Word of mouth

I think word of mouth is both one the most critical marketing tactics and one of the bests measure of whether your business is executing its vision and brand strategy effectively.  Frederick Reichheld has written extensively about loyalty and net promoter score as the key indicator of growth and I could not agree more with his conclusions, but I also think that the most successful companies take word of mouth beyond tactics and measurement.  Yes, willingness to refer is a great yardstick,  but the fastest growing companies incorporate word of mouth as part of their product and brand. Extremely happy customers are a great starting point, but if referring others helps customers meet their needs, word of mouth becomes much more powerful.  This can be a challenging concept to grasp, but a few examples where companies incorporated referrals as part of their offering can bring clarity.  

The experience on Facebook became much more meaningful as a result of friends referring friends.  As a result, Facebook's users were incentivised to refer others to Facebook.  Another example were the early days of Groupon.  In the beginning, Groupon customers needed to get a minimum number of people to purchase an offer in order to activate the dramatic discounts that were part of the deal.  Apple's app store is another great instance.  Apple allowed users to purchase apps sold by developers in the app store.  The developers in turn had incentive to refer people to the app store to purchase their apps.  

Facebook, Groupon, and Apple went beyond simply creating refer-a-friend campaigns and instead fundamentally structured their businesses around the idea that people can be more successful if they invite others to participate.  Obviously additional factors are needed to maintain long term success, but if word of mouth can move beyond a tactic to a part of the company's offering it can be a huge factor in an organization's growth. 

Admittedly the examples above seem quite unique in terms of their use of word of mouth but even simpler implementations can provide large returns.  

Five Reasons
1. Low cost of acquisition
2.Trusted relationships have much more influence
3. Like people have like needs
4. Makes the customer feel involved in the organization
5. It is a strong measure of the health of the organization