Word of mouth and referral marketing still the most effective form of marketing

Social media and phone apps have been changing the way people interact for some time now. We know what our friends are thinking, what they like and where they are at any given time of the day. Now, social media has taken the next revolutionary step and will be changing the way we shop!


Word of mouth and referral has always been a key deciding factor in our shopping habits. We are more likely to see a particular movie based on what our friends and family think of it, as opposed to media reviews of it.  Similarly, if we have heard from friends that they had an enjoyable time at a restaurant or holiday destination, we are more likely to go there to check it out ourselves. Obviously, this concept works the other way too – if friends advise us against a product or service based on a bad experience they have had, we won’t be chancing our luck by giving it a try.


This word of mouth marketing is not a new concept at all – in fact, it was around long before any other advertising and marketing method. The way businesses became successful in years gone by was simply by being recommended around the locality they serviced. Person A would come across their business, perhaps by chance or because they knew the business owner already, and then would talk about his/her experiences with Person B, who would go try it out. Then Person B would talk to Person C and perhaps Person D, neither of whom knew Person A or the business owner directly. They would try out the product and service and then each talk to an additional two or more people each. And so the word spread.  This is really the most basic and most effective form of marketing.


It would seem that we have come full circle. After having had varied results from the most high tech and expensive advertising and promotional methods, from cinema advertising to sponsoring of sports teams and fancy banners on popular websites, businesses and those in the industry are coming back to the most simple, and most effective form of marketing – word of mouth and referral.


With social media at the forefront of business and personal communication and technology, it would therefore come as no great surprise that this is the route down which these channels are heading. And the result is that these new platforms, soon to be launched around the world, will in fact change the way we shop.


Already, we are shopping increasingly online for products from airfares to technology and clothing and even groceries. The reason for this shift is that we generally have access to a wider range of product and suppliers, and better deals because we can purchase from overseas and a middle-man is cut out of the transaction. Also, we are increasingly time poor and find it easier to simply shop from the comfort of our home or office, and then spend quality time with our loved ones.


Now, facebook and Google have taken this concept one step further and are combining referral and word of mouth marketing with an online environment – basically we will be able to shop online, and access great deals for making referrals to our friends (something we probably already do).  The only condition is that we must buy as a group.


In the next blog post, I will be discussing this concept more in depth and also look at ways this will in fact impact our entire economy.



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