Why Are Recommendations So Important?

By Sarah Pierce, Sr. Vice President

I recently wrote a piece which discussed some of the main aspects to consider when building a Net Promoter Score (NPS). Your NPS gauges how loyal your customers are, and with loyalty comes an increased amount of recommendations or Word of Mouth Marketing (WOMM). Consumers are 77% more likely to buy a product if it’s recommended by a friend or family member, thus proving the power of opinion and influence. In fact, a recent report published by WisePlum, the Retail Council of Canada and Google, found that “asking friends or family for an opinion about a product” is one of the top pre-purchase activities.

Even with the incredible amount of technology marketers have at their disposal, word of mouth is still one of the strongest forms of marketing. Just like in the old days. In this article, I’m going to follow up on my previous piece, which will delve into more detail regarding recommendations and why they are important to your business. So here we go.

 

1. Influencers speak to the masses

 

Recommendations aren’t just about friends talking to other friends or family members anymore. Influencers on social media platforms such as Instagram and Facebook have the ability to reach out to many people.

The analytics company Annalect recently joined forces with Twitter to create a survey about the prominence of influencer marketing. What they found, is that 49% of the survey respondents said that they depended on influencer recommendations to purchase products. When you think about it, that’s half of your client base trusting influencers on which products are worth buying.

If you still don’t believe that influencers are that important, a recent study by Tomoson concluded that for every dollar that companies spend on influencer marketing, they get a return of $6.50.

 

2. More talk means less ad spend

 

Word about products and services spread fast, and that can be your most essential tool or your biggest weakness. Take the American Airlines conundrum which happened in 2018, where a video went viral of a passenger being dragged off an overbooked flight. After the video spread, American Airlines shares crashed over 4% and caused the value of the company to drop by roughly $1 billion.

On the other hand, if there is positive talk about the product or service, it can result in viral sharing on the internet. This is a phenomenon that most brands crave. The Dollar Shave Club is one example — their promotional video about the service cost less than $4,500 to shoot and resulted in over 26 million YouTube views to date. Now, DSC is one of the ttop-selling razors in the United States.

Yes — those are extreme examples of what happens when word spreads fast. But, if you create a product or service that gets people talking, you also have a chance at success. As it stands, recommendations have the power to increase revenue by 20%, and word of mouth can be up to ten times more effective than standard advertising.

 

3. Refer a friend: The new holy grail of recommendations

 

What better way is there to promote your product or service than getting your customers to do it for you? We’ve seen how successful these types of marketing strategies can be, yet many businesses still don’t use them. The simple answer to getting people to promote your business for you is by means of recompense. If you offer some kind of reward to clients, they are more inclined to recommend you.

For example, if you offer a service, you can give return customers a discount if they recommend a friend. If the friend visits your location, they then also get a discount because they were recommended. This creates a full circle. Return customers keep talking about your service, and new customers will start doing the same. Uber is one example of a service that implements strong referral strategies. Whenever someone creates an account based on a recommendation, both users get a free ride.

Recommendations will always be one of the most effective ways to get people interested in your product or service. Thanks to the internet and social media, businesses can develop strategies which get people to refer friends, family members, and even acquaintances. If you don’t have a referral strategy in place yet, it’s time to look into it