Let word of mouth drive your business – in a new, powerful way.

Referrals, whether solicited or not, fall along these lines. Often, the best referral uses a combination of all four.

Word of mouth, as we all know, is the most powerful form of advertising, because it relies upon the quality of the product or service and comes from a reputable source: a friend, a trusted business partner, or a group that has social mojo. You can solicit the referral or the customer can initiate it, but regardless, it works.

We can break down the referral process into 4 basic methods, though all good referral systems use all of these in combination.

1. Encourage: by asking customers to refer you, you’re reminding them that they can refer you. You better be ready to give something in return, however; something for nothing is a rare trait.
2. Inform: If you have good content and seem like an authority on something, people are more likely to refer you.
3. Promote: Promotions are, of course, powerful; “Tell a friend and get 30% off!”
4. Reward: You’re buying a customer’s referral, but that’s not a bad thing. We all know how the world goes around.

Word of mouth is a viral process.

The viral process is one that describes any strategy that encourages individuals to pass on a marketing message to others, creating the potential for growth in message’s exposure and influence. This can be accomplished online rapidly, again, if you know what you’re doing. There are whole books devoted to it. When we say viral marketing, we’re just talking about referral marketing (or word of mouth marketing, these phrases are very interchangeable.)

Online/Offline vs. Active/Passive.

How does referral marketing and simple word of mouth differ?

Whereas word of mouth is a rather passive process, referral marketing is not. At the very least, referral marketing is employed at the content level, where just providing good information is adequate to be referred. After all, with so many sources of information online, even in the smallest of niches, content is king.

The goal of all referral marketing is to take word of mouth from a passive process to an active one, which maximizes word of mouth. This can be summed up in four referral statements:

1. w/o prompting (“I know the best real estate agent…”)
2. w/o prompting online (SEM, social media marketing, indirect email, articles)
3. with prompting (USPS, handouts, pamphlets, business cards, etc.)
4. with prompting online (direct email, creative writing, PPC, affiliates)

Online referral marketing is even more powerful than real-world referral marketing.

Having a website makes even real-world referral marketing more powerful. Thousands, if not tens of thousands of leads can be generated for the same price as hundreds (if you know what you're doing.)

What’s more, you can track it. With website and social media analytics, tracking what works — and what doesn’t — has never been easier. This is important because one way or another, you’re often paying for that referral, by giving a discount or offering a bonus, or simply paying the referrer dividends.

Affiliate marketing shows its value solely through tracking; there must be some type of accountability, otherwise no one would know how beneficial a certain affiliate is (how many leads they got.)

Integration with real-world referral marketing.

Referral marketing is amplified in power when you have a website. That’s because you can make the smallest of ads, and put your website in there. That means you can make smaller ads but ‘tell the story in colorful detail’ online.

How do you do it?

Though referral marketing, word of mouth power is multiplied.

Primary Tactics

• Creative Writing: Tell them why, then they’ll refer. There is absolutely nothing wrong with telling people to refer you. If they like your information, they will. This is the law of reciprocity, and cannot be denied.
• RSS: Multiply word of mouth power by a factor of 10. RSS allows you to keep in touch with interested parties, whom are more likely to refer.
• Social Media Marketing: Syndication is visibility. RSS syndication acts as free affiliate marketing (if your articles are worthy)
• Email Marketing: Direct and targeted. Email marketing goes straight to the potential customer, with (hopefully) specific information directed at their interests. Of course, writing great content helps this process along, and people might just ‘forward’ those emails to others for viewing. Making it easy for them to forward these emails is important.
• Tracking: Knowing where your referral traffic is coming from is paramount. If you work through affiliates, an interface (or report via email, etc.) is usually provided for you. Remain objective when viewing these reports. However, tracking raw traffic, regardless of the source through services like Google Analytics will show you all your sources of traffic, whether search engines, PPC, affiliates, social sites, or emails. You can also setup milestones within these analytics services to calculate ROI (‘visitor came from Google, went to these pages, bought these products for this much, and returned to buy again 14 days later, etc.)

Secondary Tactics

• Affiliate Marketing: Use channels to target certain traffic. If your target marketing uses particular services, those services probably have affiliate marketing programs. Google AdWords alone has an affiliate program, where any website can run ‘Ads by Goooogle.’ Your ads are pushed to these affiliate sites based upon the correlation between your ad and the content of the page (relevance).
• PPC: Pay-per-click can be niche targeted for effectiveness. Many PPC programs can be targeted to specific geographic locations (“I am a psychotherapist in the Los Angeles county region”) and only for certain ‘trigger’ words (“family counseling”) – making PPC a great bang for the buck.
• Content Building: More pages, more referrals. Creating articles, like this page you’re reading, allows more topics of interest to be ranked by search engines, more information to spread around social sites, and a greater likelihood of being picked up and referred (or ‘liked’, or ‘thumbed up’, or ‘Dugg’, etc.) This differs from creative writing as this refers to quantitative amount, rather than qualitative message.

Related articles.

• Read our page on Viral Marketing.
• Branding 101, Part 1
• 11 Examples of Viral Marketing Campaigns