Word of mouth marketing drives a whopping $6T of annual consumer spending and is estimated to account for 13% of consumer sales.
That's a heck of a lot - yep, I said Trillion! With a T! Now, those are some Elon Musk numbers there.
Word of Mouth marketing has been around as long as people have been recommending the latest cave painting or gladiator fight. It works because people trust other people.
This is a concept called “Social Proof”, which is the belief that the majority knows best. So, in order to make the best decisions, individuals look toward the choices other people have made, before acting themselves.
This mental shortcut can have consequences both good and bad for the individual. These observed behaviours of others are supposed to act as a clue, rather than proof. So, often people will copy others based on not much evidence. This can be useful for marketers. However, they must also be aware that if their consumers act, and are disappointed, negative word of mouth can be extremely damaging.
This means companies have been looking for a way to emulate the trust that comes from these forms of recommendations. It's been found that brands that inspire emotional intensity receive 3x as much word of mouth marketing as less emotionally-connected brands. This means brands have to consider how to position their marketing, product, and customer experience, in order to yield the most amount of interaction between customers and potential customers.
But this is no easy feat. With one bad step, word of mouth marketing can flip - it can be just as damaging with negative views, as it can be affluent in its positive ones.
Brands have to consider why and how customers' friends and family recommendations reign supreme in this area. In taking steps to use this technique and mentality we've seen the rise of brands utilising influencers, big and small. So, how can brands adopt this guerrilla, grass-roots style of marketing to its fullest extent? And does it even still really work in 2022? Let's find out.
Word of Mouth Marketing and...Consumer Trust
- Nielsen report that 92% of consumers believe suggestions from friends and family more than advertising.
- Beyond friends and family, 88% of people trust online reviews written by other consumers as much as they trust recommendations from personal contacts.
- HubSpot shows that 75% of people don’t believe adverts, yet 90% trust suggestions from family and friends and 70% trust consumer reviews.
- 49% of consumers would shop online more if they felt more confident about delivery and 57% are reluctant to use a retailer again if delivery is late.
- People are 90% more likely to trust and buy from a brand recommended by a friend
- 88% of consumers placed the highest level of trust in word-of-mouth recommendations from people they know.
- 75% of people don’t trust paid advertisements.
- In the US, only 4% of consumers trust brand-sponsored content.
Word of Mouth Marketing and...Influencers
- Over the past three years, Google saw a 1500% increase in "influencer marketing" search queries
- Over 80% of marketers believe influencer marketing is effective in their strategies
- 63% of consumers between 18 and 34 years old said that they "trust what influencers say about brands much more than what brands say about themselves in their advertising."
- 17% of companies will devote more than half of their annual marketing budget to influencer marketing campaigns
- 60% of millennials are more likely to take advice from YouTube influencers than traditional media personalities
- 86% of women turn to social media for buying advice
- 130 million Instagram users click shopping posts to find product information each month
- 80% of consumers have purchased something via an influencer recommendation
- 41% of customers discover new products through influencers weekly
- Around 3 in 4 consumers would spend up to $629 on influencer-inspired purchases
- 22% of large purchase decisions by 18-34-year-olds are influenced by influencer endorsements
- 71% of marketers think the quality of influencer marketing traffic is better than other sources
Word of Mouth Marketing and...Return on Investment
- 74% of consumers identify word of mouth as a key influencer in their purchasing decisions.
- When specific case studies were analysed, researchers found a 10% increase in word-of-mouth (off and online) translated into a sales lift between 0.2 – 1.5%.
- Word of Mouth marketing impression results in 5x more sales than a paid media impression
- 64% of marketing executives indicated that they believe word of mouth is the most effective form of marketing.
- 70% of respondents are planning to increase their online word of mouth marketing spend, and 29% will increase their offline word of mouth marketing spend.
- 82% of marketers use word of mouth marketing to increase their brand awareness, but 43% expect WOMM to improve their direct sales.
- Word-of-mouth drives $6 trillion in annual global spending and is responsible for 13% of all sales.
- Word-of-mouth is even more effective than paid ads, resulting in five times more sales.
- 64% of marketers agree that word-of-mouth is the most effective form of marketing.
- Most marketers (83%) use word-of-mouth marketing because it increases brand awareness.
- 43% of marketers use word-of-mouth marketing to increase sales.
- WOMM brings in 5 times more sales than paid media.
- Influencer marketing ROI is 11x greater than banner ads
Word of Mouth Marketing and...B2B
- When buying business software, 46% of small businesses choose based on colleagues’ recommendations and other companies in the industry.
- 8% of B2B marketers find word-of-mouth marketing effective in promoting live events for marketing purposes.
- In the U.S., word-of-mouth marketing is 48% of businesses ’ best marketing tools
- Word-of-mouth counts as one of the top traffic sources for small businesses that do affiliate marketing.
- 20% of businesses plan to use word-of-mouth marketing in their yearly marketing strategy.
- Most businesses become aware of new artificial intelligence technologies from colleagues, networking, and seeing other companies use them.
- In the U.S., word-of-mouth marketing is 48% of businesses ’ best marketing tools.
Word of Mouth Marketing and...Brand Loyalty
- Bain & Co estimate that a 5% increase in customer retention can boost a company’s profitability by 75%.
- 65% of consumers have cut ties with a brand over just a single poor encounter, it’s more important than ever to create that amazing experience.
- Brands that inspire a higher emotional intensity receive 3x as much word of mouth marketing as less emotionally connected brands.
- 28% of consumers say word of mouth is the most important factor in strengthening or eroding brand affinity.
- 28% of people say that word-of-mouth increases brand affinity (a customer’s common values with a brand).
- Customers acquired through word of mouth promotion spend 200% more than the average customer.
- Brands that create an emotional connection receive three times more word-of-mouth than those that don’t.
Word of Mouth Marketing and...Brand Discovery
- Millennials were 38% more likely to discover brands through recommendations from friends and family.
- In Australia, 42% of people discover new brands through search engines, and 38% through word-of-mouth recommendations.
- Generation X is the most to discover products through word-of-mouth, with 18% regularly finding products this way.
- And for Generation Z, only 12% discover new products by word-of-mouth.
Word of Mouth Marketing and...Off-line vs On-line
- 70% of marketers are looking to increase their online word-of-mouth spending, while 29% are off-line.
- Consumers knew about Amazon Prime Day in 2020, mostly from Amazon’s website itself. However, 17% of people found out from friends and family.
- 23% of Singaporean shoppers bought something in a physical store in 2019 based on a friend’s recommendation.
- 37% of Americans decided on which restaurant to eat at based on word-of-mouth recommendations.
- Likewise, 31% of electronics purchases are heavily influenced by word-of-mouth recommendations.
- 20% of North Americans who became aware of a product through word-of-mouth made the purchase instantaneously.
Word of Mouth Marketing and...Negative Reviews
- According to word-of-mouth marketing statistics, 96% of unhappy customers don’t complain to the company about a bad experience; however, they share their bad experience with about 9-15 people.
- About 13% of unhappy customers share their bad experiences with 20 people.
- A happy customer, on the other hand, only tells 3 people about it.
- A whopping 91% of unhappy customers will not buy from a company they’ve had a bad experience with again.
- It takes about 40 positive customer experiences to undo the damage done by 1 negative review.
- Nearly 53% of customers expect brands to reply to negative reviews within a week.
- Only 1 in 25 consumers will complain about their bad experience with the brand.
- It takes nearly 40 positive customer experiences to make up for the damage caused by a single negative review.
- 96% of brands take a long time to respond to customers’ mentions on social media.
This post is part of our Martech stats series, which compiles key data and trends. Others include: