In the marketing world, one of the most powerful and used techniques is word of mouth marketing.
(Because you have little control over if you do it or not).It’s probably the #1 thing we hear when we ask our potential clients how they currently reach new customers and drive business.
Now, before I get into this somewhat touchy subject, let me clarify. I do not think word of mouth marketing will kill your business, but rather that ONLY word of mouth marketing will kill your business. But, that isn’t to say word of mouth marketing won’t ruin your business if you aren’t careful.
Word of Mouth marketing is volatile, powerful, enchantingly easy and practical.
It’s easy to see how comfortable we can become when we have lots of word-of-mouth marketing. It seems like an endless flow of new paying customers into our business. But the problem is that word of mouth marketing, isn’t.
It’s not endless, and it does come to an end eventually.
But it doesn’t have too!
For many years I did freelance helping people out with various marketing projects.
During this period of time, I ran into a fascinating phenomenon.
I call it, the referral gold vain.
Basically what I was finding, is that the more referrals I got away from the original reference, the less likely they were to become customers.
This was when I realized a fundamental fact about word-of-mouth marketing.
Every new client I served, generally had a referral network of about three people. Which is, because when I reached one client and did a top-notch job, I would frequently get more projects from the referrals, which kept me busy until one day when… it didn’t.
If you don’t keep your eye on word of mouth marketing, it will lead you to be complacent on your other, harder ways of reaching customers.
Eventually, those initial gold veins I’d worked so hard to find, dried up, and I had with no incoming projects to work on.
“But Nathan, that’s the freelance industry! I’m a (dentist, restaurant, pet grooming, whatever you do industry.) that doesn’t happen to my business! “
Oh, but it does, and it’ll kill your dreams if you let it.
See Word-Of-Mouth has some fundamental flaws that make it dangerously naive to rely on it alone.
1. It has a limited reach, and there will be an end to referrals eventually.
2. It doesn’t take much for one bad experience to have the opposite effect on your business. (Completely undoing all the word of mouth business you’ve been receiving.)
3. Word of Mouth marketing is tough to control and especially challenging to manage effectively.
Turn the page has an excellent article that goes into some of these reasons a bit more if you are interested, the article is worth a read!
Relying on word of mouth marketing isn’t just complacent, it’s downright dangerous to your dreams, employees, and family. You need to take control of your businesses fate. Thankfully, it has never been easier to do that. With the marketing techniques and strategies readily available to you today, it’s almost easy.
Word of Mouth has an extremely limited reach, and you can only serve people who know and hear from people who have already discovered your business. Which is terrific, but if you are relying on this alone, you limit the amount of business you are doing.
What to do?
Well, let’s start with some basic BeKnown Marketing Theory.
Start by building new funnels and bait!
What does that mean exactly?
Well, think about it this way. Marketing is a bit like fishing; you need some bait and a hook to catch the fish.
Bait is what you use to draw people into your circle of influence, and eventually into your funnels.
A circle of influence is the range of people who have interacted with or at least seen your business in some capacity. All of your customers at some point before they buy, come into contact with your circle of influence.
They could be traveling down the highway and see your restaurant on an exit sign. Maybe they run across your business listing doing a quick google search as they pass through town.
Either way, they have to run into some bait before they enter into your circle of influence.
Some bait is better than others, but that’s an article for another time.
After they come into your circle of influence, you have an opportunity to convert those individuals into customers. You can do this by using something called a funnel.
Most business people have one step to their funnel, and that’s all you get with their business.
Become aware of bait -> Enter into the circle of influence. -> Enters Funnel and makes a buy. -> end of the funnel.
That’s all she wrote for that business!
That’s okay as well, and it’s the underlying business model that’s made many people hundreds of thousands of dollars.
But, we aren’t interested in pushing your sales into hundreds of thousands of dollars, we want to bring you to the millions of dollars level.
You can’t do that without a funnel.
So how do you build a funnel for your business?
Easier than you realize actually!
With a great funnel and attractive enough bait, you will drive thousands of new customers into your business.
What does a good funnel and bait look like?
Let’s use a restaurant as an example for this funnel.
First, we are going to justify our funnel numbers by linking to a separate article on our website. It goes into detail on calculating the LTV of your business.
Let’s say the average meal at our example restaurant with a drink is $11.50
Now that we have these numbers, we need to discuss the heart and soul of restaurant marketing, repeat customers.
We know that every time a visitor comes into a restaurant, they are building a habit. We want to encourage that habit development as much as possible.
A habit cycle goes typically like this.
Trigger > Decision > Action > Reward
They see an ad, or they get hungry. > They decide to follow through on this temptation. > They take action by visiting the restaurant. > They enjoy the food and receive a dopamine rush.
Their brain records this information, and stores it for use later when they are sad, hungry or in need of a pick-me-up.
Decisions are made by calculating risk vs. rewards. This is PURELY an emotional decision, as are most. Once they have decided with emotion, they find logical reasons to back up their emotional decision.
The more often a customer has a positive dopamine rush, the higher reward and less uncertainty, and risk.
This is why if you bring the same customer into the restaurant three times, they are 70% more likely to become a regular. Once they become a regular, you will experience the benefit of the LTV formula. Which means that customer has a 70% and increasing chance of being worth at least $2,760
That’s the bread and butter of funnel marketing.
So how do we do this?
