Relationship marketing and loyalty programs were the rage in the Nineties, but the rapid advent of social media and online communities have shifted the attention away from - or at least changed - their focus.
"Word of mouth" (WOM) is all the rage, and for good reason. WOM is the most influential channel of communication for convincing people to try a new product or service.
A new study by Colloquy called "The New Champion Customers" demonstrates a compelling link between traditional loyalty programs and WOM. It found that rewards or loyalty program members are 70% more likely to be WOM champions, defined as those customers who actively recommend a product, service or brand.
Loyalty programs tend to draw in those customers who are most likely to be fans of the brand. 55% of loyalty program members indicate they are WOM champions, while only 32% of non-program customers are self-described WOM champions.
Many organizations captured a great deal of customer contact information since the advent of email, but it sits idly in their databases unscrubbed and unmonetized. It's a smart thing to evaluate how you could activate these contacts by crafting a low-cost, high-yield loyalty program and connecting it to a social community.
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