep track of customers’ reviews about your product/business and have a pulse on your business’s online reputation. If customers are taking the time to offer their feedback, you should take the time to respond.  In fact, according to a BrightLocal study, 89% of consumers said they would use a business that responds to all reviews, positive and negative. There are a number of platforms available to help you manage online reviews, including: Podium, Reputology, and ReviewPush.

2. Social media analytics

To keep track of the conversation around your brand that’s happening on social media, it’s a good idea to use a social media monitoring tool such as Hootsuite, Sprout Social, or Agora Pulse. These tools will allow you to better connect with your customers, provide customer service support, and be acutely aware of the organic conversation happening on social platforms.

3. Referral program metrics

To understand if your referral program is working or not, you must keep track of whether or not the customers being referred are actually following through on purchasing. There are a number of ways to keep track of referrals. Stitch Fix, the online personalized styling service, gives referrers a unique tracking link to send out to their networks. Another method is to use a customer survey and ask customers upon purchase where they heard about your business. You could also use a referral software such as Referral Rock or Yotpo.

Failing to keep track of the results of your word-of-mouth marketing campaign is a common mistake. Make sure to set your company up for success by following in the footsteps of the brands below.

VII. Case Studies of Successful Word-of-Mouth Marketing Campaigns

Here are a few examples of successful word-of-mouth marketing campaigns for inspiration:

• Example 1: Airbnb’s referral program

Airbnb has a two-sided referral program, where both the referrer and the referee earn $25 in Airbnb travel credit when the new user completes their first trip. The company used unique referral codes to keep track of the referrals happening on their site, and they A/B tested promotional emails to find what motivated their customers to get involved with the referral program. As a result, Airbnb increased bookings on their site 300% per day.

• Example 2: Hello Fresh’s influencer marketing campaign

According to Bloomberg Second Measure, Hello Fresh owns 69% of the total U.S. meal kit market. The company’s influencer marketing strategy is definitely a contributing factor to their success. Hello Fresh partnered with celebrities such as Mindy Kaling and Mandy Moore as well as social media influencers such as emilieeats and whitneywiley to boost their brand image as an easy, healthy meal kit delivery service. The influencers also sparked word-of-mouth marketing by encouraging customers to use the hashtag #HelloFreshPics to post pictures of their food. This push for user-generated content has produced over 250,000 posts on Instagram.

• Example 3: Wendy’s viral social media campaign

When Carter Wilkerson tweeted asking Wendy’s how many retweets he would have to get in order to earn free chicken nuggets for a year, he certainly didn’t expect it to become the most re-tweeted tweet ever. But it did. Thanks to Wendy’s effective social listening and their willingness to start conversations with customers, the company earned millions of free mentions on Twitter.

In order to emulate the success of these companies, make sure to avoid the common pitfalls listed below.

VIII. Common Challenges and Mistakes to Avoid in Word-of-Mouth Marketing

As you execute your word-of-mouth marketing strategy, ensure that you steer clear of these common mistakes:

1. Spamming or over-promotion

If you’ve already sent an initial email and a follow-up email asking customers to leave a review on your product, but they still haven’t acted on it, it’s probably wise to stop there. Customers do not want to be spammed. If email isn’t proving successful with producing the results you desire, utilize other channels to creatively ask for reviews instead.

2. Lack of transparency

Customers prefer to purchase from brands that are transparent and authentic. If a referral program is part of your word-of-mouth marketing strategy, make sure to clearly spell out the rules so that customers know exactly what to expect and don’t end up feeling cheated.  

3. Failing to properly track and measure the success of campaigns

If you don’t track the results of your campaign, how can you know if it was successful? Use the suggestions in Section VI to get ideas for how you can measure your word-of-mouth marketing campaign.

IX. Word-of-Mouth Marketing in the Digital Age

As mentioned above, most word-of-mouth interactions still take place offline. However, the digital age has enabled online word-of-mouth interactions to spread faster and to a wider audience. In addition to directly asking friends for trustworthy recommendations and advice, consumers now turn to the internet and social media to access this information.

This goes hand-in-hand with SEO, or search engine optimization, the process of improving the quality and quantity of traffic to your site from search engines. If a customer searches for reviews of your product on Google, as 59% of consumers do, SEO affects the results that they see. Inversely, using word-of-mouth marketing effectively can boost your SEO. This is because the more conversations taking place about your brand online, the more legitimate your company will appear to the search engines, improving your ranking.

Besides SEO, word-of-mouth marketing goes hand-in-hand with other digital marketing strategies. For example, you can use email marketing to prompt customers to leave reviews or alert customers about your brand’s referral program. When you think about how your social media marketing strategy can support word of mouth, plan content that is buzzworthy or helpful to promote social sharing. Ultimately, remember that word-of-mouth marketing doesn’t happen in a vacuum, so consider how you can seamlessly integrate it with your other digital marketing strategies.

X. Conclusion

This quote from Jonah Berger’s Contagious: Why Things Catch On perfectly encapsulates what makes word-of-mouth marketing such a powerful strategy.  “Word of mouth is more effective than traditional advertising for two key reasons. First, it’s more persuasive. Second, word of mouth is more targeted. It is naturally directed towards an interested audience. But want to know the best thing about word of mouth? It’s available to everyone. And it doesn’t require millions of dollars spent on advertising. It just requires getting people to talk.”

Persuasive, targeted, and inexpensive - what more could you ask for in a marketing strategy? Get started with word-of-mouth marketing today! Utilize the case studies in this guide for inspiration and remember the psychological principles outlined above to get people talking about your brand.