Using word-of-mouth as a low-cost form of marketing can be enormously successful if it is accompanied by an ethos of going above and beyond what customers expect.
Company chiefs can follow a number of steps to grow their business, all aimed at getting customers to recommend it to their friends and acquaintances.
One step is to identify where customers are coming from to help determine if word-of-mouth is working for the firm, and whether it is making the most of this low-income avenue, according to Dominic Kitchin, director of business development firm Saxonbury & Kent, and founder of The Science of Buying.
Great customer service is also key, and should be ingrained in a firm’s culture, Mr Kitchin said. Company bosses should aim to get a referral rate above 75 per cent, as anything below this figure means the company is not customer-centric, he added.
However, ultimately it is the company’s ethos of going above and beyond what is expected that gets its clientele acting as its biggest, best and lowest-cost form of advertising, Mr Kitchin said.
Using online clothing store and shoe retailer Zappos as an example, Mr Kitchin, who has more than 15 years’ experience helping business leaders and owners dramatically grow their businesses by understanding why their customers buy from them, said: “They have never had big advertising budgets, and from day one the company has focused on building the business through word of mouth.
“Chief executive Tony Hsieh, on his online Delivering Happiness page, makes it absolutely clear that his customers have always been his greatest flagbearers: ‘Our philosophy is to take most of the money we would have otherwise spent on paid advertising or paid marketing and invest it into customer service and the customer experience instead, and let our customers do the marketing for us through word of mouth.’”
Mr Kitchin added: “Zappos was bought by Amazon in 2009 for a reported US$928m (£590m) – not bad for a company built on word-of-mouth advertising through focusing on having a great company culture and customer experience.”
In addition, social media plays a part in spreading the message, but, according to Mr Hsieh, Mr Kitchen said, it is the reaching out to, and speaking with customers that actually gets customers spreading the word.
Mr Kitchen quoted Mr Hsieh as saying: “We [Zappos] don’t really look at Twitter as a marketing vehicle, so we don’t look at how it translates into the bottom line.
“What we care about is being able to connect with our customers on a more personal level. We do that through the telephone as well as through Twitter.
“Nobody writes about the telephone because it’s not an interesting news story, but we believe it’s actually one of the best branding devices out there.”
Hailing the success of Zappos, Mr Kitchin said: “They demonstrate that if you listen and give your customers what they want, and go above and beyond what they expect of you, then they will promote you and be your customer – and possibly friend – for life.”