Referral Marketing

The Definitive Guide to Word-of-Mouth Marketing

Find out why word-of-mouth strategies are a key channel for your customer acquisition plan in this definitive guide to referral marketing

An all encompassing resource to getting started with word-of-mouth marketing strategies 

Word-of-mouth marketing has influenced purchasing decisions on everything from buying a new car, to choosing a restaurant for dinner, and even selecting software vendors. 


It’s no coincidence that you and your online network share a few of the same favorite things. Who doesn’t love hearing about a great product or service from a trustworthy source? 


Which is also why many marketers and sales teams have heard the adage, “Who’s the easiest person to sell to? Someone you’ve already sold to.”  


Now more than ever, word-of-mouth marketing strategies are focused on building long-term partnerships with customers, fans, and prospects (micro-influencers). In fact, most digital marketing teams have at least one KPI dedicated to developing and nurturing relationships.


The shift toward a more personal marketing approach has been driven by the increased demand of consumers who want to know that the brands they work with not only offer quality products or services, but truly care about them. People want to know there are real faces behind logos, that brands are listening to their concerns and that your company is willing to go above and beyond to satisfy consumer needs.


As marketers, our challenge becomes: How do we leverage the conversations that are already happening amongst customers, prospects, employees, partners, influencers, and fans to drive more brand awareness and new business?


In this eBook, we will share:

  1. Why word-of-mouth strategies are a key ingredient in today’s marketing mix
  2. Examples of different word-of-mouth marketing programs 
  3. How to scale this customer acquisition channel with technology


In today's hyperconnected world, both eCommerce brands and B2B organizations serve consumers that expect engagement and relationships beyond just email or social media marketing. 


As marketers, it's important to activate a word-of-mouth marketing strategy than enables your customers and fans to share your product, service, and experience.

Chapter 1: Why Word-of-Mouth is a Critical Component of Your Marketing Mix


As more brands work to boost their lead acquisition process using organic networks, there’s much to gain from developing a killer word-of-mouth marketing strategy. By building trust with your customers, companies are simultaneously creating brand ambassadors that are willing to share your products or services with their network. 

Referral marketing consumer trust statistics

Word-of-mouth interactions have been impacting businesses for as long as commerce has been around. And today’s digital landscape is no different. 


Whether it’s making a purchase via a referral link, or passing leads from a verified partner, there’s no disputing the magnetic pull of word-of-mouth marketing with the modern consumer.

Screen Shot 2021-04-22 at 8.56.41 AM


Word-of-mouth is the digitized future of building and nurturing relationships with your customers and prospects — and it’s significantly changing the marketing & advertising landscape. 


While display ads still resonate in some markets, like live sports television, word-of-mouth marketing is surpassing display advertising by driving more value and a higher ROI. Display ads on Facebook, promoted posts on instagram, and network television ad spots all have one problem: viewability rates.


Audiences are conditioned to click away from an ad without a second thought, and unless your audience is engaged with a live event, the Super Bowl, for instance — they’re not sticking around to see your ads.


The modern consumer also has tools available, like ad blocking technology, to remove these ads from their social streams. This is literally the exact opposite of how consumers treat people they are influenced by. They are choosing to opt-in to their opinions, streams, videos, and thoughts. They aren’t going to block these people, ever.


While audiences are taught to be wary of or discerning about advertising, that standard is much less rigorously applied to word-of-mouth recommendations. In fact, 84% of consumers say they completely or somewhat trust recommendations from family, colleagues, and friends about products and services.


Additionally, 92% of 18-to-34 year-olds say they seek recommendations from friends and family when considering a product purchase—which makes word-of-mouth the highest ranked source for trustworthiness. This trust is leveraged via referral, affiliate, influencer, and partner marketing.


And with trust, comes loyalty.


Research has shown that the longer a customer stays with a brand, the more valuable they become. In fact, an annual increase of just 1% in customer retention can equate to a 20% increase in revenue annually.3 


When you work on building relationships with your customers, you begin to develop loyalty, which means they’re more likely to stick with your brand for the long haul. And the more satisfied and loyal your customers are, the more likely they will be to refer your brand to others. 


The good news for marketers is that not everyone has jumped on the word-of-mouth marketing bandwagon—at least not strategically. That means that there’s a pretty good chance at least some of your competitors are not yet leveraging this powerful tool for their own benefit. When you offer a more personal touch with your products or services, you’ll easily achieve a leg up on those that are still stuck in the sales-driven marketing era. 


That alone is worth its weight in gold


Chapter 2: What Exactly is a Word-of-Mouth Marketing Program?


Too often, we hear eCommerce brands tell us that they need separate solutions for affiliate and influencer marketing. Or agencies that think their clients need different systems to manage online and offline referrals. Or B2B SaaS companies that are convinced they need different platforms to manage partner, affiliate, and customer referrals. 


