Spread the word

Entrepreneur, Feb, 1998 by Mark Henricks

Trucks, shovels and flats of flowers are Fred Anderson's tools for designing and installing custom landscaping. But when it comes to marketing, he has only one tool: the human mouth.

One hundred percent of Anderson Landscape Construction Inc.'s clients come from referrals, either from professional architects and builders or from former clients. That makes the five-person Lancaster, Massachusetts, firm an extreme example of what marketers have always known but are beginning to rediscover and re-emphasize - that word-of-mouth is one of the best tools in any marketer's arsenal.

"It's the most effective form of advertising any business can have," says Murray Raphel, president of Raphel Marketing in Atlantic City, New Jersey, and co-author of the marketing guide, Up the Loyalty Ladder (HarperBusiness). "You have unpaid salespeople selling to others, encouraging them to use your goods and services because of their pleasure with your service."

Word-of-mouth not only works, it's inexpensive. Walla Walla, Washington, word-of-mouth marketing specialist Michael Cafferky wrote a manual called Let Your Customers Do the Talking (Upstart) because his small-business clients couldn't afford anything else. "I was forced to find marketing tactics with zero budget," says Cafferky. "Word-of-mouth is one of the most natural."

For some entrepreneurs, word-of-mouth may not merely be the best or most efficient marketing tool: It may be the only one. The wealthy estate owners Anderson sells to, for instance, don't base their buying decisions on TV commercials, billboards or phone book ads, he explains. "They choose the people they want based on other people's references. And they won't find those people in the Yellow Pages."

* WORD UP

To a marketer, word-of-mouth is what people say about your business as they go about their daily lives. It happens when one friend tells another, "You should check out that new restaurant downtown. The food's great!" It happens in a negative way when another diner complains, "Stay away from that new place on a Friday. You'll never get a seat!"

Though it may seem inconsequential, word-of-mouth can make or break your business. "Word-of-mouth carries an implied endorsement by the person who said it," says Art Davies, president of Impact Solutions Inc., a two-person Cincinnati sales agency that relies heavily on word-of-mouth. "When you have other people talking about you, it carries weight."

Another name for word-of-mouth marketing is opinion leadership, and today, everyone's a leader, according to Keith Tudor, chair of the marketing department and an associate professor of marketing at Kennesaw State University in Kennesaw, Georgia. "Everyone is an expert in some area," explains Tudor. "And that's one of the strongest influences on consumer behavior."

As a marketing form, word-of-mouth is distinct from any other. Unlike print advertising or direct mail, it primarily uses the spoken word - although the Internet has made e-mail a potent word-of-mouth medium. Unlike mass media, word-of-mouth is typically dispersed one-on-one from person to person. And unlike discounts, coupons or other cost-based appeals, its appeal is based on one person's respect for another person's judgment.

Even testimonials, word-of-mouth's closest marketing relation, are different in several ways. Testimonials are usually used in paid advertising, says Raphel. Word-of-mouth is unpaid and hence, more believable, he says.

It's also different from networking, where your primary goal is to develop referrals from a group of people with a common interest, such as chamber of commerce members or crafts hobbyists. Networking, says Cafferky, is part of word-of-mouth marketing, but word-of-mouth marketing is concerned with a broader market.

Perhaps the most distinctive trait of word-of-mouth marketing is that, compared to other media, it is poorly understood. While a great deal of research has been done on such arcane marketing techniques as psychodemographics, word-of-mouth marketing has been neglected, says Jerry Wilson, an Indianapolis speaker and marketing consultant who wrote Word of Mouth Marketing (Wiley).

"Very few researchers have tried to do anything formally on word-of-mouth," says Wilson. "As a result, people feel like it's a giant, but it's nebulous and they don't know how to conquer it."

Few things are known about word-of-mouth, besides the fact that everybody can do it and it can be very powerful. With a little thought and some patience, nearly any entrepreneur can put this often-overlooked, one-of-a-kind marketing tool to work.

* MOUTH MANIPULATION

The first rule of word-of-mouth marketing is to do what you would like people to say you do. In other words, good word-of-mouth marketing starts with good products and good service.

Anderson makes sure people have good things to say about his landscaping company by performing extraordinary follow-up service. If a customer is unhappy with some aspect of a completed job, he goes back and redoes it at his own expense.