Are You Getting The "Word" Out?

Has a mortgage broker ever said to you, "All my business is by word of mouth." and been very proud about it? If so, we will show you how this perspective can be very shortsighted and have an adverse impact on your earnings.

In this Internet marketing article, we will examine a few of the myths associated with "word of mouth."

First Things First

Let's take a brief test, which usually occurs first? Planning or results? Work - payoff? Hard work - luck? Satisfied customers - word of mouth?

We think you passed. You have to invest effort before you reap the rewards. You have to have satisfied customers who will tell their friends about you. And if you extrapolate a bit, a lot of satisfied customers telling their friends is much better than a few customers telling their friends.

Myth: Word Of Mouth Is An Easy Way For Sales

First, we agree that "word-of-mouth" is great way to sell, but we always shudder when we think about how short-sighted, or lacking in comprehension, the "word-of-mouth" comment really is... Almost always when we hear that comment, we find that it originates from:

  1. Someone who is cash strapped.
  2. Someone who expects business to come to them.
  3. Someone who has the money but is tight-fisted.
  4. Someone who doesn't understand where to market, so they don't.
  5. Someone who doesn't understand marketing and its correlation on revenue. They typically perceive marketing as an expense, not as an investment.

Again, word of mouth is a great way to generate business; it is just that not everyone applies it correctly.

Myth: Word Of Mouth Doesn't Cost A Fortune

Let return to the mortgage broker (let's call her Josie) who is actually achieving her business via "word-of-mouth." Josie is busy, but could actually handle more customers, and she knows if she became exceptionally busier, she could add a couple of assistants, and still earn higher income after the additional expense.

Josie looks back and notices that a client she had in January refers another client in May to her. Then she sees that the customer in May, referred a customer in December to her. She sees that trend occurring several times, and is proud of her good work - and rightfully so.

After The Harvest, Comes The Food

But upon further review, Josie realizes that if she had marketed more, instead of a couple of clients referring additional business throughout the year, she could have had 15-20 clients each referring new business. She sits back and discovers that only relying on word of mouth, has cost her additional business. If she had invested in additional marketing efforts, she could have created a larger source of satisfied customers referring new customers to her.

In effect, Josie saved on marketing costs, but paid for that in less overall revenue.

Essentially, "word-of-mouth" is an avenue of marketing, but it occurs AFTER you have clients, so it can take a long time to develop if you have a slow acquisition rate of new customers. Ideally, you shorten the time cycle so this can occur sooner rather than later.

Sales Versus Marketing

Just a quick review: marketing sends traffic to your site, sales is what you do after traffic arrives. Once potential customers arrive, you need to "sell" them on your services and once they agree to use your mortgage company, you must "satisfy" them in order to receive word of mouth referrals.

How To Jump Start Your Word Of Mouth Program

Start your own word of mouth program by attracting customers to your web site. Invest now, receive rewards later. Use pay per click advertising (discussed in next month's article) to drive traffic to your site. 

NOTE: We are not advocating you spend/waste unreasonable sums of money or enter into a race to grow a company to 1,000 employees, what we are advocating is that if you have capacity in your company, be it a one-man show or larger, you need to market to get business, in a responsible, cost-effective, yet aggressive way. The faster you get business, the faster you reach the capacity you want, and with "word-of-mouth" you will be able to sustain that income. And ultimately, if you don't want to grow, you will be able to pick and choose from prospective clients.

Now a word about your web site. 

Ask For The Referral

One of the most overlooked methods of gaining word of mouth referrals is utilizing your existing database. Extract a sample of closed loans and send them a thank you email. Be sure the subject you use and your email return address present themselves in a way as not to look like Spam.

Throw In A Bonus

Additionally, you can experiment with offering anything from free movie tickets to someone who refers a friend, to a dinner for two if a transaction closes.

By using email, you can quickly test which offers draw the most responses.

The moral of the story: In order for "word-of-mouth" to work, you need clients to spread the word, and if you want to shorten the "word-of-mouth" time cycle to get those clients, you need to front-load the number of clients you have. Of course besides marketing you have to do quality work and keep your customers happy so they will spread the…word.

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