WOM - Word of Mouth - is the Holy Grail of marketing. It is defined (by Wikipedia) as being “the passing of information between a non-commercial communicator (i.e. someone who is not rewarded) and a receiver concerning a brand, a product, or a service”. The bit in brackets is pretty important.
If you have lots of deliriously happy customers who go around telling everyone how wonderful your product or service is, then you've got it made. Although it's vital you do everything you can to ensure you get great word-of-mouth - great referrals - it's sometimes very difficult to achieve this.
It depends on all sorts of things, although word of mouth is most frequent where there is a sizeable and very noticeable difference between your product and other similar products. In the service business anyone who turns up on time every time or goes 'beyond the call of duty' is likely to get great word of mouth.
But sometimes when people are on to a good thing they don't want to let everyone know their secret. This is a bit galling if you are the service provider! And sometimes people just don't share their experience, unless it was a bad one.
But even where you and your business are getting good referrals, word-of-mouth in its purest sense is just that - one person telling another person that they bought a great product or received great service. And there's a limit to the speed and reach of word-of-mouth for this very reason.
Unless you are selling a product or service where there is a very limited number of people or businesses that would buy from you, word of mouth is highly unlikely to be enough to grow your business. If you're selling high end products to the rich end of town - Learjets maybe - WOM may be all you need. If you're not, WOM is very important, but it's not enough. That's why marketing was invented.
Next time... PC