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“Word of mouth marketing” may be a misnomer. Word of mouth marketing is not a marketing strategy per se. Instead, it is is the byproduct of effective execution across a number of marketing disciplines.
Definitionally, word of mouth marketing is just what it sounds like: how many people are going to tell their friends and family about your brand and subsequently, how many of those people will purchase from you. In some ways, it is a measure of virality.
Mathematically, it is a measure of k factor (which we won’t get into in this post) or Net Promoter Score (which we will get into).
Why is Word of Mouth Marketing Important?
Did you know that 90% of people are more likely to purchase a product with a recommendation from a friend?
- 74% of consumers identify word-of-mouth as a key influencer in their purchasing decision (Ogilvy/Google/TNS).
Some of the biggest and best companies in the world build word of mouth right into their DNA. Online glasses retailer, Warby Parker has done exactly that. The company’s cofounder Neil Blumenthal on the topic:
What we’ll find is we’ll hit a huge spike when we’re in the New York Times for example. Typically when you get a spike in sales it usually drops down but what we found is it actually ended up being maintained and it actually created a step function because all of those new customers were telling more customers. What are those reasons that you can give people to talk about your brand or company? Word of Mouth is Important – Business Insider
While I can assure you that this is an exaggeration (Warby Parker would be the biggest company on earth today if this were completely true), Neil hits the nail on the head when he asks, “what are those reasons…?”
It’s not coincidence that some companies achieve significant word of mouth impact. You have to give your customer a reason to talk about you. That is what this post is about.
Measurement: Net Promoter Score
There is a way of measuring your brand’s word of mouth factor: Net Promoter Score (abbreviated NPS) is an index of the willingness of a user to recommend your product or service to others. NPS is measured from -100 to 100.
NPS is measured by surveying customers, asking them simply: “On a scale of 0 to 10, how likely are you to recommend this company’s product or service to a friend or a colleague?”
Respondents who answer 0-6 affect word of mouth negatively. They are detractors.
7s and 8s neither help nor hurt word of mouth marketing.
9s and 10s are promoters of the company or brand. These are promoters of the brand.
The Net Promoter Score (NPS) is determined by subtracting the percentage of customers who are detractors from the percentage who are promoters. What is generated is a score between -100 and 100 called the Net Promoter Score.
My Personal Experience
To illustrate the importance of word of mouth, I’ll rehash a conversation I once had with a venture capitalist, Rebecca Kaden, a General Partner at the venture capital firm, Maveron. Rebecca has led investments in Dolls Kill, General Assembly and Everlane (more on them in my Ecommerce Marketing Manual).
I was in the midst of raising a Series A for my company, BeGood. BeGood had strong traction, 100%+ year over year growth and no term sheet in hand. After a (sort of) warm introduction, Rebecca was kind enough to take a call with me to discuss my company.
As an ecommerce investor, I was pretty sure Rebecca would be interested in our cost of customer acquisition, lifetime value and growth metrics.
So I explained to her that our customer acquisition costs were relatively low – we found that search engine optimization and Facebook advertising worked well and we could scale pretty effectively. She seemed mildly impressed with our growth and revenue traction.
She asked, “how much of your revenue comes from direct traffic (traffic that types begooclothes.com into their browser)?” Fortunately I had my favorite marketing tool, Google Analytics open. I confidently replied, “40%” – it seemed like a pretty good number to me.
Not so much.
Rebecca went on to tell me that companies in their portfolio like Combatant Gentleman, Everlane and Dolls Kill acquired 90%+ of their users from direct traffic when they invested. Maveron did not invest in BeGood.
I probably went back to my desk, defeated and angry. Why did Rebecca care so much about direct traffic?
In hindsight, the answer is clear: Rebecca and Maveron use direct traffic revenue to quickly assess how viral the company is. It’s like asking, “how much is your word of mouth marketing generating?”
Word of mouth marketing is simply the most cost-effective way to acquire customers. This is especially true for ecommerce companies who have many large cash drags in the form of inventory, fulfillment centers, stores, etc.
Word of mouth protects Maveron from the unknown. What if search engine optimization or Facebook wasn’t as effective at scale as we had hoped? Word of mouth makes Everlane, Dolls Kill and some other companies in the Maveron portfolio impervious to many of the ups and downs of conventional digital marketing. Why pay for marketing when you can get it for free?
Three Companies that Crush WOM Marketing
Remember: the best way to increase your word of mouth exposure is by having a great, differentiated and even viral product offering. Yes, there are ways to market your product effectively, but selling something that consumers desperately want is a really great start.
I’ll underscore: no amount of optimized digital marketing can replace having a great product with high natural demand.
Let’s look at a few product that injected word of mouth into their product offerings. Usually, this is accomplished through a disruptive idea, an extremely differentiated offering or an incredible company story.
