A Research Report Submitted to Mzumbe University in Partial Fulfillment of the Requirement for the Award of Master of Business Administration in Corporate Management (MBA-CM)For many years word of mouth has been used by companies as an advertising tool which requires less major investments in mass media yet it was regarded as an ineffective tool for business sales performance. With the invention of new technologies in communication the same is increasingly gaining popularity in the context of marketing. In view of the same this study aimed at assessing its effectiveness in influencing businesses sales performance. The study was conducted at Chef‟s pride located along Chagga Street at the centre of the city of Dar es salaam. The population of the study involved restaurant‟s top managers (the management), non managers members of staff (receptionists, waiters, waitress and cooks) and customers. A total of 80 respondents were selected to compose the study sample. The sampling technique employed in the study involved purposive, simple random and convenient sampling. The techniques for data collection included interviews, questionnaires, and observation. Qualitative data were analyzed using content analysis and elements coded accordingly for analysis and presented. The study data were all analyzed using basic mathematical calculations that were presented in tabular, bar and pie chart form. The study reveal WOM advertising is effective in improving company sales in the following ways; it speeds up customer‟s decision making in buying service and products, increase number of customers, and increasing sales volume of the company. The study also revealed that applying WOM in advertising has the following challenges; negative WOM is more influential than positive WOM, the environment in which WOM takes places is constantly changing also negative WOM can be used in unfair business competitive practice. The study recommend that companies should create positive business environment and consider providing quality hotel services and allied products, maintaining customer care and avoiding annoying customers for whatever reasons.