Think about the last time you made a significant purchase. Whether it was a car or a mattress, how did you learn about and decide upon this product? In a 2014 paper, MIT researchers credited an “index strategy” with helping consumers make up their mind. An index strategy is a ranking of products which allows us to make quick decisions.
For instance, when buying a car, most people don’t really consider all options, but are strongly influenced by cars they’ve bought in the past and others that they like and are within the same price range.
A word-of-mouth campaign is a powerful tool to influence this consideration set. Marketers use WOM campaigns to influence consumers to talk about products. For instance, the hotel chain Doubletree gives away 75,000 cookies a day, which prompts 34% of their customers to talk about them.
That, in essence, is word-of-mouth marketing. If you’ve talked or posted about a brand in the last couple of days, consider what inspired you to do so. There’s a chance that some agency had a hand in it. Below are four examples of brands that have successfully used word-of-mouth marketing.
- Tesla. Tesla is the only car company not to advertise; it’s hard to look like a challenger brand these days when you’re putting out a huge ad campaign. CEO Elon Musk has said the reason Tesla doesn’t advertise is to instead use that capital to “make the product great.” In lieu of advertising, the brand relies on strong WOM, which Musk has credited for the success of Tesla’s Model 3. It also helps that Tesla fans are tech-savvy and like to post videos of themselves driving their Teslas on YouTube and social media. The company has admitted that it has largely taken a pass on standard marketing. As Tesla disclosed in a filing with the SEC, “To date, media coverage and word of mouth have been the primary drivers of our vehicle sales leads and have helped us achieve sales without traditional advertising and relatively low marketing costs.”
- Lush Cosmetics. The UK brand has followed a no advertising strategy since inception. Instead of blasting consumers with multimillion dollar campaigns, Lush relies on press coverage and ties in with special events. A month before Halloween, for instance, Lush dropped its Halloween-themed batch of products, including the Black Rose Bath Bomb and the Cloak of Invisibility bath oil.
- Trader Joe’s. Considering Trade Joe’s doesn’t advertise, it’s notable how often it comes up in conversation. There’s ample reason: we tend to talk about foods we like and a trip to the store is often a framework for a conversation about new foods. The fact that about 80% of Trader Joe’s products are private label helps solidify the link to the shopping experience and TJ’s positioning as an alternative to standard supermarkets.
- Zara. Clothing retailer Zara spends about 0.3% of its revenues on advertising. How does it compete with The Gap, J. Crew, and American Eagle? Zara has a reputation for being in touch with what its consumers want to buy. Envisioned as a “fast fashion” chain, Zara has a particular aesthetic: the items are inexpensive and the retail environments that house them are very well maintained. Though Zara is the world’s largest fashion retailer, the brand’s lack of advertising means that it sparks more conversation. “The 18 to 40 somethings that live in cities are nearby their friends, and they are not shy about telling them about Zara,” noted The Huffington Post.
A radical shift to word-of-mouth marketing is not for every brand. Nonetheless, the strategy does involve tactics that many might find useful. Traditional advertising is definitely not evaporating anytime soon, but brands could see marketing success and fiscal savings through the incorporation of ground-up, grassroots strategies like WOM.