Tinder: On December 19, 2016, the dating conglomerate Match (NASDAQ:MTCH) reported earnings. As part of the report, it revealed that Tinder is now the top grossing “lifestyle” application in 99 countries.
Even in the early days, Tinder was destined for huge things. They reached 1 million monthly active users in their first year. In less than three years, they achieved 24 million MAUs.
Tinder perfectly addressed an unmet customer need: fast and non-stigmatized online dating. With such a differentiated offering, people wanted to tell their friends about it. The idea was disruptive. All Tinder did to take off was seed its app with sorority and fraternity members on college campuses and word of mouth did the rest.
Everlane: Everlane started with a differentiated offering. As a consumer, there’s no real way of knowing whether you’re getting ripped off when you shop for clothing. Why does Alexander Wang charge $500 for a hoodie? I don’t know.
So imagine a company that tells you exactly how much it costs to produce their clothing? This way you know you’re not getting ripped off. Everlane has done exactly that. They even include a clever infographic on each page to show you how they arrived at their price point.
This value proposition is apparently strong enough that Everlane produced 90%+ of their revenue from direct traffic (word of mouth) in the first few years of operation. As they’ve scaled, I imagine they’ve introduced a lot more paid marketing to supplement their growth, but Everlane started as a word of mouth machine because the idea was so differentiated.
Toms Shoes: Toms Shoes took off because of an incredible company story. The story began when founder, Blake Mycoskie, journied through Argentina – he saw villages where children did not have shoes. He hatched a plan to create a shoe company that would give a pair of shoes to a child in need for every pair sold.
Mycoskie met a shoe buyer in Los Angeles who loved the concept and brought them to the Los Angeles Times. Two weeks later, LA Times’ Calendar Section featured an article about Toms alongside an article about The Da Vinci Code.
This Inc article recounts the rest of the story:
The morning the article ran, Micoskie woke up to his BlackBerry vibrating.
“The phone was spinning around like it was possessed, then died after 20 minutes,” he recalled. Then it dawned on him: He had set his site to send an email every time he got an order, and thanks to the cover story the orders were flooding in. “We sold 2,200 pairs of Toms on our site by 2 p.m. that afternoon,” he said.
Later, Mycoskie was featured in an AT&T commercial that introduced his brand to the world.
Obviously, making an incredibly viral product, worthy of strong word of mouth is much easier said than done. If you have an idea like one of the above, please email me ;).
The 5 Best Ways to Improve Your Word of Mouth Marketing
Outside of making an awesome product, there are some creative ways to increase the amount of word of mouth exposure your company gets.
Table of Contents
1. Guerilla Marketing
Guerilla marketing is one way. Tactics like those Red Bull frequently use are basically stunts meant to acquire users through word of mouth. In October, 2012, Felix Baumgartner jumped from an altitude of 127,852 feet in the air at faster than the speed of sound. Millions tuned in to watch live on Youtube. Millions more talked about the stunt. Some non-trivial amount of those millions bought Red Bull products.
2. Creative Brand Marketing
Do you know that something as simple as a color, logo or slogan can increase word of mouth. Do you recognize the picture below?
Companies do some kooky things, but a lot of times they work. Ridesharing app, Lyft enlisted its drivers to do a little word of mouth marketing for them. They did it using Lyft’s eye-popping cotton candy pink color scheme.
Every one of its drivers affixed a pink mustache to the front, turning every Lyft ride into a mustache ride. While Lyft drivers don’t do this anymore, in the early days of Lyft, this produced a lot of cheap buzz. Google Trends search for “pink mustache” below.
3. Referral Program
You can introduce paid referrals as part of a word of mouth strategy. You’ve probably seen plenty of referral programs as you browse ecommerce sites or use applications on your phone. For instance, if you use Lyft, you may notice an opportunity to refer friends – “give $20, get $20.”
I’ve seen referral programs convert at a clip of 2x or 3x higher than other paid channels.
4. Be Different
Don’t fall in line if you want WOM marketing to work for you. Companies that alienate some consumers but delight others, frequently create rabid fans out of their early supporters. This is why companies from Dolls Kill, to Cards Against Humanity and even presidents of the United States have been able to rally groups.
A lot of brands stand apart using smart PR to create buzz or amplify existing buzz.
I like to tell the story about my startup, BeGood – which sold eco friendly clothing. On Black Friday a few years ago, we executed a press activation that landed us $10,220 in online sales in one day.
Most retailers have clothing waste – inevitably, some garments come from manufacturers with small holes, ripped tags, etc. Instead of throwing these out (as most companies do), we decided to sell our “factory follies” on black Friday – faulty or lightly damaged garments. We did a small, funny photo shoot, overhauled our website in the middle of the night and made it quite sassy and fun.
We blitzed press with this campaign. Every eco-focused publication loved it and BeGood made over $10k that day.
Word of mouth marketing is a function of a great product and effective, creative marketing.
What did I miss? Tell me in the comments.