What Is Word-of-Mouth Marketing?

Textbook Definition

Word-of-mouth marketing is the process by which customers share information and recommendations about a business with others, and the deliberate efforts a business makes to encourage, facilitate, and extend those conversations.

In Plain English

Word-of-mouth marketing is customers telling other people about you, and you helping that happen on purpose. It is real and powerful, but it only reaches the people your current customers already talk to. To grow, you have to give it somewhere new to travel.

Why Does Word of Mouth Stop Growing?

Word of mouth is a loop. Your customers tell people like them, who become customers like them. If your customers all live in one area or one circle, your word of mouth is a very loud conversation in a very small room. The room stays full, with the same faces, for years.

"We have never had to advertise" is often true, and often the reason a good business has stayed the same size. Word-of-mouth marketing grows when you find the people who talk to customers you do not have yet, and give them something easy to carry.

Signs you have this problem:

  • Your room is full of the same regulars year after year.
  • You get only two or three first-time customers a month.
  • New customers are almost always friends or relatives of current ones.
  • You are busy at a few peak times and quiet the rest of the week.
  • A few regulars have moved away and nobody replaced them.
  • You say "we never spend on marketing" as a point of pride.
"We never had to advertise" is a lovely thing to say. Make sure it is a choice, and not the reason nobody outside your circle has heard of you.

What It Looks Like When the Room Is Full of the Same Forty Faces

From the Fabled Forest · Chapter 19

Louie's waffle café was full every Saturday morning. Doctor Owl could name every face. Louie had never spent a coin on marketing, and was proud of it. His first-time card showed two new customers that month, both somebody's cousin. Tuesday afternoons it was Louie, the badger, and empty umbrellas.

Mrs. Owl-Willow asked where his customers lived. Here. And who did they tell? Their cousins, who used to live here. The regulars were thinning out: the stoat moved away, the herons never came back. Word of mouth was working perfectly. It just never left the square.

Louie named the loudest mouths who talked to coast visitors: the ferry crew. He gave them cards and a free waffle for anyone they brought. Tobias added Louie's to a "where to eat off the ferry" sheet. His card got a new line with directions from the dock. Nine coins total. First-time customers that month: nineteen, eleven of them off the boat.

Louie's story is Chapter 19 of Marketing for Small Businesses, Book 4 of Dr. Paul's Fabled Forest Business School Series.

How to Grow Word of Mouth on Purpose in 5 Steps

Find the doors in the loop. They are usually people who talk to strangers for a living.

  1. Count first-time customers for a month.

    Ask each one how they found you. If the answer is always "a friend," ask where the friend lives.

  2. Find where your current customers do not reach.

    A neighborhood, a group of visitors, a type of business. That is where new growth is.

  3. Name the people who talk to those customers.

    Hotel desks, drivers, neighboring shops, local guides, group admins, delivery crews.

  4. Give each of them something to carry.

    A card with directions, one line to say, and a real thank-you when it works. A small, honest reward is fine.

  5. Keep counting.

    Watch first-time customers and where they came from. Put more effort behind the doors that open.

Dr. Paul's Insight

The most common mistake is treating "we do not spend on marketing" as a badge. It is only a badge if the room is full of new faces. If it is the same faces, it is a ceiling. Feeding word of mouth rarely takes much money. It takes deciding to do it, and asking people who already like you to carry your name a little further.

Worked Example: Nine Coins, Nineteen New Faces First-time customers before: about 2 to 3 a month. Spent: about $9 on cards, a drawing, and a thank-you waffle. First-time customers after one month: 19, with 11 from visitors off the ferry. If even 5 of those become monthly regulars at $12 a visit, that is $60 a month, or $720 a year, from nine dollars. Figures are an illustration to show the math, not a projection for your business.

Sample: A Word-of-Mouth Door List

People who talk to the customers you do not have yet.

Business: Neighborhood caféGoal: More first-time visitors from outside the neighborhood
Who talks to themWhat we giveThank-you
Ferry crewCards with directions from the dockFree waffle per new customer
Shipping counterA spot on their "where to eat" sheetFree waffle for the owner
Garden center across the riverCards by their registerSwap: their cards by ours
Visitor info boardCard and one-line directionsNone needed

Sample for illustration. Keep thank-yous small and honest.

Video: How to Grow Word of Mouth Beyond Your Regulars

Video Coming Soon

What Is Word-of-Mouth Marketing? How to Grow It on Purpose

Dr. Paul maps where customers come from and builds a word-of-mouth door list on screen.

Who Do They Tell?

Chapter 19 · Word-of-Mouth Marketing

Everybody Knows Louie: A Labrador's Full Room, Same Faces

"And who do they tell?"

"Their..." Louie looked at the otter, eating her Morning Waffle at the end of the counter, whose cousin had moved to the coast. "Their cousins. Who used to live here. Who tell their cousins, who've never been. Who come once a year, if they come." He put the spatula down. "Word of mouth goes exactly as far as my customers go. And my customers don't go anywhere."

Who were the loudest mouths on the coast, and how many new faces came in? Find out in Chapter 19. Book 4 of Dr. Paul's Fabled Forest Business School Series.

Get the Book on Amazon →

Word-of-Mouth Marketing Questions

Is word of mouth enough marketing for a small business?
It can sustain a business, but on its own it usually only reaches people your current customers already know. If you want to grow or replace customers who move away, you need to help word of mouth reach new groups on purpose.
How can I encourage word of mouth?
Give happy customers something easy to share, like a card or a link, and a reason to share it. Then find people who talk to new audiences, such as neighboring businesses, hotel staff, or local guides, and give them the same tools and a thank-you.
What is the difference between word of mouth and referral marketing?
Word of mouth is any customer conversation about your business. Referral marketing is a structured way to encourage it, such as asking for referrals, offering cards or codes, and thanking people who send customers. Referral marketing is one way to feed word of mouth.
How do I measure word of mouth?
Ask every new customer how they heard about you and count the answers. Track first-time customers each month, and note where the person who referred them lives or works. That shows whether word of mouth is growing or circling the same group.

Written by Dr. Paul Borosky, DBA, MBA, business consultant and author who helps owners get found by the right customers. Full of regulars, but not enough new faces? See business growth plan options.

This page is for general educational purposes only. It is not legal, financial, or other professional advice. Trademark, privacy, and advertising rules vary, so talk with a qualified professional before registering a name, collecting customer data, or making claims about a competitor. Dollar figures are illustrations. The Fabled Forest and its characters are fictional. For decisions about your own business, consult a qualified professional.