The Power Word-of-mouth has in Marketing, and how to Cultivate it, by Rafael Schwartz, Published by Forbes Magazine, on

The Power Word-of-mouth has in Marketing, and how to Cultivate it, by Rafael Schwartz, Published by Forbes Magazine, on September 8, 2020.




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In The Power, Word-of-Mouth has in Marketing, and How to Cultivate it, published in the Forbes Magazine on September 8, 2020, Rafael Schwarz claims that online and offline word-of-mouth by a firm can influence consumers’ preference certain brands. He argues that consumers have always consulted with other consumers about the commodity they would want to purchase for the first time (Schwarz, 2020). The author suggests that the old customer’s review of the product, mostly influenced by how the firm treats the customer, affects the new customer’s decision to purchase or drop the product. Word-of-mouth plays a vital role in maintaining a customer’s lifetime value, profit maximization, and business expansion.

According to Rafael, a firm must follow six principles in the word-of-mouth promotion of their products to capture the customer’s loyalty, strengthen their trust and attract more to their brands. He advises that a firm invest in social currency, put up product triggers to the customers, connect emotionally with them, avail their product in all markets, offer practical value, and maximize captivating and memorable connections (Schwarz, 2020). These principles bring the firm closer to its brand consumers and make them feel safe, and it gives the consumers a sense of belonging, thus making them want to stick and continue working with the brand. More often than not, consumers pay attention to the treatment they receive on business premises rather than the value or price of the commodity. They believe quality customer treatment reflects on the quality of the products as well. Therefore, a firm that has mastered the principles is likely to maintain most of its old customers and attract new ones through them.

Estimation of Customer value influenced by word-of-mouth is relatively straightforward. Product firms use the purchasing patterns of their customers to study their product preferences and predict their future purchases and the channels they are likely to use (Schrage, 2017). Firms use sophisticated statistical models to project their customers’ past purchases, preferred commodities’ type, and price range, and time intervals to their future likelihood of making new purchases. However, it should be noted that this method can prove inaccurate since it is impossible to tell exactly the intentions of a consumer or their financial constraints. These factors can easily change their purchasing patterns as it tempers with their purchasing powers, especially the latter. Firms, therefore, acknowledge the fact that sometimes their predictions can be incorrect and establish measures to control such situations and expectations to avoid experiencing a drastic loss.

Firms also calculate their customer’s referral value to estimate how valuable their customers are to them in spreading their brands to other new customers in the market. This process is a bit complicated compared to calculating a customer’s lifetime value. It requires a firm to commit longer periods to conduct this analysis, usually six to twelve months, depending on the type of business in play (Schrage, 2017). This time consideration enables a firm to make accurate conclusions regarding their loyal customers’ influence on new customers by establishing variance in the referrals number. The firm accomplishes its objective by determining the average number of referrals a customer has made due to introducing an incentive on products purchased as a market campaign mechanism. Therefore, it requires the firm to study the customer’s purchase patterns but from a different angle from determining their lifetime value. Most brands prefer to count referrals influenced by the incentive market campaign within one year.

It is also important for a firm to distinguish the new consumers drawn to the products but not necessarily through their loyal customers. Some customers embrace new brands mainly because they want a change or get a new experience with a different product (Fan & Dong, 2021). They might as well have compared prices of the new brand’s commodities and found them to be affordable compared to the ones they’re used to, hence switching to the new brand. These are some of the factors that draw consumers to new brands other than being referred by their friends or people around them who identify with the brand. For a firm to identify referrals linked to their loyal customers and those not, they survey the ground and ask their new customers their trigger and motivation to purchase their brand (Kumar et al., 2007). They also question whether they would have been drawn to their product had it not been for the influence of an old customer. Answers and conclusions drawn from analysis enable a firm to understand and appreciate their customers more.

