Building trust and loyalty with word-of-mouth marketing

Key takeaways

• Most forms of word-of-mouth marketing come at little or no cost for your business
• Word-of-mouth marketing inspires trust in your brand and creates a loyal customer following
• User-generated content, online review platforms, and referral programs are a few word-of-mouth advertising tactics

As a small business owner, you’re faced with a critical decision: Which marketing channels should you use to grow your business? From social media ads to email newsletters, many marketing channels have costs attached. But there’s one age-old marketing technique that you can implement for free: word-of-mouth marketing.

Word-of-mouth marketing leverages your existing customer base and spurs organic growth for your brand. Organic growth is the act of acquiring customers naturally—without spending money on advertising. It’s an ideal choice when you want to expand your brand awareness on a limited budget.

Learn how word-of-mouth marketing can fit into your overall marketing strategy and provide an affordable, organic growth engine for your small business.

What is word-of-mouth marketing?

Word-of-mouth marketing—also known as WOMM, WOM marketing, or word-of-mouth advertising—is when a business makes a conscious effort to encourage people to promote the company through organic discussion.

First, a business creates something that’s interesting and worth talking about—maybe it’s a funny social media campaign or an enticing referral program. From there, the company encourages its existing customers or the general public to spread this information to others.

Before the internet, word-of-mouth marketing consisted of in-person conversations where customers recommended businesses and brands to one another. Today, businesses have a wealth of digital tools at their disposal, such as social networks and online review sites, that can foster organic word-of-mouth growth.

Why should you care about word-of-mouth marketing?

Word-of-mouth marketing is an affordable (and often free) way to promote and grow your small business. It also directly impacts the health of your company. When customers have good experiences and share those moments, it builds brand trust and brand loyalty. Research shows that 94% of consumers are more likely to trust and frequent businesses that have positive reviews from other customers.

Maximizes your marketing budget

Word-of-mouth is a form of marketing that lets you stretch your budget. In fact, you don’t even need to spend a dollar.

The strategy relies on spreading conversation naturally rather than pumping dollars into other paid advertising channels like print ads.

For instance, Burger Revolution—a small business based in Ontario, Canada—uses social media to promote burgers of the month, rotating craft beers, and special giveaways for engaging with their content. You don’t need a full-time employee or marketer to create those social posts. You could do it on your own as a small business owner—all for free.

Strengthens brand loyalty

With word-of-mouth marketing, you’re engaging customers instead of inundating them with advertising. You’re creating a unique experience that they want to share with their family, friends, and other potential customers.

For example, the Evanston Rebuilding Warehouse in Illinois repurposes materials and reduces waste in the construction industry. It also provides ample opportunity to workers regardless of educational, financial, or background-related limitations. This altruistic business strategy helps the company build brand loyalty and connect with its local community, primarily through word-of-mouth marketing.

Likewise, if you can engage your audience with a compelling story or experience, there’s a much greater chance they’ll continue to frequent your business and refer it to others. As an added bonus, retaining loyal customers will be much cheaper than finding new customers, which can cost five times as much to acquire.

Creates brand trust

Word-of-mouth marketing campaigns build trust in a world where consumers are bombarded by digital marketing.

Consumers trust recommendations from family, friends, and other consumers—39% of consumers developed trust for a brand through peer-to-peer conversation, compared to only 23% from a brand’s paid advertising.

Consumers are greatly influenced by word-of-mouth marketing—like online reviews—with 93% of consumers saying it influenced their purchase decision.

When a customer shares their experience with your brand online or with a friend, they’re saying they vouch for your company. It’s as if they are giving their stamp of approval.

Build a word-of-mouth marketing strategy

Your word-of-mouth strategy should be built on providing a positive experience and excellent customer service to your client base. You can’t foster organic growth for your business if you don’t impress your regular customers.

From there, you can create opportunities for people to spread the word and encourage them to talk to their family and friends about your business.

Here are five ways you can put marketing efforts in the hands of your existing customers, along with some word-of-mouth marketing examples.

1. Establish a referral program

Referral marketing can jump-start your word-of-mouth marketing efforts. Referral programs are an indirect way of prompting customers to share your business with their family and friends.

You provide an incentive for every new customer they send your way—typically, a discount on their next purchase, gift cards, or free products. This encourages customers to recommend your business to their network of contacts.

To make the deal even sweeter, you can offer a two-way referral program, which rewards the referrer as well as the new customer.

For example, boutique salon Black the Salon developed a referral program that offers existing customers a free visit when they refer three new customers.

