I often hear knowledgeable people say “that’s not viral marketing, it’s word of mouth.”  Rarely do they go on to try to explain the difference or why the difference is important.  I’m not sure why it’s particularly important, but I’ve tried to decipher the difference below.

The confusion probably stems from their shared potential for driving exponential growth rates by leveraging existing users.

Based on the two sources I’ve found that tried to answer this question (pasted below) and my own experience, I’ve reached the following conclusion.  The primary difference is that strong word of mouth is primarily based on a compelling customer experience while viral marketing is more “engineered” to specifically propagate a product.

It’s easier to “engineer” viral marketing into some environments than others.  For example, a few years ago my accountant in Belgrade asked me to download Skype so we wouldn’t run up a big phone bill.  Skype didn’t need to do a whole lot to drive this virality, but making it easier to invite friends improves their viral growth rate.  Like Skype, every new communication platform shares this viral characteristic (the first fax machines, early IM products or Facebook).  There is a strong incentive to tell other people to join the network, because it improves the value of your own experience.

Word of mouth, on the other hand, is really based more on doing a favor for the other person (clueing them into something unexpectedly cool).  TIVO is a great example of this.  There is no inherent usage benefit for telling other people to buy TIVO.  But it is such a surprisingly great experience that people tell their friends about it anyway.  Even if TIVO were to offer a free month of service for everybody you tell, I still wouldn’t consider this a viral growth driver.  It’s just incentivized word of mouth.

While they may technically be different, I’ll take either exponential viral growth or exponential word-of-mouth growth if I can get it.  Or even better combine the two.  Skype falls into this combo camp.  You’d probably be compelled to tell friends about the ability to make free phone calls (especially overseas) even if the software weren’t required on both ends.  The fact that you also benefit when they install the software only accelerates this growth.

Before you obsess over viral marketing and word of mouth, make sure you have completed these critical baseline marketing steps.

Here are links from other bloggers that try to answer this question:

Andrew Chen’s comparison is a response to the question I posted on his blog.  He mentions multilevel marketing and chain letters as a couple of great non-online examples of viral marketing (and MLM is an example of a non-communication form of viral marketing also).

Seth Godin’s post points out the decaying nature of word of mouth.  A great experience fades quickly when it reaches a couple links into the word of mouth chain.  However, this wouldn’t be the case if word-of-mouth referrals always result in a new user who also refers the product/service.

For more details on the process of engineering viral growth, see this earlier post.

Read more at http://www.startup-marketing.com/the-difference-between-word-of-mouth-and-viral-marketing