Firms pay more attention to their customers’ concerns, suggestions, and requirements. Firms understand how impactful their word-of-mouth is to their customers. Therefore, they establish strategies and policies that enable them to connect with the customers personally and create a sense of belonging (Schrage, 2017). Firms invest in employee training programs as one of the ways of enhancing customer treatment. Employees are subjected to lessons and training that help them interact with customers respectfully. They are taught to be patient and considerate because they interact with different customers daily. They are required to help them without complaining, even if the customer seems to be mistaken. According to most brands, the customer is always right, and the employees’ main aim is to ensure customer satisfaction at all times (Alavijeh et al., 2018). However, they are also taught how to stand up for themselves and handle abusive customers, which happens on rare occasions. Employees come out of training knowledgeable and ready to serve customers diligently, whether physically in the stores or online.

Firms also conduct self-evaluation over different periods to comprehend the business’s market position and what is required to maximize customer lifetime value. Firms hold meetings within their corporations to discuss consumer satisfaction and ways to attract more to their brands. It is a clear indication that they acknowledge and value their customer’s contribution to their firms, whether directly or indirectly. Firms strive to maximize the aspects that led to referrals being made in the first place, including word-of-mouth. They introduce new, quality, and advanced products that make them more competitive in the market (Alavijeh et al., 2018). Furthermore, they introduce discounts and vouchers to their loyal customers, which motivates them to shop with them some more and request their friends to join in the offers. Gifts and prizes to be won are also introduced to propel customers to purchase more commodities and spread the word to their friends and family hence attracting more new customers.

Customer Lifetime value enables a firm to calculate and determine the expected profit margin resulting from loyal customers. Since Customer Lifetime Value involves customer data scrutiny and analysis, the firm gets insights and can tell the profit to expect from their customers after a given time frame (Kumar et al., 2007). For this reason, firms lay down plans and policies concerning their costs and effective resource placement. Some of the costs incurred by firms include commodity restock, employee payments, store enhancements costs, and advertisement costs. Firms are able to work their way around these costs and on time, thus ensuring the smooth running of activities in the business, with little to no inconveniences. When the customers are happy and satisfied, everyone is happy

Customer Lifetime Value enables a firm to determine advertisement schemes that are capital intensive (Sauro, 2021). Consumer market segments allow firms to identify advertisements schemes that are likely to drain their resources, yet they do not yield a reasonable outcome. Therefore, they can change their marketing strategies depending on the resources they have at their disposal and adopt relevant and profit-yielding schemes. This way, firms prevent unnecessary costs that would otherwise result in a loss, thus insufficient funds to run their operations in the long run.


Consumers play a vital role in propelling and elevating a business in any market setup. They complete the cycle of goods exchange, and without them, a business would not exist. Therefore, firms should pay attention to consumer needs and address them appropriately, including their verbal exchange. Word-of-mouth has a massive effect on the consumer lifetime value, which consequently affects the performance of a business. Businesses that put their customers’ interests first and address them respectfully tend to strive and perform well in the market.


Alavijeh, M. R. K., Esmaeili, A., Sepahvand, A., & Davidaviciene, V. (2018). The effect of customer equity drivers on word-of-mouth behavior with mediating role of customer loyalty and purchase intention. Engineering Economics, 29(2), 236-246.

Fan, J., & Dong, L. (2021). A study on improving customer value based on the effect of word of mouth. Frontiers in Psychology, 12.

Kumar, V., Petersen, A., & Leone, R. (2007). How Valuable Is Word of Mouth? Harvard Business Review. Retrieved November 11, 2021, from

Sauro, J. (2021). Why Your Customer Lifetime Value Is Important – dummies. Dummies. Retrieved November 11, 2021, from

Schrage, M. (2017). What Most Companies Miss About Customer Lifetime Value. Harvard Business Review. Retrieved November 11, 2021, from

Schwarz, R. (2020). Council Post: The Power Word-Of-Mouth Has in Marketing, And How to Cultivate It. Forbes. Retrieved November 11, 2021, from