2. Harness customer review platforms

Customer reviews are the purest form of word-of-mouth marketing: Ideally, a customer patronizes your business, has a great customer experience, and leaves a review on an online review platform.

Reviews are one of the most influential factors consumers consider when making a purchase. One study shows that 97% of consumers make a purchase after visiting Yelp. On top of that, nearly 80% of customers say they trust online reviews as much as a personal recommendation from family or friends.

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Online review platforms like Yelp serve as a centralized hub for customer testimonials. If you provide great customer service, you’ll increase the likelihood of receiving positive reviews from happy customers. This is also the perfect place and time to respond to those reviews. Thank those who had a great experience, and follow up with reviewers whose expectations may not have been met.

To respond to reviews and show off your customer service skills, claim your free Yelp Business Page. 

3. Tap into influencer marketing

Influencer marketing involves creating partnerships with social media users who have a devoted following. Influencers are trusted by their followers and are seen as a reliable source of information, with 80% of people reporting they have made a purchase based on an influencer‘s recommendation.

You can partner with local influencers to endorse your business on social media sites, giving you an effective way to align your brand with like-minded people and reach an expanded audience. Consumers think, “This reputable person I trust uses this business. Maybe I should too.” Just be sure you and the influencer are both following endorsement guidelines—for example, clearly marking sponsored posts with “#ad” or “#sponsored.”

In some cases, the influencer can be the business owner or other members of the company. Chef James Rigato uses his personal Facebook account that has nearly 4,000 followers to promote events at his restaurant—Mabel Gray. This contributes significantly to the overall reach of the restaurant’s event promotion.

Influencer marketing doesn’t need to be on a grand scale. You can partner with local “micro-influencers” who may only have a following of 1,000 to 10,000 people but hold more sway within a specific industry or region.

Interestingly, influencers with more followers on platforms like TikTok yield lower engagement rates than those with fewer followers. Those with 15,000 followers or less show a 10.8% engagement rate while influencers with 500,000 to one million followers have an 8.6% engagement rate.

To locate local influencers, start by combing through your comments, followers, and anyone who has engaged with your content. You can also search industry and city-specific hashtags on social media platforms, like “#AustinMoms” or “#DetroitDIY.” Identify people who have a few thousand followers and strong engagement with fans, such as positive comments and questions on their posts. Reach out to them to see if they’re interested in a potential partnership. It never hurts to ask.

4. Use social media marketing tactics

Social media marketing uses social media platforms to engage consumers, build brand awareness, and eventually grow sales revenue. It’s a free way to market your business through posts that feature text, photos, graphics, and video.

Business owners have a lot of freedom when it comes to posting on social media, but many struggle with using it effectively. The key is to post content that’s interesting, informative, and useful for your target audience.

Think about what makes your business unique and valuable to customers. For example, Full Spiral Salon specializes in curling and coloring curly hair. The owner uses Facebook to host live Q-and-A’s. Those who join can learn from the stylist and ask questions about curly hair maintenance, styling tips, and more.

Another way you can leverage social media is by running a contest or giveaway, where customers are encouraged to follow your social page, like your content, and share your page with their followers. In exchange, they’ll be entered in a raffle for a free product or service.

For example, two small businesses—the Yoga Shelter and vegan restaurant Seva Detroit—partnered for a giveaway. Participants were required to follow both accounts, like the post, and tag a friend to be entered into a drawing for a $25 gift card at each business.

5. Create opportunities for user-generated content

User-generated content (UGC) is the photos, videos, and social posts that your customers share about your business. Harnessing UGC allows you to show potential customers how much other people love your business.

A simple way of utilizing user-generated content marketing is reposting content that your customers have already shared on social media. For example, you can search for people who have tagged your business in photos or social stories and repost them to your business profile crediting the customer’s page.

Another way to capitalize on UGC? Create opportunities that encourage people to share content related to your business. For instance, the popular Chicago dessert spot BomboBar encourages people to share images of its treats by creating photogenic spots around the restaurant, including a colorful mural outside. Its branded packaging invites customers to “show us your bombos” (an Italian donut)—and they do: BomboBar’s online profiles are full of images of people posing against a pastel backdrop, ice cream and donuts in hand. 

Use these organic word-of-mouth marketing ideas to boost your business

Word-of-mouth marketing essentially means your existing customers are promoting your business on your behalf. This can occur naturally after they have great interactions with your business, or you can inspire them to share with their networks by setting up a special giveaway or displaying branded, picture-worthy decor at your storefront.

For more ways to boost your bottom line, explore these low-cost ideas to promote your business and free online advertising tactics.