Why Word-of-Mouth Marketing Will Never Go Out of Style

Word-of-mouth marketing for small businesses

Word-of-mouth marketing has been around for a very long time. It happens when people who have had positive experiences with a service or product recommend it to others—making word of mouth a relatively hands-off promotion technique.

This simple marketing approach is a significant part of small business success, especially in local communities. And the Internet has provided a new frontier for word-of-mouth marketing through blogs, reviews and social media, increasing the reach of this highly effective form of small business marketing.

What makes word-of-mouth marketing so effective for small businesses?

People trust their friends and family

A 2013 Nielsen study found that 84% of people trust word-of-mouth marketing over any other form. The reason for this is simple: we trust the recommendations of our friends and family, who presumably have our best interests at heart. Since advertisements always portray a company’s product or service as appealing, many consumers are skeptical. However, friends and family or other consumers with no obligation to promote a product or business are more likely to give their honest opinions. Customers who have unexpectedly positive experiences are more likely to share them with others.

Recommendations are personalized and targeted

Not only do people build a business’ word-of-mouth reputation when they recommend it to a friend, but online reviews and blog posts about a small business can be tailored to the customer who best benefits from them, as they’re relevant to their personalized search queries. Many customers use search engines and trusted review websites to check on a brand or small business, and the information they find can influence their decision to spend money on the product or service. A 2011 study by Google found that online sources are a driving force behind word-of-mouth marketing conversations. Whether through social media, blogs or review websites, customers seek recommendations for products or services they are interested in and, in turn, recommend those products and services to people who may share that interest. This word-of-mouth advertising reaches a more targeted group of customers than generalized advertising and is extremely useful for small businesses with a very specific client base.

Companies and customers can connect

Social media, blogs and online reviews open many doors for small businesses. Word-of-mouth marketing is no longer limited to just the customers in the conversation. Companies can now engage with customers on Twitter, Facebook and forums and respond to reviews and feedback from Yelp or independent blogs. Word-of-mouth marketing is influenced by personal relationships and trust. A small business that interacts directly with customers on online platforms makes them feel more connected. Engaging with customers builds trust, and increased trust makes customers more likely to recommend a business through word of mouth.

When it comes to straightforward tactics for small business marketing, promotion by word of mouth is one of the most effective ways to go. However, it takes more than just a reliable product or service to secure a recommendation. While word-of-mouth marketing is much more cost-effective for small businesses than traditional advertising, it still requires a budget to keep up with online reviews and social media chatter, as well as dedicated employees to manage social media accounts, track keywords, and respond to online reviews. Creating a trusted relationship between a company and its customers takes time and devotion but is rewarded in time.

Read more small business marketing tips from Fundation, provider of online small business loans, by visiting our blog.

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About Fundation

Fundation combines the benefits of a bank loan with the ease and efficiency of an online lender. We offer conventional loans with competitive rates to businesses with varying credit profiles. Our technology allows us to deliver capital in as few as 3 business days through streamlining the collection and evaluation of customer information and conducting the majority of the lending process electronically. As a direct lender, we use our own capital to originate and hold the loans we make, so that we can focus on building relationships with our customers. Our dedicated customer relationship model enables us to understand each unique borrower’s business. This level of service, coupled with our best-in-class products, is why many of our customers come back to us repeatedly for more capital.

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