WoMM vs Referrals

 Difference between WoMM and Referrals

If you don’t know what referral marketing is, you might be missing one of the most cost-effective ways of getting new customers. In this post, we’ll tell you more about referral marketing, cover the difference between word-of-mouth marketing (WoMM) and referral marketing (RM), show you the benefits of refer-a-friend programs and how referral marketing can generate high revenue.

Remember the last time your friend shared a promo code (if you want to know more, my eMail is below) with you or a discount on a first purchase ? If you used that code and made the purchase, it is most likely that you have already been a part of a Referral Marketing Campaign.

If you don’t know what referral marketing is, you are missing one of the most cost-effective ways of getting new customers through word-of-mouth.

The mind-blowing stats speak for themselves. 

# 75% of companies using referral programs say referrals are their lowest-cost method of acquiring new customers

# companies with referral programs saw 86% more revenue growth over two years.

Let us cover the difference between word-of-mouth marketing and referral marketing and explain how referral marketing can generate revenue.

What Is Referral Marketing?

Referral marketing is the method of promoting products or services to new customers by asking a current community to share referral incentives with their friends. A typical example of using referral marketing is sending your close contacts your personalized referral code for Uber Cabs, for example. While Uber’s referral marketing campaigns may differ in different countries, one of their most common offers is giving your friends $10 off their first rides, using your promo code. In return, you receive $10 of credit for your next ride.

Referral Marketing or Word-Of-Mouth ?

Whenever you come across a product or service you like, chances are you will mention them to your friends or relatives. If you don’t get any incentives to do that, the whole process can be called word-of-mouth marketing.

If you heard about a product from a friend and didn’t receive an incentive, chances are you just experienced word-of-mouth marketing. However, if a friend sent you a Facebook message or an email with a referral code or a discounted offer, this would be an example of referral marketing.

A great example of word-of-mouth marketing is the story behind a media brand. They started in 2008, with one person emailing to her 50 friends about a secret neighborhood she discovered. In six months their mailing list grew to 10,000 people because women were begging to be added to it. Three years later the newsletter had 800,000 subscribers. In 2017 this number skyrocketed to 4 million.

What is the secret behind its success? Apart from newsletters being the genius of content marketing with their witty, compelling writing, it also about sharing a small secret with a friend. The end of each newsletter had a button with “Share with a friend (or five)” written on it. That is word-of-mouth marketing.

Comparing Word-of-Mouth Marketing With Referral Marketing

Referral marketing and word-of-mouth marketing are very similar; however, there are some key differentiators between the two. Both referral marketing and word-of-mouth marketing use existing customers as advocates to help promote their business. However, the big difference between the two is that word-of-mouth marketing is organic; whereas, referral marketing introduces an incentive to make the outcome more repeatable.

To make things ore clear

Word-of-Mouth Marketing

Brands rely on their customers to share and talk about them on their own accord

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Referral Marketing

Brands encourage customers to share information about the brand by introducing a reward for it

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