What is word-of-mouth communication? Explain its importance to a retailer.

Word-of-mouth communication is defined as positive or negative verbal communication between groups such as experts, employees, family members, friends and current or potential customers, independent of the forwarding. The literature underlines that word-of-mouth communication is a very effective factor in the decision of employees' positive or negative thoughts about their organization.

Word-of-mouth marketing is important as it is an effective way to increase sales, promote products and services, increase brand recognition, and build customer loyalty. Many companies employ strategies that prompt customers to recommend their services and/or products and share positive experiences. Essentially, companies create the spark that causes the firestorm of chatter among consumers, and since studies show that most people trust the advice of family and friends, focusing on word-of-mouth marketing can be more beneficial and cost-effective than other forms of marketing.

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