It is often said that “word of mouth” is the best form of advertising, but do we really understand how it works?  Or better still, how to make it work better for your business?

Word of mouth is about communicating a message.  The message is in the words you use when telling people about your business - ideally a message that conveys a memorable and meaningful description of how your business can benefit others. 

Communication also requires a medium for delivery.  In word of mouth, the medium is any opportunity you have to meet and talk to people, an example of which is attending a business networking event. 

In fact, the key to “word of mouth” is networking.  Being a member of networking groups provides a great opportunity for networking with other business owners, and in so doing, spreading your message. 

But it doesn’t stop there.  People talk about the people and the things that they know.  By giving them the right words when describing your business when you meet them, they will then spread your message for you too.   

So, by making better use of networking opportunities and developing your message, you can make word of mouth work harder for your business.

So let’s take a moment to consider how to improve the quality of your message.

Do you have a short answer to the questions – “Who are you?” and “What do you do?”  Having a prepared response to these questions is a good way to make sure that you are spreading the right message when meeting people at a networking event.  Some people refer to this as a 30-60 second “infomercial”, or even an “elevator pitch”. In Australia, you can think of it as your BBQ speech. 

This is something that should be well thought out, and practised often.  When developing your “elevator pitch”, make it unique, make it memorable, make it concise and most importantly make it natural!  Get to the point – what are the key benefits of doing business with your company?  Why are you different?

The next thing is to consider how often you find yourself in a networking opportunity, and how well you have “networked”.   Are there more opportunities for you to network?  (Isn’t any time you meet someone a networking opportunity?)

By sowing the seeds when you network, your message will start to get out there by word of mouth.  Sure, it might not lead directly to an opportunity to do business, but it certainly will make more people aware of who you are and what your business can do. 

Word of mouth can indeed lead on to a referral for a business opportunity – because someone you meet might know someone who is looking for your particular product or service.

The thing to remember about networking is that it doesn’t just work one way – it is a two way street. In fact, asking people what they do is a natural icebreaker at a networking function, and a good way to start conversation with new people.  Usually they are just dying to tell you anyway.

But, take this one step further.  You might be able to provide referrals to people you meet through networking.  Action speaks louder than words, and there is no better way of letting people know that you do business by referral than by demonstrating this and providing referrals yourself.

The most important thing about word of mouth is that the positive message that you spread about your business needs to be backed-up by reality.   Your business must actually deliver what you say it does!  (As a word of warning, word of mouth can be detrimental to your business if you don’t deliver, as people will start spreading that message.)

So, I will leave you with this thought – word of mouth marketing ultimately depends on the quality of your customer service.

People in business often ask me how they can improve the quality and quantity of referrals to their business. 

In answering this question, it is useful to explore some of the reasons why people may be relcutant to refer that business in the first place.  Here are 10 of them:

1.     TRUST – They don’t like or trust you sufficiently.

2.     SALES PRESSURE – They don’t want to subject a friend or colleague to the pressure of a salesperson and / or they might look down on the role of salespeople.

3.     UNCLEAR OF BENEFITS – They aren’t sufficiently clear about what you do and how you might benefit their friend / colleague / relative.

4.     INCORRECT PREQUALIFICATION – They incorrectly pre-qualify their colleagues as to their ability to acquire and use your products or services.

5.     RELATIONSHIPS – They are afraid of upsetting their relationships.

6.     TALKING BEHIND BACKS – They do not want to give the impression they are talking behind someone’s back.

7.     SALESPERSON – They believe in the product or service, but not the salesperson.

8.     PRODUCT OR SERVICE – They believe in the salesperson, but aren’t too fussed about the product or the service.

9.     THEY CAN’T THINK OF ANYONE

10.   DISORGANISED – They are “time poor” and absolutely disorganised.  Just finding a business card is a real chore.

(Source: "Business Goldmine", Business Publications Australia)

So what can a business owner do to improve the quality and quantity of referals to their business?

