I recently read this article by @econsultancy which claims that word-of-mouth referrals are an "offline" phenomenon. Since my business enables companies to easily build socially-integrated referral programs, I was disappointed with their assesment. It's clear they are grossly underestimating the value of real word-of-mouth engagement via social media; here is just one of example:
Consider this conclusion (below)....
In short, status updates and tweets hardly represent the one-to-one interactions that serve as the foundation of effective word-of-mouth."
Of course! Neither status updates nor regular tweets constitute actual word-of-mouth. I suppose you can technically count a 'status update' as 'word-of-mouth.' Yet, in the real world, a 'status update' is like wearing a t-shirt. You are posting something (on your chest or via facebook / twitter) for everyone to see. There is no engagement or direct contact required. To compare wearing a t-shirt to having a face-to-face conversation is like comparing apples to papayas.
I had an encounter a few months ago that serves as a great real life example. Here is a recap of the events (or search via my @jeff_epstein twitter stream....)
Time 6:28 am (EST)
Time 7:28 am
Time 7:34 am
NOTE: the extent of my and @zburt's relationship is that we both post on HackerNews and we have traded 2 short emails in the past month...
Time 11:08 am
In short, referrals via social media absolutely work. The issue is those looking to be referred need to know how to ask! Zack was clear with his approach, he was looking to get sweet banners for Awesomeness Reminders -- his brilliant (and obviously awesome) website.
Once people start becoming more knowledgeable about how to use twitter to ask questions -- the 'effectiveness' of word-of-mouth referrals online will surely increase.