The Top 3 Myths About Word-of-Mouth Marketing and How to Avoid Them

Myth #1 – “Word of Mouth” is the best way to grow your business.

What’s your favorite and most effective way to generate new business?  If you ask any business owner or salesperson this question, they’ll almost always say “word of mouth”.  That seems logical, and it’s backed up by the statistics.  According to Nielsen, 92% of consumers believe in recommendations from friends and family over all forms of advertising.  Furthermore, 64% of marketing executives indicated that they believe word of mouth is the most effective form of marketing according to the American Marketing Association.  Let’s face it, having a client send you a referral is not only the biggest form of flattery, it’s also pretty close to a guarantee that you’ll generate a new client or customer.  However, the reality is that “word of mouth” isn’t a good way to grow your business.  The fact is that “word of mouth” isn’t a strategy - it’s hoping you will get business.  While it’s nice to be positive and hopeful, if that’s what you are relying on to grow your business, you will most likely be disappointed in the results!

Truth – “Word of Mouth” is NOT a system!  It’s hoping you will get business.  This isn’t predictable, sustainable or consistent. 

So, what needs to happen so that you can use word of mouth to grow your business in a sustainable way?  If you want to grow your business through word of mouth, you need to shift from crossing your fingers and hoping that your clients will give you referrals, and instead build a referral system.  What’s a referral system?  A referral system is a set of detailed methods, procedures, and routines established to generate referrals in a predictable, sustainable, and consistent way.

In short, a referral system is predictable, sustainable, and consistent! The truth is, if you don’t create a system for generating referrals, it will never become a sustainable way to build your business.

  

Get The Cheat Sheet: The 5 Keys to a Great Referral System

If you are looking to generate more referrals for your business in a systematic and sustainable way, I’ve created a Cheat Sheet – The 5 Keys to a Great Referral System, that will help you build a referral system based on what I’ve learned from coaching thousands of business owners, salespeople and entrepreneurs over the last 15 years I’ve been a business coach, which you can download here.

 

 

Myth #2 – Referrals always come after the sale.

Most business owners and salespeople believe that referrals come after the sale.  Well, of course they do, right?  The fact is that experiential word of mouth is the most common and powerful form of referral, typically accounting for 50 to 80 percent of referral activity in any given product category according to a McKinsey study.  Most people just aren’t going to give you a referral until they’ve at least tried your product or service.  Therefore, the reality is that every interaction before, during and after the sales determines if you will get a referral.  

Truth – Every interaction before, during, and after the sale determines if you will get referrals.

Why?  Quite simply, your customers don’t care about you or your business, they care about their reputation!  If they are going to give you a referral, they want to make sure that they are 100% confident that you’re going to make them look good.  They assume that how you treat them is how you will treat others. 

For example, have you ever referred one of your friends to someone, only to have your friend call you and tell you they had a bad experience?  How did that feel?  Not good, right?  When it comes to giving a referral, that’s anyone’s worst nightmare.  Most people will do anything to avoid this situation.  So, if you want to generate referrals, you must be focused on making the person giving you the referral look good.  The way you do that is by adding massive value for your customers during every step of the process and realizing that while most referrals may come after the sale, every interaction before, during, and after the sale determines if you will get one in the first place!

Key Question - If your success was entirely determined by one customer, how would you treat them?

Myth #3 – If your client has a great experience, they will give you referrals.

Have you ever had a situation where you went above and beyond for a client or customer, and you didn’t get a referral?  Do you wonder why?  The truth is that you aren’t even on your clients’ radar.  They have their own issues and problems, and their focus is on themselves, not on growing your business!  Let’s face it, we live in a world where opportunities and distractions are growing at an exponential pace, and our attention spans are short lived.  In fact, according to a study done by Yankelovich Consumer Research, consumers get bombarded by 3500 – 5000 marketing messages/day, and it takes an average of 26 impressions to move someone from complete apathy about your product or service to “ready to buy”.  So, even if you “wow” your customers, you still might not get any referrals!

Truth – You aren’t even on your clients’ radar.  They have their own issues, and their focus is not on growing your business.

What can you do about this?  One thing that you can do is to teach your clients and customers how to give you referrals.  You do this by making it super easy for them.  How?  First of all, the #1 thing you can do is ask!  Yes, that’s right.  It may sound simple, but in my experience, even though everyone knows this, they don’t do it!  Just by making that one change, you can massively increase your results.  Second of all, you can educate them on what kind of referrals you are looking for, which makes it easier for them to identify who they may know that can benefit from your product or service.  Thirdly, you can leverage your sales and marketing process by consistently asking for referrals via your website, social media, newsletters, in your e-mail signature and networking efforts.  In fact, according to a MarketShare study, combining marketing with word-of-mouth has been shown to improve marketing effectiveness by up to 54%!  


Get The Cheat Sheet: The 5 Keys to a Great Referral System

Those are just three of the many ways that you can teach your clients and customers how to give you more referrals. There are many more. If you are looking to generate more referrals for your business, and do it in a consistent and repeatable way, I’ve developed a great Cheat Sheet – The 5 Keys to a Great Referral System, which you can download here.

 

 

Tom Kelly is a Professional Business Coach that specializes in working with small business owners, entrepreneurs, and salespeople. He can be reached at (630) 964-0112, or at www.businesscoachchicago.com.

Copyright © Tom Kelly, Potential In Motion, Inc.TM 2017

 

 
 

Tags: referrals word of mouth

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