Here’s the reality: All of these referrals have the same source. They all come from word-of-mouth marketing initiatives. 


Yes, they come in different flavors, but they’re generally managed in very similar ways. Done right, these different forms of referrals all lead to the same result — increased brand awareness and revenue growth. 


That said, each variation does have unique characteristics, and they do need to be approached in slightly different ways. 


So, to clear up some of the confusion, here’s a high-level breakdown of the best performing (and most common) forms of modern word-of-mouth: 


Affiliate Marketing

affiliate marketing illustration

  • What is it?: A transaction between a company and an entity where the business receives customers (or leads) in exchange for a financial incentive.
  • What makes it unique?: It’s highly efficient because brands specify the cost for a specific action being driven. Examples of effective affiliate incentives include $X per lead (or app download) or Y% of a purchase. Both Netflix and Amazon leverage this strategy well.
  • How is it typically managed?: The challenge with affiliate marketing is that brand recognition has a big impact on success. Attracting “affiliates” is an arduous process and you often have to compete for “space” on a blog. This can sometimes lead to a biddingwar, which lowers your margins.

Influencer Marketing

influencer marketing illustration


  • What is it?: In many ways, influencer marketing is a modern take on traditional affiliate marketing. Instead of a network of smaller affiliates driving traffic, influencer marketing targets specific people who have large, captive followings.
  • What makes it unique?: Today, someone with a million Instagram followers wields an incredible amount of power to drive interest in a product, and many brands are seeing big results by incentivizing those influencers to talk about their products or services.
  • How is it typically managed?: In most cases, marketers manage influencer marketing manually — handpicking target influencers, reaching out to them individually and tracking the program through spreadsheets and email. There are some software programs designed to manage this process, but they aren’t usually flexible to handle anything other than influencer identification. 


Partner Marketing

partner marketing illustration


  • What is it?: Partner marketing leverages the synchronicities of two companies - each with its own brand equity, core expertise, unique value proposition strength - to create strategic alliances that gain market share for each entity.
  • What makes it unique?: For B2B marketers, partner marketing plays a crucial role in acquiring new business. Engaging and building positive brand relationships with prospects via channel partners, value-added resellers, and agencies produces immediate results similar to customer referrals.
  • How is it typically managed?: Most partner programs are managed in-house, usually by the Sales or Business Development team. There’s usually a large amount of effort that goes into securing the right partnerships and contracts.But managing the relationship after the dotted lines are signed can be challenging. When companies neglect to focus on the partner experience, partners often look elsewhere and satisfaction, engagement and sales can suffer. The human element of building relationships is a must-have factor of partner marketing.


Referral Marketing

referral marketing illustration


  • What is it?s: Exactly what it sounds like — a strategy for encouraging passionate customers and advocates to directly refer their network to your business.
  • What makes it unique?: Studies have continuously shown that customers not only seek referrals, they act on them. Referral marketing takes the inherent organic and altruistic nature of referrals and gives brands the tools to incentivize and manage them at scale.
  • How is it typically managed?: We’ve seen companies build a referral program in-house and others who try to manage it manually through email and other basic systems. But the most successful companies automate the process by using one system to enroll, track, manage and reward their ambassadors.  


The most important part of word-of-mouth marketing is facilitating two-way conversations with your customers.

conversations with customers


Overall, brands that are successful with word-of-mouth marketing create meaningful connections with people who will talk about their brand and deliver positive messages to their networks—aka prospective customers. 


Because there are so many variables to word-of-mouth marketing, it’s important to take a systematic and organized approach. Take some time to understand your audience and which word-of-mouth marketing program is the best fit for your brand.


Referrals, affiliates, influencers...oh my! It can be overwhelming to figure out what program is best suited for your audience. Our marketing experts break down which word-of-mouth marketing program is right for your brand in this easy-to-understand webinar.


What word-of-mouth program is for me?


Ways to Jumpstart Your Word-of-Mouth Marketing Initiatives


The premise is simple: People trust recommendations from people they know—and that includes people they know via their online presence. 


From sponsored influencer posts to refer-a-friend campaigns, there are many word-of-mouth marketing strategies that marketers should test in order to expand brand awareness and drive sales.


Consider these three strategies to jump-start your word-of-mouth marketing efforts:

  • Target online influencers to spread the positive gospel about your product
    Celebrities, gurus, experts, and organizations that have legions of social media followers often partner with brands to market the brand’s products or services for an agreed-upon fee. The brand benefits from the influencer’s implicit endorsement and the exposure to the influencer’s faithful fans and followers.


  • Incentivize your customer base to make referrals

You already have superstar brand advocates in your customer base. Relationship marketing engages your customers and motivates them to recommend you to family and friends. If you incentivize your customers to spread the word with rewards, monetary or otherwise, you create a pipeline to receive leads that have been warmed up by your customers! 


