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Difference between WoM & Referrals

Difference between WoMM and Referrals

If you don’t know what referral marketing is, you are missing one of the most effective ways of getting new customers. Today, I will cover the difference between word-of-mouth marketing and referral marketing and show you how referral marketing can generate greater revenue than what you thought was possible.

If your friend has shared a promo code with you, you can take it from me that you were a part of a referral marketing campaign. Not knowing about referral marketing means you are missing one of the most cost–effective ways of getting new customers through Word-of-Mouth (WoM).

The statistics below are from live campaigns, that were run in recent times.

  • 75% of companies say referrals are their lowest cost method of acquiring new customers
  • Referral programs gave 86% more revenue growth in last 2 years

 So, what Is Referral Marketing ?

Simply put, a method of promoting products or services to new customers by asking current customers to share referral incentives with their friends.

A simple example – sending your close contacts your personalized referral code for Ola Cabs. Usually, the most common offer is give your friends $10 off their first rides, if they use the promo code you shared with them. In return, you too get $10 credit for your next trip.

So, is that Referral Marketing or Word–of–Mouth ?

If you mention Ola Cabs to your friends or relatives but you don’t get any incentives, then it is WoM Marketing. However, if you sent your friend a message (or even an eMail with a referral code or a discounted offer), it becomes an example of referral marketing. Take the example below.

The Secret ?

Typically, newsletters share content in  a witty, compelling way. WoM is about sharing a small secret with a friend. At the end of each newsletter, you usually see had a button Share with a friend written. That is WoM Marketing. If you share the contact of this friend, for an incentive to both giver and receiver, it is Referral Marketing.

More about this is in my next blog. Your comments will be welcomed.

Dr. Sunil Pevekar (drsunilpevekar@gmail.com)


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