Supercharging Word of Mouth for Online Retailers

By Angela Bandlow

Special to the eTail Blog

Vica voce – commonly known as word of mouth (WOM) – is the oral or written transfer of information between people and groups. It’s helped us pass on tradition, recount the history of our world and share the things we love with friends. While WOM has existed since the beginning of time, mass adoption of the Internet and social technologies has supercharged the scale at which we’re able to share and interact. Today, consumers have unprecedented access to information and to one another. Retail brands that understand the underlying dynamics of WOM (i.e. why we share) are creating armies of advocates – and more importantly, revenue, in the process.

Compared to advertising, WOM is genuine, which means that when a consumer promotes a brand, product, service, or event, they’re doing so because they’re truly passionate about whatever they are endorsing. Research has consistently shown WOM to be viewed by consumers as more trustworthy than traditional promotion methods. When consumers have faith that they’re getting the whole, unbiased story from a friend or influencer not affiliated with a brand, they’re much more inclined to make a purchase. In fact, Forrester research shows that 80 percent of all purchase cycles (both B2C and B2B) involve some form of WOM recommendation. The days of strictly controlled brand messaging are long gone and without a clearly defined purchase path, word of mouth marketing (WOMM) has become more critical than ever.

To skip to the meat and potatoes now, check out Extole’s Utlimate Guide to Referral Marketing Programs, from which this article was derived. Screen shot 2013-03-28 at 3.46.52 PM

As marketers, and in particular, Internet retailers, we know that it’s virtually impossible to duplicate the level of credibility that comes with a personal endorsement from a friend. So, we must take steps to encourage positive sentiment amongst brand fans and encourage them to help direct friends and connections along the purchase path for us.

What’s the quickest way to get brand advocates to spread the word? Just ask. Especially when paired with a compelling incentive, your advocates are already passionate about your brand and will readily spread the word with their networks via social channels. Tapping into your customer network through a referral marketing program is the easiest way to gain credible endorsements and jump start a network effect of sharing – driving WOM at scale.

Here are a few tips to keep in mind when launching a referral marketing program to harness consumer WOM:

1. Make the Benefit of Sharing Clear
: What is the incentive for your advocates to spread the word about your brand? Whether it’s a $25 credit, Free 2-day Shipping for a few months, or a charity contribution, make the benefits of sharing painstakingly clear. Make sure to promote your program where your customers will be most likely to see it and make it easy for them to understand and get started.

2. Personalize the Experience: Both for your advocates and their subsequently referred friends, the experience is half the battle. For advocates, make sharing effortless with optimized emails (and the option to edit content to their liking) and the ability for one-click sharing on social networks. For referred friends, make sure the landing page is personalized and reinforces your offer and the incentive that awaits them beyond conversion. Bottom line, make it easy for newly converted friends to share the offer – it creates a domino effect and introduces your company to a whole new network of connections.

3. Take Advantage of Analytics
: Arguably the most important element, this applies to both your consumer-facing application and your own behind-the-scenes measurement tools. For consumers, make it easy to see how many referrals they’ve sent to date, via which channels, and where their sharing has been most effective in earning them incentives. This will inspire more sharing and deeper engagement in the program. Behind-the-scenes, it’s important to have a clear view into your biggest advocates – who’s been most engaged in programs to date and the type of ROI they are driving for your brand.

There has been much debate in the market about incentivizing advocates to share. Does it make sharing less genuine? Does it really make a difference? We recently worked with an online retailer of hair care products to test the impact of incentives on consumer sharing and WOM. We launched a referral marketing program without incentives and then added an incentive to test the impact. By adding the incentive of a $10 Amazon gift card, the program saw a 25x increase in advocates sharing, and 96x the sales driven by the program. The results across the board indicated that incentives drastically improved the performance of the referral program.

There is no marketing technique more powerful than WOM. And, with referral marketing programs, online retail marketers have the ability to harness WOM recommendations and amplify them exponentially with incentives – creating an entirely new marketing channel that drives real results.

To learn more, check out Extole’s Utlimate Guide to Referral Marketing Programs.

Angela Bandlow is the Vice President of Marketing for Extole,