Despite the undeniable power of word-of-mouth marketing, C-suite executives continue to underutilize this valuable tool. Leaders recognize the power of referrals, but they don’t spend enough time learning new ways to generate and track them.
As evidenced by the recent partnership between Redknee Solutions and WOM Chile, partnerships to measure and grow WOM advertising are gaining steam. By the end of 2018, WOM marketing software will become the new hot thing — 2018’s answer to account-based marketing software.
Soon, WOM marketing will become a fundamental slice of the modern marketing stack. From referral programs to affiliate agreements to influencer programs, authentic advocacy is the future of leveraging audience trust into paying customers.
Formal Referrals to Word of Mouth
In the past, word of mouth meant talking to a friend. Today, it means talking to a million friends at once from anywhere in the world. According to Nielsen research, 92 percent of buyers trust referrals from people they know. By quantifying those conversations, executives can create and refine plans to get more people talking about their products.
Implementing a referral program is the best method to increase and optimize WOM in a measurable, actionable way. Referral marketing takes this new paradigm and creates a framework around the components that lead to more referrals. To join the conversation, leaders must leverage technology. Just as email marketing turned toward automated sending and segmented lists, WOM marketing is shifting to similar tactics. The companies in a position to do more with their data will gain a massive lead over their competitors.
Take the memory-foam mattress market. Once dominated by Tempur-Pedic, startups such as Leesa Mattress and Casper leveraged WOM marketing and referrals to make massive strides in a short time. Casper, for example, made $20 million in sales in less than a year through word of mouth.
Generating Dependable Results
Asking for predictable referral marketing is like asking for predictable sales. Everyone wants it, but few know how to make it happen.
To encourage more customers to take their positive impressions to the web, executives must use tech. Referral marketing technology tracks and analyzes where, when, and how often people share information about a product, then connects that information to final purchases, closing the loop. Using that data as a starting point, executives can optimize their referral programs to boost sales.
Facilitating these conversations is key to referral success. As noted by Stella Service, unhappy customers tell two to three times more people about their experiences than happy ones do. The easier it is to share good news, the further the product will spread.
How to Make More Out Of Referrals
To make referral revenue skyrocket, follow these simple rules.
First, put real resources toward the plan. Just like every other marketing initiative, the more intentional the attack, the better the results will be. Determine how much to spend and which team members to assign to boosting referrals, then follow through by providing those resources. When properly funded, successful WOM campaigns provide exponentially higher ROI than other channels.
After locking down budget and talent, select new technology. The best option varies from company to company, so start with the base requirements — communication automation, data tracking, and analytics — and then work from there. Follow the examples of Amazon and Uber, both of which excel in leveraging data to anticipate and meet customer needs.
Finally, continue to evaluate the data and adjust strategy accordingly. Don’t stubbornly stick to a plan until the year ends — social media moves too quickly for that. Instead, respond to what the metrics say to create a scalable pipeline of referrals.
Consider what data indicates in relation to the entire customer acquisition process. Start by segmenting each channel (pay-per-click, events, partnerships, affiliate, etc.), then dive into channel-specific metrics. Analyze cost per lead, cost per customer, and customer lifetime value to determine which channels drive the most value to the company.
Word-of-mouth marketing consistently creates leads who convert faster, buy more, and refer others — all at a fraction of the cost of other strategies. By prioritizing referrals now, companies can stop wasting money in low-ROI areas and start convincing customers to do the marketing for them.