Word Of Mouth Marketing 101

Key Takeaways

  • Word of mouth marketing is defined as recommendations made to personal networks by satisfied customers.
  • There are many benefits of word of mouth marketing, including its effectiveness in attracting new clientele and low cost.
  • A passive income investor’s word of mouth marketing strategy might include sending out newsletter or taking an active role in social media.

It is most likely safe to assume that you have heard of the phrase word of mouth marketing, and perhaps you have even benefitted from it before. However, have you ever considered the advantages of taking a more active role in word of mouth marketing for your business? Read on to learn more about how this unique marketing strategy works, its benefits, and how you might enlist it to create more positive awareness for your brand.

Word Of Mouth Marketing Definition

Word of mouth marketing is defined as recommendations made by satisfied customers, both oral and written, to their network of personal contacts. Because consumers are more likely to try a product or a service recommended by a friend or family member, word of mouth is considered to be the most effective method of marketing available.


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Word of mouth marketing definition

5 Benefits Of Word Of Mouth Marketing

  • Inexpensive: The cost of marketing can eat into a significant portion of an operating budget, especially for smaller businesses. One of the most notable benefits of word of mouth marketing is its inexpensive nature. Although some campaigns may require some initial investment, the referral-based medium costs nothing in comparison to print, television or radio campaigns.
  • Brand Recognition: A positive by-product of a word of mouth marketing campaign is the amount of recognition it can bring to your brand. Businesses can take an active role in these campaigns by providing resources that can easily be shared by customers to their friends, not unlike social media.
  • Customer Retention: Research shows that someone is more likely to convert into a customer, purchase more, and stay with your brand longer when they were referred by a friend or family member, compared to leads obtained from traditional marketing methods. Your word of mouth marketing strategy should include an emphasis on customer service and customer experience; as more and more customers provide referrals to their personal networks, the value of referrals will grow exponentially.
  • Build Trust: According to the Nielsen 2015 Global Trust in Advertising study, a whopping 83 percent of respondents claim to trust recommendations from people they know, over online reviews and editorial reviews, and all other forms of advertising. Although coming up with word of mouth marketing ideas may be tricky, encouraging and facilitating referrals will help attract buy-in from new customers.
  • Alternative Marketing Strategy: In today’s digital age, there is no shortage of marketing strategies. Unfortunately, some strategies are not only considered out of date, but can also aggravate consumers. Word of mouth marketing provides businesses with an alternative route to reach potential customers, when tactics such as cold calling are ineffective.

Word Of Mouth Marketing Statistics

Word of mouth marketing statistics can help address any skepticism that may arise. According to Invesp, word of mouth marketing drives $6 trillion in consumer spending annually, or roughly 13 percent of all consumer sales. Furthermore, 90 percent of consumers are more likely to buy from a brand when it was recommended by a friend. More specifically, word of mouth marketing is five times more effective in sales, compared to paid media. It should be noted, however, that not all word of mouth marketing is positive.

Brands that instill a more intense emotional response from consumers are three times more likely to receive positive word of mouth marketing, while almost 30 percent of consumers agree that word of mouth can also erode brand affinity. Marketers think creatively on how to do word of mouth marketing, but they should be cautioned to also consider how to drive word of mouth marketing in a way that puts their brand in a positive light.

A Passive Income Investor’s Word Of Mouth Marketing Strategy

When learning about word of mouth marketing, one must be in want of specific word of mouth marketing examples applied to real estate investing. Although the benefits are quite clear, it can be tricky to brainstorm how to drive word of mouth marketing for your specific investing niche. For starters, word of mouth marketing does not gain momentum over night. It requires some time to build up your reputation, as well as making sure that consumers are exposed to the services that you offer. In the case of a passive income investor, perhaps this means building a positive reputation on your resume of buying property and managing rental properties.

In addition to taking the time to build up a positive reputation, a key tip for success in word of mouth marketing is staying top-of-mind with your clients, tenants, and business partners. Here is an example. Imagine there is a group of friends sharing a meal, and you had purchased the property off of one member of this group. This person had a very positive experience working with you. Your client’s friends is looking to sell their property, but doesn’t want to deal with listing the property or working with an agent. They remember that their friend had sold their property through an investor, and asks them for advice. At this point, there are two probable outcomes. Let us say that you had not spoken to your client in years. In this case, the probable outcome is that you will not come up in your client’s mind. Alternatively, let us say that have put in the effort to nurture this client relationship, even without the expectation that you would execute another deal with them. However, in this case, you do come to your client’s mind, and most likely they provide their friend a referral and you have gained a new client.

The point of this example is how critical it is for real estate investors to continue nurturing relationships with business contacts, even if there is minimal likelihood that you will do business with them again. You never know when you will unknowingly gain a new client, deal or great rental unit tenant from word of mouth. It can be tricky to nurture business relationships on a one-on-one basis, especially as the years go on and your resume grows. However, there are some tips on how to stay connected. First, do not be shy to leverage social media. By engaging with your audience regularly, you can be sure to stay top-of-mind, even if you do not have the chance to interact one-on-one on a regular basis. Listen to what your audience has to say, make comments and answer questions. The key to social media is to use the platforms that your audience is most likely to use, and actively participate in a manner that builds your brand. Investors can also bolster this strategy by sending out monthly or quarterly newsletters, to help demonstrate the work that you do, as well as encourage readers to follow you on social media. Finally, in today’s digital age, it is easy to forget word of mouth strategies that enlist the help of face-to-face communication. Attending or hosting local events in your community provide an excellent opportunity to connect with community members face to face while promoting your personal brand.

Coming up with good word of mouth marketing strategies can be tricky, but the benefits are too advantageous to ignore. Not only can word of mouth referrals land you new clients and deals, it is a surefire way to promote and build your brand in a positive light. Furthermore, word of mouth marketing can be deployed at an extremely low cost. Investors who take an active role in promoting their own word of mouth marketing are sure to magnify these benefits.

Do you have any useful strategies to help facilitate word of mouth marketing? Feel free to share in the comments below:

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Real Estate Investing Strategies
Real Estate Investing Strategies
Real Estate Investing Strategies
Real Estate Investing Strategies
Real Estate Investing Strategies
Real Estate Investing Strategies