This morning a friend was telling me about a product he had used recently, and how it changed his life. Well, made a small piece of it better at least.
Next time I am looking for a product in that category, I will try it. Very little to lose even if I do not share the enthusiasm, and I value my friends opinion.
Word of mouth marketing.
Free marketing for the product supplier, right?
Consider how much effort went into making the product right, managing and optimising the value chain, in creating the programs that engaged and made an advocate of my friend, and gave him the stories to pass on to me.
Word of mouth is very effective, the most effective form of marketing we humans have ever seen, and on the surface it is free, but beneath the surface, there is frantic paddling going on.
Word of mouth marketing works but is not free, it is earned.
StrategyAudit 
Completely agree, earned media whether word of mouth or social or any other always costs something somewhere!
Yes Chris it does, but the automatic assumption is that word of mouth is free, with no consideration of the effort that goes into the construction of the story the mouth is retelling.