Manufacturers Underestimate the Power of Word of Mouth
February 16, 2009 - Consumers who are loyalty reward program members are far more likely to be word-of-mouth (WOM) champions for their favorite brands than non-members, and the more active their program participation, the more likely they are to exhibit WOM behavior.
A new study released by Colloquy, a provider of loyalty marketing publishing, education and research, titled, "The New Champion Customers: Measuring Word-of-Mouth Activity Among Reward Program Members," examines the motivations of WOM champions -- asking why they engaged in WOM activity regarding their favorite products and brands and what categories of offers and information they were most likely to pass along to others within their networks. The top five motivations of WOM champions were:
> To tell manufacturers what I think (73%)
> To get smart about products/services (68%)
> To be the first to discover new items (68%)
> To get free product samples (63%)
> To share my opinion with others (61%)
The analysis also offers significant evidence of a direct and important correlation between reward program activity and consumers' positive WOM endorsement activity. Here are some more of the key findings:
> Reward program members are 70 percent more likely to be WOM champions (defined as customers who are "actively recommending" a product, service or brand) than the general population
> 55 percent of reward program members are self-described WOM champions
> Only 32 percent of non-reward program members are self-described WOM champions
> 68 percent of WOM champions in reward programs will recommend a program sponsor's brand within a year
> Actively participating reward program members are over three times more likely to be WOM champions
> Reward program members who have redeemed for experiential rewards are 30 percent more likely to be WOM champions than those who have redeemed for discounts
In essence, the research shows that a company's loyalty marketing database is an under-utilized social network that marketers would do well to exploit in the pursuit of positive, profitable WOM activity.
"If your goal is to cultivate and encourage ongoing, profitable customer WOM activity, all of the tools exist within the loyalty marketing database. Loyalty marketers should find the champions buried within their program memberships, and build relationships that reward them for positive WOM activity," says Colloquy editorial director Rick Ferguson, who co-authored the study with Partner Kelly Hlavinka.
A new study released by Colloquy, a provider of loyalty marketing publishing, education and research, titled, "The New Champion Customers: Measuring Word-of-Mouth Activity Among Reward Program Members," examines the motivations of WOM champions -- asking why they engaged in WOM activity regarding their favorite products and brands and what categories of offers and information they were most likely to pass along to others within their networks. The top five motivations of WOM champions were:
> To tell manufacturers what I think (73%)
> To get smart about products/services (68%)
> To be the first to discover new items (68%)
> To get free product samples (63%)
> To share my opinion with others (61%)
The analysis also offers significant evidence of a direct and important correlation between reward program activity and consumers' positive WOM endorsement activity. Here are some more of the key findings:
> Reward program members are 70 percent more likely to be WOM champions (defined as customers who are "actively recommending" a product, service or brand) than the general population
> 55 percent of reward program members are self-described WOM champions
> Only 32 percent of non-reward program members are self-described WOM champions
> 68 percent of WOM champions in reward programs will recommend a program sponsor's brand within a year
> Actively participating reward program members are over three times more likely to be WOM champions
> Reward program members who have redeemed for experiential rewards are 30 percent more likely to be WOM champions than those who have redeemed for discounts
In essence, the research shows that a company's loyalty marketing database is an under-utilized social network that marketers would do well to exploit in the pursuit of positive, profitable WOM activity.
"If your goal is to cultivate and encourage ongoing, profitable customer WOM activity, all of the tools exist within the loyalty marketing database. Loyalty marketers should find the champions buried within their program memberships, and build relationships that reward them for positive WOM activity," says Colloquy editorial director Rick Ferguson, who co-authored the study with Partner Kelly Hlavinka.
