Word-of-Mouth Marketing – “Effective” versus “Cheap”

By Bob Troia

Many marketers are interested in leveraging word-of-mouth, viral, and social media marketing because they view it simply as being “cheaper” than other marketing channels.

This is the wrong attitude. The expectation is small spend, huge results (often in a short amount of time). With traditional marketing channels, there is a linear relationship between spend and return (i.e., if I know that I get a x% response rate on a direct mail piece, I can simply set my budget accordingly to hit my total response goal; each $1M in additional advertising generates a x% lift in sales, etc.). With WOM or viral marketing, the relationship ideally resembles more of an S-curve (not a J-curve, as you might be led to believe) – fairly linear until a certain point, then takes on a more exponential shape until flattening out again (or falling off entirely). How you get to steep part of the curve is a factor of time (i.e., bigger spend gets you there faster). It’s “organic” versus “amplified” WOM.

Most marketers want to first dip their toes in the WOM waters so they piece together a small budget to try something out, which is understandable. But if their budget is set too low, time frame is too short and expectations are too high, they are doomed to fail (they never hit the exponential part of the curve) and are left with a bad WOM taste in their mouths.

There’s tons of research out there showing that Word-of-Mouth is the most impactful and trusted form of marketing around. But to really see its benefits, marketers need to spend more, not less.

WOM should be treated as being “effective” rather than “cheap”!