The danger of Word of Mouth
One of the bigger reasons for business failures and start-ups that go broke is the lack of proper strategy. These companies live for the day and forget that the future must be well-planned and, if not predicted, at least pointed in the right direction.
Strategy, by its very definition, is the planning and implementation of actions and ideas focused on achieving goals other than the ones that have to do with your immediate purposes, it is the use of one achievement to leverage the company to another achievement.
The reason why businesses should implement is that good results are not achieved overnight. They are dependent on good strategy and building momentum. Good results come when you manage to combine that momentum with planning and the available resources, transforming it along a schedule into a bigger, better idea than what you started out with.
Building momentum and the strategic view in a company are essential, and having the tools that allow these strategies to flourish are the key to unlocking your potential.
The problem I often face is that in business conversations, when I ask entrepreneurs what they are doing to acquire more customers, it is not uncommon to hear that their main lead generation channel is ‘’word of mouth’’. This usually makes the hairs on my neck stand up, because it displays a tremendous lack of understanding of how businesses works in today’s economy.
This has to do with how companies interact with one another. A company is part of a regional or national economy, which itself is part of the global economy. This means that no matter what you want to believe about business, your company is never separate from the greater economy. Everything that happens in that economy has an influence on you, from floods in Thailand increasing the prices of electronics, to a potential Grexit sending travel companies scrambling to cancel their reservations. All the factors in the economy have a deep influence on the company, and its ability to thrive and build momentum.
So, the ability of a company to find new customers - as much as all the other tactics and strategies - must be under its own control for a simple reason: if the demand for a product is too low, you need to be capable of influencing this demand, steering it upwards.
For this purpose word of mouth is too uncontrollable. There are no metrics to measure its efficiency and a company that relies only on word of mouth might lose by being hostage to the market’s whims.
Other tactics for lead generation and customer development, which would lead to better results, are networking, promotional efforts such as social media, print advertising and direct marketing, as well as branding initiatives and a mature set of growth hacking techniques.
Word of mouth is important since it proves the quality of a determined business and can be an incredible extra asset for a strategy. However, relying only on word of mouth is likely to lead to fluctuating income, and an unstable growth into the future.
Seizing the day is important, but just as important is planning of the future. In this planning, implement solid initiatives that will drive growth and gear them towards your goal. To achieve the greatest results, use word of mouth, but don’t rely on it. That’s the key to unlocking your business’ potential: to combine the strategy, the momentum, and the tools, and use them as a ladder towards your greater goal.