So many business plans state that they are going to use word-of-mouth advertising to market their products and services. But what is word-of-mouth advertising, how is it built and, more importantly, how do you get it? Word-of-mouth is the process of a customer, prospective customer or someone who has seen a marketing message, telling a friend, relative, associate, etc. about the respective brand, product or service. One of the biggest misnomers about word-of-mouth is that it is free—word-of-mouth, just like any other form of advertising, should be included as an expense in your business plan's profit and loss.
Smart businesses build word-of-mouth through diversifying the networks of people they come into contact with each day; developing spheres of business contacts that have a like consumer but are non-competitive; and most importantly, creating long-term contacts with customers and associates. You can simply state that you are going to build word-of-mouth in your business plan, but you must understand just how to do it.
Building word-of-mouth is not specific to any business. Just like all businesses are different, all word-of-mouth methodologies are different. One of the best ways to initiate word-of-mouth for small businesses is to join and "participate" in your local chamber of commerce. There are other groups that you could possibly join and most cities have business networks already established that you can join for monthly dues. Also, figure out what businesses have the same customer in common as your business plan and make contact with these people. If there is one thing I know for certain it is that business owners love finding potential relationships that can benefit their business—be the initiator in this relationship.
However you go about building word-of-mouth, keep one thing in mind. It takes patience and an extroverted attitude to utilize this low-cost approach to marketing. As far as it relates to the financial forecast in the business plan, just remember one thing: we said low-cost approach, not no-cost approach.