I gave a short presentation on word-of-mouth yesterday. No powerpoint slides, no whiteboard. I had 45 minutes of material with examples of brands that grow through no advertising, brands that spend $1.5 billion in advertising and need bailout money, and ways to create WOW in your customers with big things/game-changers and small and personal steps.
One of the issues or questions I knew would be asked is What's the difference between word-of-mouth and referral marketing?
Tactically, I was clear on the difference. The first, WOM, is generated solely at the leisure and discretion of your customers. You give them something valuable, something that WOWs them, WOW them consistently, they can't help but share that story. They talk about you. It's natural. That's word-of-mouth.
Referral based marketing is different. The company is asking the customer to do them a favor. Referrals are generated with follow-up phone calls, emails, special offers with tell-a-friend links, etc. The company asks for a favor from their customer. Some have earned it. Some haven't. But, in essence the company asks for a favor: "Our business depends on referrals. We appreciate your referrals. Who do you know....?" That kind of thing.
See the difference? One's giving. The company wants to give a WOM experience to their customers. They devote themselves to understanding the needs of their customers. As a result, the company knows what extra feature or tidbit or step or tactic or benefit would add meaning to their customer's day. And they deliver it. Little to no fanfare is used. The focus is on giving to the customer.
One's holding a hand out asking for a favor. Can you do me a favor and tell me your friends' name who may want our service?
The first one, the word-of-mouth company, creates a cycle of giving. The company gives a WOW to its employees. The employees give a WOW to the customers. The customers share that WOW with their friends. Their friends call the company, already pre-qualified and excited, and give that WOW back to the employee when they tell the employee "our friend, your customer told us how much they loved your business".
The second one, the referral-based marketing, creates a cycle of interruptions. The company interrupts the employee to remind them they need to go out and ask for referrals. The employee interrupts the customer to ask for referrals. The company then interrupts the friends of their customers with uninvited sales calls.
Which cycle creates trust and loyalty with both customers and employees?
Which cycle creates a sustainable business model?
Which cycle do you create?
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