Word-of-Mouth Referrals: Pros and Cons

Do you recall a time when you were so impressed by a product or service that you had to tell everyone about it? This is known as Word of Mouth (WOM), and referrals of this nature could well hold the key to your success as a tradie.


Every tradie needs word-of-mouth marketing as happy customers can recommend your services to friends and family. In addition to increasing credibility and engagement, WOM referrals provide you with free promotion, which can help you improve your reputation as a service provider. The word on the street is that you can also get cheaper insurance for tradies by comparing online.


It is well known that personal connections drive purchase decisions – and integrating this exciting strategy into your business will help you boost sales. 


The Positives of WOM



Trust-building is not an instant process, but it's worth the effort in the long run.


Nielson conducted a study that found that 92% of individuals trust recommendations from relatives, friends, and colleagues. Essentially, referred customers are more likely to trust your business because they have heard about you from a trustworthy source.



WOM referrals can significantly impact your credibility as a business owner. If people hear about your business from a person they trust, then they perceive it to be more credible. Customers are less likely to consider marketing messages to be authentic if they have clearly been paid for because they know the message is intended to influence the client to purchase.


Improved Customer Retention Rate

Getting referrals can result in more loyal customers for your trades or service business, which can result in improved customer retention rates and refer-a-friend effects. Research conducted by Goethe University found that referred customers were 18% less likely to stop using the services of a business than customers who had learned about the business by other means.


To attract new customers, you must achieve customer satisfaction, which is the first step toward retaining customers.  


Empowers WOM

Scalability occurs when you encourage your customers to recommend you, since word-of-mouth spreads. In this way, you can connect with a larger audience that you wouldn't typically reach. We speak about brands when we discuss new products and services. As a result, you are introduced to a targeted audience because your brand is placed before high-quality leads.


Little to No Cost

A typical marketing strategy can become very expensive very quickly. A referral is a fairly inexpensive way to market a tradesman or service business. Simple interactions between customers in the marketplace, such as sharing of experiences, have no direct costs. You can turn your existing customers into a great source of offline marketing, especially if you have already developed a positive relationship with them. 


The Negatives


Less control

Using referral marketing limits your ability to control the messaging of your brand since you rely exclusively on feedback from your customers. In some cases, WOM may undermine your market position. For instance, customers may promote your trades or service business as the cheapest service when you are actually seeking to position yourself as a high-end tradie.


It is the goodwill (and the memory) of the customer that determines the reviews. It is largely a matter of chance for word-of-mouth to spread, and there are so many elements, like fear and uncertainty, that can prevent customers from spreading the word for you. You cannot always count on your customers to think of you. There is a chance that even your most loyal customers may forget to refer you!


The consumer experience versus reality

With WOM referrals, you have the challenge of managing consumer expectations since each customer's experience will be different. The client experience can also be impacted by a wide range of customer expectations, which can lead to either excellent reviews or negative word-of-mouth.


Keeping interest high

New products or services eventually lose their buzz over time. If the hype dies down, consumers will no longer be aware of your business. Furthermore, your customers are less likely to understand or be educated on your brand's full story if you rely solely on WOM marketing.


Waiting for results

Referrals from word-of-mouth are quite cost-effective but setting them up correctly takes some time. The right ‘moment' is crucial, according to business coach Nancy Michaels. Establish a successful track record for your business and build trust with your customers. Then, ask for a referral of your trades or services. A customer is more likely to have the wrong impression of your brand if you ask them for a referral too soon.


Analysing results can be difficult

The most common way for consumers to spread word of mouth is through casual conversations. Consequently, it may be difficult to determine whether profits were enhanced through WOM. To determine how new customers discovered the business, businesses usually perform brand awareness surveys, analyse sales data, or employ POS inquiries. However, this is not always possible for tradies.


What are the best ways for me to get referral business?


The effectiveness of WOM is harder to measure than other marketing techniques. So, you can't rely on WOM as your primary marketing tool. Along with word-of-mouth referrals, other methods must be employed.

Creating tools that make your trades or services business referral process easy can make WOM referrals more effective. In addition to online forums, you can make use of feedback tools and increase your presence on social networks.

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