  • Create relationships with affiliates who earn a kickback every time they send a potential customer or conversion your way

Affiliates that link to your product, write about your product, run your display ads, or otherwise promote your product in exchange for a fee or for a percentage of the resulting sales can lead to a steady stream of converting traffic. There’s a reason why companies that are already at the top of their game, like Amazon and Netflix, execute affiliate marketing campaigns.


At their core, all of these word-of-mouth marketing sources and lead acquisition channels can be tracked, monitored, and managed in practically the same way. 


Sure, affiliates certainly require different treatment than customers, and the incentives that resonate with each will vary. 


Similarly, influencers will obviously be evaluated against different metrics than customers referring for free, and they’ll cost a lot more to engage. Still, the ways in which all of those different parties are tracked and managed are congruent. 


But it’s near impossible to scale your efforts without technology. Simply put: It would be difficult to harness the sheer volume of strategic partners, affiliates, and top referrers without a system that facilitates and streamlines the word-of-mouth marketing process.


To truly scale your efforts, partner with a word-of-mouth marketing software vendor that offers tools to maximize your engagement and revenue every step of the way.

Chapter 3: How to Scale Word-of-Mouth Marketing with Technology


The recent growth of modern word-of-mouth programs — and the various point solutions that currently comprise it — have also created a lot of confusion around what businesses really need to grow effective affiliate, referral, influencer, and partner marketing programs. 


Do you need four different software solutions to manage each variation? Or can one platform do the trick? 


The future of post-conversion engagement is a single, flexible platform that delivers all the tools companies need to manage and optimize a variety of campaigns. 


There are a lot of reasons why this makes sense, but two primary benefits are data consistency and ease-of-use. When you have five different systems trying to do five different things, the data doesn’t always make sense. 


Additionally, with multiple solutions, you can’t ever be sure that all of them will seamlessly integrate with the other systems you rely on. With one platform, those concerns are eradicated.


So, what capabilities does this single platform need to have to handle every aspect of post-conversion engagement? Here are the six most important features to look for in a technology provider: 


  • Identification and segmentation: For a referral, affiliate, influencer, or partner campaign to work, it has to be easy to identify the people that fit into each of those categories and organize them by key characteristics. 


  • Turnkey engagement: Now that you know who to leverage for specific campaigns, the next key capability is being able to engage the right people in the right places with the right messaging and incentives.  


  • Seamless tracking: In today’s world, the customer journey isn’t contained to a few channels and one device. Instead, our path to purchase follows a convoluted path that bounces between desktop, mobile, and numerous different channels. For any software platform to deliver value, it must be able to seamlessly track all of this activity. 


  • Simple management: The whole point of automation is to eliminate the repetitive, mundane tasks so that business leaders can spend their time focusing on strategy, analysis, and optimization. The benefit of software like Ambassador is that it can serve as your database of record — allowing you to track, measure, and manage affiliates, customers, fans, followers, and advocates in one place. 


  • Reward delivery: If there’s one thing customers, affiliates, influencers, and partners hate, it’s being promised a reward for some kind of action and having to wait weeks or months to receive it. It’s even worse if your technology limits how you can issue those rewards. A truly effective platform should give you the power to reward customers quickly and in a variety of ways — through vouchers, loyalty points, cash, gift cards, etc. 


  • Optimization functionality: Like most effective marketing tactics, post-conversion engagement isn’t a “set it and forget it” strategy. To achieve the biggest results, you need to be able to dive into the analytics, look at the reporting, make decisions based on intelligent information, and optimize based on that. If your platform can’t provide that, you’re missing out on a huge piece of the puzzle. 


Ultimately, we’re heading toward a future where every aspect of customer engagement — NPS®, reviews, recommendations, rewards, referrals, etc. — will be managed under one umbrella and through one system. 


A good word-of-mouth marketing strategy has the opportunity to deliver something that resonates with your brand and customers, remains evergreen, and grows more valuable over time. 


In digital marketing, where the landscape is changing at the drop of a dime, it's important for marketers to lean on proven strategies - like word-of-mouth marketing - rather than wasting time on the latest fad that might negatively impact your bottom line and eat up resources.


Let’s face it: There are certainly plenty of options available to marketers when developing an online marketing strategy, but none of these options are as powerful and effective as word-of-mouth. Happy customers that love your product or service enough and are willing to spread the word about your brand are much more likely to be repeat customers. 


It goes beyond that, though. 


The buyers that brand ambassadors influence also tend to be more loyal, long-term customers. In turn, as these customers strap in for the long haul, many of them will also take up the cause and become an advocate for your company.


The more awareness you can generate about your brand, the more success and growth you will continue to realize in this self-perpetuating cycle. 



  1. Jay Baer 92% of global consumers trust The 8 Things Online Influencers Can Do For You
  2. Ad Blockage Statistica Ad blocker usage in US
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