Let’s start with bringing them into contact with the restaurant. To do that, we need some excellent bait.
We start by running a delicious looking Facebook ad, and we will target everyone in the surrounding 5 miles of the business to test it at first.
The bait is going to be a free entree with a purchase of a drink.
Yikes right? Who’s going to pay to give away a free entree with a drink? We are, but to get the coupon they have to join our SMS list and our email list. But most importantly they land on the signup page. On this page, we have installed our Facebook and google tracking pixels. They pick their ID out and add them to our re-targeting audience.
What this means is we will be able to get these individuals back, through other ads and bait.
Remember, we don’t care about the $11.50 sale, because we want to turn these people into $2,760 customers over the long run.
The drink, tip and possible side you might be able to tempt them into buying will cover the food cost of the entree. We won’t make any money off this first sale, but that’s okay.
The idea is to WOW them with the food and experience, so they come back. This is the first step, free food to build the dopamine connection in their brain.
Our next offer will up the risk a little bit, but give them a good deal to bring them in.
We retarget the ad again, but we want to double our efforts this time.
Bring a friend, get your entree for free. A standard 2 for the price of 1 offer.
This ad will bring them, AND a friend into the restaurant. This doubles the exposure and opportunity to build the habitual connections with the restaurant.
Plus, we are on visit number #2 for our prospective customer.
At this point, the customer has an excellent chance of becoming a regular. (If the food is excellent of course, and let’s face it I wouldn’t be running a fictitious restaurant if the food wasn’t good.)
Now, while this is going on with Facebook targeting let’s talk a bit about what we’ve been accomplishing with email and SMS marketing.
We kindly let the customer know they’ve been enrolled in a loyalty program, and they can pick up their card at the restaurant. The waiter at the restaurant should also be offering the card to the customer from the minute they sit down at their table.
Loyalty programs entice them to continue coming back because who doesn’t like free stuff?
To make them feel a little more VIP, we let them know that if they use their cards, they can get a drink for themselves at half price. (If they aren’t using a different special of course.)
After seven meals, they get a free entree and a new punch card!
All of these techniques, encourage revisits.
At this point, they’ve been in the restaurant at least three times if they’ve followed through our funnel of offers and they are coming back in regularly.
Now we are making money.
This is a reasonably simple funnel construct and one you might run into at times at restaurants which are crushing it.
This customer is hundreds of times more likely to be a regular customer and will eventually be worth thousands of dollars to your business.
Now, to be realistic this isn’t always going to turn customers into regulars. But a substantial percentage of people will, and it will far outweigh the small expense spent to gain these customers.
Now, in the same way, that we shouldn’t rely on word of mouth only to grow the business. We shouldn’t rely on this marketing strategy alone either.
We need to build multiple marketing strategies and systems to draw customers in from lots of different areas. The more strategies, and funnels a business has working effectively, the more likely it is to experience long-term success.
There are now more and more referral headwaters so to speak. These new people that find your business through marketing and advertising now send referrals your way.
Through all these strategies is where marketing, advertising and word of mouth meet and create synergy.
How to improve word of mouth synergy
We aren’t done yet though, and we need to build our word of marketing strategy out even further.
There are a few ways we can do this!
Social media is one of the great word of mouth marketing tools. By incentivizing your current customers to utilize it correctly, you can spread the word about your business. This is both cheap and especially effectively.
A well-known fact is that advertising will only convert a percentage of people. There will always be individuals who will never convert, no matter how many ads you show them. Only one way exists to convert these, stubborn potential customers.
Peer Pressure. Aka, Getting their friends to sell them your business.
How do we do this?
Social media is one of the great word of mouth marketing tools. By incentivizing your current customers to utilize it correctly, you can spread the word about your business. This is both extremely cheap and effectively.
This is a socially acceptable way to ask your customers to sell their friends on your business.
Social Media has features like Check In’s, Reviews and what I consider the most powerful, tagging.
By offering your customers a free entree if they tag your business in a photo they post, you get all the exposure from their friends seeing the picture. This is not only a great way to advertise your products/services, but it is an official endorsement from them.
Reviews also act as social proof, public endorsements of your business.
The same goes for Check-Ins.
It’s critical you build this extra social proof for your business.
One of the strategies we help our clients implement is review handout cards. When you give one of these to each customer that comes in, with some reward for leaving an “Honest” review.
It’s important to ask for an honest review because otherwise, you would be bribing for a positive review. Not only does that come off as distasteful to the customers that you ask, but it can also have serious legal implications for your business. Your Google business Page can even get banned if they catch wind of you trying to game the system.
The obvious question that comes up then is “What about the bad reviews?” There are a couple of ways to mitigate this.
Probably the most common way is asking them to fill out a short survey for a free entree. At the end of the survey ask if their experience was positive through a survey software. If they say yes, then ask them to share their experience. Provide links to Google, Yelp or Facebook.
This is the way the big chains do it, and I would recommend you build something similar.
Below is a list of a couple of different review management software for you to consider.
I hope this article has been insightful and taught you some exciting ways to grow your business. With effective marketing, you can gain more word of mouth referrals, and build your business’s reputation and customer base.
Remember, if you ever need any help with marketing or want to get a couple of ideas explicitly customized for your business. You can reach out to us through the contact page on our website, or schedule a free brainstorm meeting here.