Word of mouth marketing, or referral marketing, is nothing new. In fact, people have been using it for centuries to not only sell their wares, but to share information about their business. In our fast-paced, Internet-driven lives, we often forget that using word of mouth could be the secret that is holding back our marketing success. Still a bit unsure about word of mouth marketing? Perhaps some of these staggering statistics will change your mind:
One of the most shocking statistics when it comes to word of mouth marketing is that almost 85 percent of all consumers rely on the opinions of their family and friends when making a purchasing decision. These numbers are rising, too, which means it’s the perfect time to start using this to your advantage.
You will also likely be surprised that people trust other people, even if they don’t know them, more than brands. In fact, in a study by Nielsen, 92 percent of consumers trust the advertising that comes from other people than those that come from brands.
In that same study, Nielsen reported that less than half of all consumers trust ads they see in magazines, on television or in the newspaper, which are all traditional forms of marketing. These numbers continue to fall, too.
According to statistics; referral marketing has a massive reach. If you can get just 1,000 customers to tell people they know about your business, you can potentially reach 500,000 people with information about your business.
It isn’t only consumers that make word of mouth marketing plans a success, other businesses, such as those engaged in B2B transactions, also use and trust this way of marketing. Research shows that 91 percent of B2B buyers trust word of mouth marketing when making their buying decisions.
There is also research that shows consumers spend approximately $6 trillion each year thanks to referral marketing. Most businesses will want a piece of that pie.
AdWeek published a study to support referral marketing, too. What did they find? They found that 74 percent of all consumers identify word of mouth marketing as the main influencer of their purchasing decisions.
When it comes to comparing advertising dollars to advertising dollars, marketing induced word of mouth marketing produces more sales than paid advertising 2 to 1. If ROI is important to you, and it should be, this is an important statistic.
Though having a customer buy from you once is great; you also want to make sure that you are keeping them as customers. A study from Deloitte shows that customers referred to companies by word of mouth have a 37 percent higher chance of remaining a customer long term than those that were not referred in that way.
Finally, there are statistics that show the vast majority of marketers, about 72 percent of them, do not see the value that a consumer can bring to them. Do you see this value?
The bottom line here is that word of mouth marketing is usually not a top focus of companies these days. However, if you are not focusing on it at all, you could be losing out on a great resource that can bring in more new customers than the marketing methods you are probably using now. Start utilizing referral marketing today, and see a big difference, tomorrow.
Post author: Peter Velardi, CFP®