Want Your Customers to Pass the Word Along? Get Them into a Loyalty Program.

Customers who participate in loyalty programs are 70% more likely to recommend a product or service than the general population, according to a study. Of the people in a rewards program, 55% described themselves as brand champions. 68% of that group said they would recommend the brand associated with the rewards program within the next year.

When asked why they participate in word of mouth activities, respondents stated the following reasons: to tell manufacturers what I think (73%), to get smart about products and services (68%), to be the first to discover new items (68%), to get free product samples (63%) and to share my opinion with others (61%). 

The author of the study recommends that Marketers analyze their loyalty-marketing databases to find, build relationships with and reward brand champions. I agree that Marketers should make better use of customer databases; understanding who your customers are, properly segmenting (actives vs. non-actives, demographics, psychographics etc.) and then marketing to them has always been a critical marketing function. I also agree that companies need to build stronger relationships with brand champions.  70% of study participants stated they want to tell manufacturers what they think. Companies need to make that conversation an easier process. Use social media to listen to and talk with, instead of at, your customers to strengthen the relationship.

However, I disagree that customers should be rewarded for engaging in positive word of mouth activity. The risk is that the message becomes tainted and disingenuous. Marketers can make it easier for customers to recommend a brand by providing free product samples and an open space to share (i.e. through Twitter, Facebook etc.), without directly compensating them. 

See the full article in Brandweek