Word of Mouth Marketing

Word-of-Mouth Marketing Definition

We are exposed to word-of-mouth marketing when we learn about a new product or brand through a friend, family, or our social networks. This information transfer can be organic (word-of-mouth) or encouraged by a company or brand (word-of-mouth marketing). Here are the complete definitions of both:

However, most often, there is a thin line between organic word-of-mouth and word-of-mouth marketing. Since word-of-mouth often occurs when customers are satisfied with the product or service, which happens only after they have made a purchase.

Marketers spend millions of dollars on advertising products to raise brand awareness and communicate customer value. They also use various sales promotion tools and pricing strategies to encourage purchase. Through digital technologies, companies are also able to start conversations and build long-term relationships with customers. All these marketing activities leave an impact on the customers and can turn them into an enemy or an advocate for a brand. This eventually leads to negative or positive word-of-mouth.

Another thing to note is that word-of-mouth does not only include oral communication. It can also take place through e-mail, direct mails, phone calls, text messages, blogs, social media, and other websites.¹

Types of Word of Mouth Marketing

There are four different types of word-of-mouth in marketing: positive (PWOM), negative (NWOM), traditional (TWOM), and electronic (EWOM). All these four types of word-of-mouth have different impacts on a company or brand.

Positive vs. Negative Word-of-Mouth Marketing

Let's first examine the differences and effects of positive and negative word-of-mouth:

As a result, positive word-of-mouth may increase customers' purchase probability and attitude towards a brand, whereas negative word-of-mouth might decrease it.

Word-of-mouth is particularly important in service marketing, where a product cannot be physically tested, as it may reduce perceived risk.¹

But why do marketers adopt word-of-mouth tactics at all? According to East et al. (2021), there are four motives to engage in WOM:

• Frequency and weight of purchase - Customers who purchase larger quantities of a product often are more likely to engage in word-of-mouth.

• Personality - Certain personality traits like extraversion or agreeableness are more likely to lead to WOM distribution.

• Brand attitudes - If a customer has a strong attitude toward a product or brand, they are more likely to spread word-of-mouth. Bear in mind that brand attitudes are not always positive. A customer with a strong negative attitude towards the brand is also more likely to engage in word-of-mouth (NWOM).

• Brand recruitment - Customers who were recommended a particular product or brand by others through word-of-mouth are also more likely to recommend the brand to others through word-of-mouth (PWOM).

Through word-of-mouth marketing, marketers can create positive brand attitudes and strengthen brand relationships with customers. This will translate to more sales and profits for the company.

Traditional vs. Electronic Word-of-Mouth Marketing

Let's now also take a brief look at the traditional and electronic word of mouth:

The widespread usage of digital tools means that companies need to pay more attention to electronic word-of-mouth. Brands should be present in online communities and provide consumers with relevant information about their brand and product value.³

Electronic word-of-mouth allows companies to explore consumer behavior and motivations. It also helps mitigate negative word-of-mouth and, if done right, can encourage a more positive information exchange experience. For example, companies can use EWOM to prompt meaningful conversations on social networks or collect customer feedback.

Both positive and negative EWOM can help companies to adjust and adapt their marketing strategies. Positive EWOM shows what they are doing well and should capitalize on, and negative EWOM points out areas that need improving. Overall, electronic platforms provide an overview of customer perceptions of a brand (compared to TWOM). How companies react to these perceptions and improve them will affect their profit returns in the long run.⁴

Benefits of Word of Mouth Marketing

Now that we understand what word-of-mouth marketing means let's examine some of its benefits. Why would companies attempt word-of-mouth? Here are several major benefits of initiating a word-of-mouth marketing campaign ¹ :

• Customer interest: Most consumers who spread word-of-mouth don't have any commercial interest in the company. Instead, they just want to share their positive experience with the brand (or negative reviews if the service is downright bad). Thus, word-of-mouth is the most authentic form of promotion. Investing in word-of-mouth marketing not only helps the company arouse people's interest but also builds brand authenticity.

• Customer loyalty: Word-of-mouth marketing amplifies the brand message, which results in more brand loyalty. Brand loyalty can lead to more sales for the company as loyal customers are more likely to recommend the brand to their networks and leave positive reviews. Positive word-of-mouth can sometimes make people switch from a competitor to your brand.

• Conversation: Word-of-mouth is an interactive form of marketing. It involves a dialogue between the two groups. In word-of-mouth marketing, the receiver often asks many questions about the brand to collect as much information as possible. This can improve brand awareness and help turn "strangers" into prospective customers.

• Customer relationships: Word-of-mouth marketing is also an effective method for building customer relationships which leads to repeat purchases and more product recommendations.

Word-of-Mouth Marketing Disadvantages

That said, there are some disadvantages of word-of-mouth marketing that marketers should be aware of:

• Implementation: Word-of-mouth strategies are difficult to execute as companies pursuing this strategy tend to be viewed as inauthentic in the eyes of customers. A subtle and genuine approach should be adopted for word-of-mouth marketing to succeed.

• Targeting: Word-of-mouth marketing might not directly impact your target customers. This is because you can't control the audience who are exposed to word-of-mouth messages. A customer may talk about your product to a friend or family member who is not interested in the product or service that your company is selling. Thus, even if it's a positive message, it won't do your brand any good.

• Feedback: It is challenging to collect feedback and measure the success of a word-of-mouth campaign, especially if traditional word-of-mouth is used.

• Negative impact: Negative word-of-mouth can have a detrimental impact on brand perceptions. Dissatisfied customers (even when your company is not at fault) can spread negative word-of-mouth that deters potential customers from purchasing a product. NWOM also hampers the brand's revenues and existing customer relationships.

Word-of-Mouth Marketing Examples

So how can marketers use word-of-mouth to their advantage? What are some of the marketing techniques that encourage customers to speak about a product or brand? Let's take a look at some examples.

Word-of-Mouth Marketing: Viral Marketing

Viral marketing is one of the methods to generate word-of-mouth communications. Viral marketing is effective at creating word-of-mouth due to the nature of the content being published. The nature of viral messages is often humorous or may involve a shock factor or call to action, leading consumers to spread the message to their friends or family, usually through a social network platform (e.g., Instagram or Facebook).

Word of Mouth Marketing: Text Mining

Another example of how companies can use word-of-mouth in their marketing efforts is through text mining.

Text mining allows marketers to analyze a vast number of customer reviews and social media posts about their products or brand. Using text analysis methods, marketers can examine the impacts of word-of-mouth on their brand. It can also help them discover patterns and trends in customer wants and needs.