by Wordy

Created on: February 26, 2009

People would much rather buy from a company they know and trust, or from a company recommended by someone they know and trust, than take a chance on one found in a directory or online. The key to word of mouth marketing, therefore, is to have lots of people recommending your company to their family, friends and business associates. The process of making this happen is known as word of mouth marketing, or referral marketing.

Lots of businesses claim that they rely on word of mouth marketing for a significant proportion of their business, but few actually have a strategy to make it happen. It is true that if you do a good job for a customer, that customer will recommend you if they get the opportunity, but relying on this is a bit hap hazard; the customer may not know people in the market for your services, or the subject may not arise in conversation. So to really grow your business through word of mouth marketing you have to take some action yourself to get other people talking about you.

There are a number of ways to make word of mouth marketing effective, and this activity should form part of your overall marketing strategy and plan. Some ideas to try include:-

1. Refer a friend schemes. Reward existing customers for referring people they know to you. A simple referral card with the goods purchased or invoice for services, offering a small reward (a free gift or money off next purchase) when the customer refers a friend.

2. Use the media to build your reputation. Set yourself up as an expert in your field and offer your expertise and opinions to writers in local newspapers and magazines or online. People reading these articles will respect your opinion and will talk about your company as a result.

3. Get involved in community or charity events. You can sponsor events, or you can just take part, building and enhancing your reputation as a "good" company to deal with.

4. Develop strategic alliances with other companies looking for the same type of customer. Your two companies may offer complementary goods and services (wedding car hire and photography, for example) or may be completely different. Promote each other's services you'll find it much easier than selling for yourself, and by developing several strategic alliances you will have several client bases to tap into

5. Attend business networking events. These are good places to find people with whom you might want to build a strategic alliance, and excellent forums for getting to know other people in business who can recommend you to their contacts.

6. Offer incentives to other people to recommend you. This type of incentive is usually commission on the value of the sale, but be creative, would your contacts respond to an offer of a free trip in return for 10 referrals that turned into business, for example?

7. Recommend other companies to your contacts; they will be so grateful they will want to recommend you in return.

Word of mouth marketing can be extremely powerful, but do not forget that the power is two-way. Bad news travels fast, so you have to be extraordinarily careful to manage your reputation in a positive way. If you were to let down a customer, even if it weren't your fault, the effects could be catastrophic; reputations can take years to build and can be destroyed overnight. You must remember, therefore, that absolutely everything you do and say in business affects how others perceive you and your company, and take care to ensure that the perception is the right one.

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