Local Business Marketing: It’s Time To Rethink Word Of Mouth

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How comfortable would you feel if your entire Google search history was suddenly made public to your friends and family? You’d probably be somewhere on the spectrum of slightly uncomfortable and completely mortified.

During my time working in the search industry, part of my job entailed conducting in-depth research on how people search Google, what they search for and how often. I’ve worked in sporting goods, intimate apparel and now in the legal industry.

No matter the industry, my research has led me to the same conclusion each time: People turn to Google with the questions they’re not comfortable asking their friends. “I can’t believe how many people Google that,” is a common utterance of mine.

I often hear attorneys and other small business owners, especially in service industries, proclaim that word-of-mouth is still their top source for new client acquisition, despite the rest of the world moving toward this new “digital marketing” trend.

However, many lawyers are in the businesses of helping people dealing with difficult situations. Situations that might entail asking Google some very personal questions.

Word-of-mouth plays an important role in most business marketing strategies. For mature businesses, it may be enough. However, if you’re in the growth stage of your business and word of mouth is your top source of new customers, it probably means you’re not investing enough in other marketing vehicles — especially search.

There are more than 100 billion Google searches a month. There probably aren’t 100 billion instances of people asking a friend for a recommendation for a local business. While some people still look to their closest friends and family for recommendations, many more will go to Google first.

Think about your product or service. Is it something that naturally comes up in conversation at the dinner table? Or is it something that your customers may want to keep in their Google search history and leave their friends out of it? In the legal industry, for example, the answer is overwhelmingly the latter.

If you rely on word-of-mouth advertising, you’re really only scratching the surface of a much larger pool of potential customers.

Diversifying Your Marketing Acquisition Efforts

When businesses claim that word of mouth is their “best” or “top” marketing vehicles, here’s what they really mean: It’s easy. A lead generated by a referral is highly likely to convert to a customer or client of your business. You barely have to do any work to convince them to buy your product or service. Your existing customer who made the recommendation has done the work for you.

But for every new customer you get through word of mouth, there are likely hundreds or thousands of potential customers looking for answers to questions that your business can help with.

A well-diversified marketing strategy can help minimize or eliminate business volatility. Businesses that rely too heavily on one or two sources of new customer acquisition can find themselves in precarious situations if that source experiences a lull.

To evaluate a new marketing opportunity for your business, I’ve found that developing an understanding specific to your industry of the following four factors is necessary:

• Cost Or Effort Level: What is the cost structure of this marketing channel? Beyond hard costs, what is the level of effort involved?

• Potential Reach: How many people can you potentially reach by this form of marketing?

• Conversion Likelihood: Out of your total potential reach, what percentage of people are likely to become customers?

• Frequency: Is this marketing tactic designed to bring in a consistent, steady flow of new business or is it more volatile?

These factors will vary depending on the industry and geographic market. For a law firm operating in a midsize metro market, a qualitative evaluation of marketing options may look something like this:

Marketing Vehicle Cost or Effort Level Potential Reach Conversion Likelihood Frequency
Word of Mouth Low Low High Inconsistent
SEO Low High Low Consistent
Paid Search Moderate to High Moderate High Consistent
Direct Mail Moderate Moderate High Consistent
Social Media High High Low Consistent

 

Next, think about how you might best diversify your marketing efforts based on the goals of your business. For example, let’s assume this law firm wants to reach new customers but keep overall costs low for the first year. A combination of word of mouth and SEO may make the most sense.

If you have access to real or industry data, use it to form some predictive modeling.

• Hard Cost: How much money will I spend directly on this marketing effort?

 Reach: Based on my investment, how many people will I reach in a month?

• Conversion Rate: What percentage of leads can I expect to turn into customers?

 Net New Customers: How many new customers should I expect based on reach and conversion rates?

Let’s say the law firm is a criminal defense law firm and wants to focus on retaining new clients with DUI cases. They pay an SEO agency a $1,200 monthly retainer fee. They have strong rankings for DUI-related keywords that garner about 13,000 impressions a month. An analysis of word of mouth and SEO may look like this:

Marketing Vehicle Hard Cost Reach Conversion Rate Net New Customers
Word of Mouth $0 20 60% 12
SEO $1,200 13,000 5% 650

Redefining Word Of Mouth

Think of your marketing efforts as a means to building a core group of referral-generating customers.

If you provide a great experience for your clients for customers, word of mouth will bring you new business. In fact, you can even amplify it with incentive programs if that is ethical in your industry. But if you’re in the business of helping people during difficult times, it will not compare to the scale and ROI you can achieve from other marketing tactics. People will Google their problems, and you should invest the time in making sure you’re there with an answer.

You will set yourself up for success by careful evaluation of every marketing option, paired with strategic decisions to diversify your efforts in a way that supports your business goals.

[“Source-forbes”]