Referral marketing, better known as word-of-mouth, deals with product recommendation by satisfied customers. The English term is Word-Of-Mouth-Marketing (WOMM). The advantage of good referral marketing over other marketing concepts is that recommendations among customers are particularly credible. Recommendations from other customers correspond to social proof and are therefore particularly effective.
Word-of-mouth marketing is to be distinguished from viral and buzz marketing, because viral marketing and buzz marketing are both based on artificially voiced hypes. Word-of-mouth, on the other hand, arises organically from the desire of the target persons to exchange information about a product. It is a side effect of good brand management.
In viral marketing , inspiring or particularly exciting advertising media ensure that the message spreads exponentially, for example by means of sharing in the context of social media. Here, the enthusiasm or the arousal potential (both positive and negative) of the advertising media represents the core of the advertising campaign. Viral marketing depends on the dynamics and speed of the Internet.
In buzz marketing , on the other hand, a message is reproduced independently of a specific advertising medium, which can happen both online and offline. The result is “talk”, the target group exchanges information about a brand or a product.
In contrast to buzz and viral marketing, the target group in recommendation marketing communicates factually about product services, presents experiences and makes recommendations to each other.
From this, the following general definition can be derived:
Word-of-mouth marketing or recommendation marketing is the promotion of product-performance-related communication within a target group, with the purpose of communicating product performance using socio-psychological effects and thereby increasing sales beyond the possibilities of conventional communication policy.Definition: Word-Of-Mouth-Marketing / Referral Marketing (Source: www.aloma.de)
Good word-of-mouth marketing requires product performance to exceed audience expectations . In particular, inspiring services ensure that customers develop the need to share their good experience.
Negative customer experiences are communicated just as intensively, which is why word-of-mouth marketing is always a customer-centric approach and goes hand in hand with good quality management, constant product development and a high degree of product-related services and, of course, product support and goodwill arrangements (de-escalation).
Word-of-mouth communication offers all the advantages of personal and private communication, such as:
- Personal approach is better received (= better selective information absorption).
- The exchange of information is bidirectional – queries and exchange of relevant experiences is possible.
- Social and psychological mechanisms (e.g. feeling of togetherness) create higher credibility than in the conventional communication policy of the manufacturer.
- Private communication within the target group is subject to hardly any legal restrictions. (in particular no competition law)
- Word-of-mouth propaganda largely eludes the influence of the provider.
- The effects of direct customer communication are difficult to predict in terms of strength and orientation.
- High measurability is opposed to poor controllability, so that the fallacy of good influence results. In fact, however, too strong influence, e.g. by deleting reviews, can be perceived by the target group as paternalism and have a lasting negative effect on the corporate image.
- Recommendation by influencers
- Recommendation in social media
- Recommendation in rating systems (e.g. on marketplaces)
- Recommendations in the private sphere
- Recommendations in a professional environment