Personal references make great advertising, but your product or service better be good

What’s the best form of advertising there is? Word-of-mouth. There are hundreds of occasions when people ask others — friends, relatives, business associates — for a recommendation for a doctor, a plumber, a hotel, a restaurant or a movie.
If we trust the person making the recommendation, we often act upon the referral. And some lucky business gets one more customer without having to spend a nickel on advertising or promotion.
Word-of-mouth is the only method of promotion that is of the consumer, by the consumer and for the consumer. Every business owner dreams of having loyal, satisfied customers who brag about his business to others. Not only are they repeat purchasers, but they become walking billboards for his company.
Best of all, it’s one of the lowest-cost forms of promotion there is. Keeping in touch with satisfied customers and encouraging them to talk up your business costs relatively little.
Here are five word-of-mouth marketing tips that can help you build a network of referral sources:
1. Get your customers involved – Encourage your customers to become involved in the process of making or delivering your product or service. This personal experience creates a sense of camaraderie and positive feelings that lead them to talk about your business to their friends.
Solvang, Calif., a popular tourist destination, is the home of at least a dozen candy and fudge shops. One of the most successful has the big marble slab where they mix all the ingredients right in the window, where passers-by can’t miss the display.
Many stores put their mixing table in the window. But what makes this store unique is who mixes the ingredients: kids. Children roll up their sleeves, put on plastic mitts, and start mixing and folding the rich chocolate, creamy caramel and chopped walnuts, all spread on a well-buttered table. Guess which fudge shop gets good word-of-mouth (every pun intended) advertising?

2. You scratch my back, I’ll scratch yours – If your business receives referrals from another business, reciprocate. Refer business to the referrer. Or at the very least, offer the referrer a discount price.
My piano tuner gives me 50% off my next tune if I refer business to him. It’s a good deal. I keep the piano in tune for a reasonable price; my friends get their pianos accurately tuned by a professional; he gets additional business from my piano-playing circle of friends.
If your business can’t offer a discount, there may be other ways to reciprocate. Consider a small gift or gift certificate. One client sends out gift certificates to a clothing store for referrals, an appropriate gift since he is in the dry cleaning business.

3. Tell stories – Stories illustrate a specific idea or selling point. A story is an effective vehicle for spreading reputations because stories communicate on an emotional level. If you have a company newsletter or brochure, include a story or two about your company that readers can pass along.
Nordstrom’s reputation for good service is legend. In her book Fabled Service, Betsy Sanders, a former Nordstrom vice president, recounts the story of a woman in torn and filthy clothes who walked into a store one day. The sharp contrast between the disheveled itinerant and the bodacious abundance of the store drew the attention of a local minister who was shopping nearby.
When the bag lady entered the pricey Special Occasions Department, rather than being asked politely to leave the store as the preacher expected, she was greeted warmly and allowed to try on gown after gown. The salesperson exhibited infinite patience as she offered comments on which evening dress was most appropriate, which was most flattering. The old woman left the department store with her head held high, a spring in her step.
The minister was so impressed, she told the story to her congregation. Later, word of the minister’s sermon, "The Gospel According to Nordstrom," was mentioned in The New York Times. It became so popular that her church eventually sold audio tape copies.

4. Teach your customers – Some companies have found that by educating their customers, they can boost their reputation and customer loyalty. Pick a topic relevant to your best customers and make yourself the source of credible, current information about that topic.
One paralegal services firm I worked with used this technique effectively. In every newsletter, the firm included a column on legislation, either pending or passed, that would affect the legal community.
Research discovered it was the most-often read portion of our newsletter. Lawyers, the firm’s primary customers, looked forward to the "news bites" on legislation in their field. It was a great way for the lawyers to remain current, and a great way to keep our client’s name in front of their best customers.

5. Fix problems fast – Nothing grates more than the slow resolution of a problem. Speedy response is vital to prevent negative word-of-mouth from spreading. Negative feelings about a product or service may linger for years.
Think about a restaurant where the food was awful, or you received exceptionally poor service. You probably wouldn’t recommend the place to friends. More likely, you might tell them to avoid it, even years later, because of the problems you had.
Research shows that for every bad experience, we tell four friends. While for every good experience, we tell, on average, just two and a half. When faced with a complaint, the response of your employees should be, "How can I send this person away happy?"
The best form of advertising is word-of-mouth. And certainly the best way to get positive word-of-mouth is by providing a quality product or service that meets the needs of your customers.
But there are ways to encourage your happy customers to spread the good word.

Robert Grede, author of Naked Marketing – The Bare Essentials (Prentice Hall), teaches marketing and entrepreneurial management at Marquette University. Learn more on marketing at

April 4, 2003 Small Business Times, Milwaukee

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