Unlock the Power of Word-of-Mouth Marketing: 3 Principles to Grow Your Small Business
Joshua Botello
Word-of-mouth (WOM) marketing is typically the first and easiest way small business owners can attract new customers. It costs nothing and is incredibly powerful when done correctly. In fact, 84% of B2B decision-makers start their buying process with a referral, and people are 90% more likely to trust and buy from a brand recommended by a friend. Not to mention, referred customers bring 25% higher profit margins.
However, many business owners struggle to harness the full potential of word-of-mouth marketing. The key is to create a consistent, predictable, and iterative system like
Referral Marketing. In this article, we'll explore the three principles of the E-A-R framework to make those referrals work for your small business.
Earn the Referral
The first step in effective referral marketing strategy is to earn the right to ask for referrals. You need to provide an exceptional experience that leaves your customers raving about your business. As Walt Disney famously said, "How can we do what we do so well that our customers can't help but tell their friends about us?" Here are some ways you can earn the referral:
1. Provide a Personalized Experience: Tailor your interactions to meet the specific needs and preferences of each customer. Personalization can significantly enhance customer satisfaction and loyalty. Use customer data to segment your email list and send personalized recommendations based on previous purchases or browsing history.
2. Offer Prompt and Efficient Support: Ensure that your customer service team is responsive and resolves issues quickly. This builds trust and shows that you value your customers' time. Implement a live chat feature on your website to provide immediate assistance, and train your team to handle common queries efficiently.
3. Exceed Expectations: Go beyond what is expected by providing unexpected perks or superior service quality. This can leave a lasting positive impression. Offer services that go above and beyond what is typically expected, such as complimentary upgrades or personalized welcome kits.
Ask for the Referral
Once you've earned the trust of your customers, it's time to actively ask for referrals. Many businesses miss out on this opportunity simply because they don't ask. Make requesting referrals a habit and part of your process.
The key is to identify the right moment and method to request referrals from satisfied customers. The ask should feel natural and justified, leveraging the goodwill you've earned through excellent service. For example, a chiropractor could say:
"Most of our customers come as referrals from other customers, and we appreciate that. If you have any friends, family, or co-workers that suffer from lower back pain, you can introduce them to us, and we'll give them a free 15-minute back examination. This way, we can advise them about the best course of action to relieve their pain."
Reward the Referreral
The final step in the E-A-R framework is to reward those who refer new customers to your business. This can be done through various incentives, such as discounts, exclusive offers, or loyalty points. A well-structured reward system can motivate customers to actively promote your business.
Some effective referral incentives include:
1. Discounts or Coupons: Provide percentage discounts, fixed-amount discounts, or exclusive coupons for future purchases.
2. Two-Sided Rewards: Offer incentives to both the referrer and the new customer to encourage participation from both parties.
3. Tiered or Bonus Rewards: Implement a system where rewards increase as referrers bring in more customers. For example, offer $250 for the first 5 referrals, then $500 for each referral after that.
The reward system should be clear and attractive enough to motivate customers to participate in the referral program. Additionally, it's important to properly track referrals and ensure that rewards are distributed accurately to maintain trust and encourage ongoing participation.
Final Thoughts
Word-of-mouth marketing is a powerful tool for small businesses, but becoming more active like referral marketing requires a strategic approach. By following the E-A-R framework - Earning the referral, Asking for the referral, and Rewarding the referrer - you can create a consistent, predictable, and iterative system to grow your business through the power of referrals.
Remember, establishing clear goals, simplifying the referral process, leveraging social proof, and continuously monitoring and optimizing your efforts are key to unlocking the full potential of word-of-mouth marketing. Implement these strategies, and watch your business thrive through the power of recommendations from happy customers.
Funded in part through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, conclusions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.
