Is Word of Mouth Marketing Dying?
Is Word of Mouth Marketing Dying?
Most service-based businesses, even most small businesses, have relied on word of mouth marketing (WOMM) for decades. The reason is twofold. It’s the cheapest marketing option out there and as humans, we place trust in the opinions of those who are in “our group”. It’s a psychological principle that allows us to make a decision without having to think much about it.
So what’s the issue? In our ever-changing digital world, a customer can get factual evidence of the quality of work a company produces in seconds. Offering a definitive answer to the questions of “Is this company trustworthy?”, “What are the chances I’m wasting my money?”, and the most important “Have they completed a similar job for a person similar to me?”. Coupled with Pay-Per-Click (PPC) marketing on search engines, companies can and will pay to put that evidence in front of the people actively looking for the services they offer.
Many service-based business owners still believe that WOMM will sustain their business in the future. Unfortunately, that isn’t the case. The writing has been on the wall for the past few years with many still refusing to acknowledge that change is required in an evolving world. For someone like myself, a growth agency founder and operator, I hear constantly “the digital stuff isn’t important in my niche” or “we don’t need a website, our reputation is enough”. 88% of consumers trust online reviews as much as word of mouth recommendations {“}. If you don’t have a website or a Google My Business page showing a multitude of reviews, you’re fighting an uphill battle in gaining a customer’s trust.
You may not believe me, but a digital presence is required for the large majority of businesses. This includes every service-based niche. In the mind of the customer, it’s a requirement to be visible online. Without it, you’re losing more customers than you could ever imagine. 70% of customers are more likely to switch to a competitor if a business lacks online engagement and visibility [“]. There’s a fundamental confusion when you aren’t able to find information about a business online. Many customers start asking questions such as “What are they trying to hide?”, “Are they even still in business?”, and “Why don’t they want to show off their work?”.
The question that most people in my industry want the answer to is “Why do service-based business owners refuse to change?”. I believe the answer is multifaceted. First off, it’s hard for people to change, especially when something has worked for years. Our brain believes that if something has worked previously it will continue to work. It’s a fundamental flaw in how we think about the past and the future. Secondly, almost every small business owner I’ve talked to has a horror story of how either themselves or a close friend was burned by a lead generation or marketing agency. Finally, it is expensive to correctly implement change.
The fallacy of thinking that WOMM will continue to work only because it has worked in the past is the most dangerous opinion a small business or service-based business owner can hold. There has been a definitive shift in the market. Word-of-mouth was relied on so heavily by consumers before the internet because it was the best option. That is not the case anymore. Those who swear by word-of-mouth and referral based client acquisition are also the same companies who tell us “we don’t know where our next 5 jobs are coming from”. Riding the tides of waiting for customers to tell their friends and family about you can leave you dangerously overextended, especially if you’re holding massive amounts of debt on the equipment you use.
While I understand why the horror stories of lead generation agencies may put people off from investing into growth, there is a misunderstanding of the issue at hand. Many business owners put too high of a value on leads themself. There is a belief that “all I need is higher quality leads and my business will do better”. In reality, the quality of your leads is only a piece of the equation. The full picture includes: how quickly are you responding to leads, what does your lead qualification process look like, how relentless your follow up is, and then finally where are you getting your leads from. The bad lead quality is a lazy excuse for businesses that don’t care about the entire lead to client process that is required to grow a business year over year.
The final piece holding business owners back is the investment required to implement an infrastructure that fixes these issues. It will cost anywhere from $3,000-$8,000 a month to hire a growth agency to overhaul your internal processes and run paid advertisements. For owner/operators taking home $5,000-$10,000 a month, that can be a very scary situation. It’s scary because they feel like they are losing that money, not investing it for 6-12 months to take home $20,000 plus. It’s a scarcity mindset. “What I have currently is all that I will ever have”. In reality, every competitor is doing better than you has invested in systems and processes that not only draw customers to them, but makes the experience extremely easy.
There is no “secret” method or lead provider that you don’t know about. I’ve personally seen the blueprint work for local barbershops, custom fabricators, concrete contractors, and cleaning companies. There are individual tweaks that are made of course, but the infrastructure we install is the same across any business. It isn’t a complicated process. To grow any company, you need multiple systems to generate leads, automations to handle those incoming leads, constant communication to stay top of mind of leads who didn’t buy, hiring processes that ensure quality employees, and a quality customer experience.
This is the primary reason word-of-mouth marketing is dying as a primary generator of growth. The ability to scale a business is directly correlated to the quality of your internal systems and processes. The marketplace is too competitive to think that WOMM will keep your business afloat in the years to come. It’s a pipedream that is slowly fading into the night, with many small businesses dying in the hope of that dream.