REMEMBER the Golden Rule of Referrals-“GIVERS GAIN”! Referral marketing is not a set of techniques – it is a mindset. There is no better way to send the message that you work from referrals than to practice the giving side of it.

Some important tips on how to pass on referrals:-

• Get permission from the prospect to pass on his or her name.
• Demonstrate enthusiasm to the prospect about who will be calling.  Tell the prospect how this person has served other customers.
• Upgrade the referral as much as you can.  Make certain to represent the information accurately.
• Don’t sit on hot referrals.  Pass them on as quickly as possible.
• If you do give the same referral to more than one person, make sure that all parties know this.

If you want to receive high quality referrals, you must give high-quality referrals.

"A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption of our work. He is the purpose of it. He is not an outsider of our business. He is part of it. We are not doing him a favour by serving him. He is doing us a favour by giving us the opportunity to do so."

- Mahatma Gandhi in a speech in South Africa in 1890

“It’s unwise to pay too much, but it is equally unwise to pay too little.

When you pay too much, you lose a little money. That is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing you bought it to do.

The common law of business balance prohibits paying a little and getting a lot. It can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run. And, if you do that, you’ll have enough to pay for something better.”

John Ruskin (8 February 1819 – 20 January 1900) was an English art critic and social thinker, also remembered as an author, poet and artist. His essays on art and architecture were extremely influential in the Victorian and Edwardian eras.

Remember the equation, Value = Benefits divided by Price.

Inherently, this shows that a customer's perception of "Value" can be increased by enhancing the level of "Benefits" that they are being offered.  The alternative option is to reduce the "Price".

If you want to focus on selling value to your clients, consider how you can enhance the benefits to your clients of doing business with you, before you consider reducing your price.

By Kristian Reiss

Is your Business Plan up to date?  What is your Business Plan?  Is it that document that’s sitting in the bottom drawer that you put together when you started business, or needed finance, and hasn’t been looked at since?  Or is it something that you review regularly, and keep up to date.

Many business owners find themselves overworked by the day-to-day activities in their business, and do not take the time for business planning.  As a result, they may indeed miss out on opportunities, or worse still – fail to recognise a critical threat to their business until it is too late.

Business planning is an ongoing process, and business owners have a responsibility to set aside the time to do it regularly.  Writing or reviewing the business plan is the first step in this process.

A Business Plan should be a living, breathing document, which is adapted to the changing conditions of the market, and the changes in your business.  Think about it.  Virtually every business is affected by the current happenings in the world financial markets - but how many have revisited their business plan to take that into consideration?

Intrinsic to most Business Plans is the SWOT Analysis.  SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats.  A SWOT Analysis therefore is an analysis of these factors as they relate to your business, and I believe it is an extremely useful tool to use when planning the direction of your business.

Strengths and weaknesses are internal to your business and are generally things that are largely within your control.  Some examples of this could be the quality of your employees, or an exclusive distribution agreement or patent that your business may possess.

Opportunities and threats are external to your business, and as a result are not generally things that you can directly control, but you do need to be aware of.  Some examples of this could be changes in interest rates or government policy.

Effectively, a SWOT Analysis is a “line in the sand” – it is a view of things, as they are, at a given point in time.  Understanding these factors will help you determine approaches, or strategies, to:

• Maximise your opportunities
• Focus on your strengths
• Address your weaknesses
• Reduce the potential effect of known threats to your business

The strategies that you implement should be in line with a vision for your business.  A vision is simply your “future” business – or how you would like your business to be in the future. 

Have you stopped to think about this recently?  What will your business look like in a year, in 3 years, or perhaps in 5 years time?  Are you satisfied with the direction your business is headed?  Why did you get into business in the first place?  Is it going how you planned, or have things changed?  

If you put the SWOT Analysis together with the vision for your business, very quickly you will have a growing list of “things” that you need to do for your business to succeed.  The next step is to prioritise this list, and determine the best way to actually “do” them.