Word of Mouth Marketing
Posted by Orrin Woodward on October 19, 2015
Word of Mouth advertising is the most effective form of advertising and thus why LIFE Leadership leverages the concept through its Compensated Community to spread its message. The Financial Matrix looms larger everyday for those without financial literacy. Thankfully, however, there is a community of people who are doing something about it. Below are some thoughts I am working on about Word of Mouth marketing.
LIFE Leadership leverages word-of-mouth marketing to compound its growth. Instead of paying millions of dollars per year to advertise in print, radio, or TV, LIFE Leadership instead rewards people who recommend our products. This is a major competitive advantage! For example, authors Huba and McConnell proclaimed, “Word-of-mouth is THE valuable currency in today’s advertising-saturated world.” Meanwhile, Nielsen Global Trust in Advertising noted that 92% of respondents surveyed trusted recommendations received from friends about products or services. Last but not least, a recent McKinsey study identified word-of-mouth as the most effective form of marketing and advertising in the world. According to the McKinsey study, word-of-mouth marketing generates twice as much sales as paid advertising, and over 50% of all purchases are influenced by word-of-mouth. Indeed, the buzz generated by word-of-mouth marketing is vital to the growth of a company.
Because word-of-mouth marketing is so effective, LIFE Leadership built all of its marketing and advertising budget around it. We reward loyal customers and members who are effective in recommending our products to others. All word-of-mouth marketing can be boiled down to a three-step process:
- 1. Discovery: Somebody encounters a new idea.
- 2. Wow: This person is convinced that the idea is worth sharing.
- 3. The Share: The person shares the new information with others.
Once this process loop is started, the share stage for one person corresponds with the discovery stage of another one, and the word-of-mouth chain reaction has started. Seth Godin, author of Unleashing the Ideavirus, emphasized the importance of making it easy to share the product or company’s message: “How easy is it for an end user to spread this particular ideavirus? Can I click one button or mention some magic phrase, or do I have to go through hoops and risk embarrassment to tell someone about it?”