Word of Mouth: From Brick-and-Mortars to Online Mercenaries

When I started my career in marketing at Procter & Gamble we were taught that word of mouth was the most effective advertising media.

Contrary to our million dollar campaigns, word of mouth was effective because the referral came from an objective, trusted and disinterested source. Best of all, it was free.

This was back in the pre-YouTube era and P&G was the world’s biggest ad spender. In spite of our million dollar budgets, we were helpless at finding ways to promote consumer advocacy.

Brands like Harley Davidson, Apple and Disney had such fantastic products that encouraging word of mouth was a walk in the park for its marketers. Unfortunately for me, dealing with brands like Febreze, Mr. Clean or Charmin was a different story.

 

Fast-forward 15 years

Most of us have probably experienced Dropbox’s highly acclaimed get extra storage if you refer a friend. Dropbox taps both into the selfish nerve as well into the altruistic one by also offering free storage space to the person that is being referred.

Uber has also perfected their referral program by offering a $30 discount on the next ride for both the referrer and the new customer. This is a substantial part of their growth engine in addition to press and public relations.

Airbnb perfected their referral program by encouraging satisfied users to spread the wealth. The experience of receiving a personal referral invitation helps convert new customers as they receive a picture of the referrer. As such, the invitation is perceived as being very personal—one of the fundamentals of word of mouth.

 

Current service offering

P&G has still multimillion-dollar campaigns and they are now spending 35% of their ad budget online. It was close to 1% back in the year 2000. Younger marketers wanting to promote word of mouth can leverage technology to unprecedented levels.

After the sale of my previous company, I started up a new venture and wanted to apply the lessons learned back from my early days at P&G but without having to code the marvels that Dropbox or Uber have created.

As I browsed for the different options, I was impressed by the choices and the quality of service offerings in the web. Most of them are close to being plug and play. Their business model ranges from a cut of the revenues to subscription models.

Canada is well represented and has global leaders in the space. Influitive, who is based in Toronto and running the Advocamp on March 25 in San Francisco are part of those 2 to 4 year old companies that have received more than $10m in VC funding.

On the west coast, we have exceptional companies like Referral SaaSquatch in Victoria that delivers an integrated user experience like the programs of Uber and Airbnb. Their team is quickly establishing themselves in the enterprise space and they have an impressive customer service.

3 Tier Logic from Vancouver, who recently acquired Reward Stream, is also part of the interesting newcomers and has carved-out a niche in consumer-to-consumer content sharing, rewards and receipt code scanning by having Abercrombie & Fitch, Best Buy, Ralph Lauren, Red Bull and more recently WetSeal and Bon Air shopping center in San Francisco.

 

Hordes of online mercenaries

Most of these companies offer a platform where referral marketers can access a referral dashboard where they can connect with all those satisfied customers and offer incentives for them to endorse your products with their own network via Twitter, Facebook or Email.

I had the opportunity to glimpse in some of these dashboards and saw some socially active stay-at-home moms competing to send the most referrals in order to receive small cash rewards, a bottle of wine, a movie ticket or the opportunity participate in draws for larger prices.

This is mouth-watering for any marketer as they are essentially hiring a horde of highly efficient online sales reps without having to put them on payroll.

On the flip side, as a consumer, I’ll inevitably start to be suspicious when I receive an email from a friend with a coupon to buy the latest Gillette razor.