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    Loyalty Marketing Generates Word-of-Mouth Business

  • Industry News February 10, 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, according to a study released today by COLLOQUY, a leader in the loyalty-marketing industry.

    The COLLOQUY study is titled “The New Champion Customers: Measuring Word-of-Mouth Activity Among Reward Program Members,” written by COLLOQUY Editorial Director Rick Ferguson and COLLOQUY Partner Kelly Hlavinka. It is available as a free download and will be presented as a free webinar on March 5 at 1 p.m. EST. Register at

    The COLLOQUY analysis offers significant evidence of a direct and important correlation between reward program activity and consumers’ positive WOM endorsement activity. Here are some 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 perecent of WOM champions in reward programs will recommend a program sponsor’s brand within a year
    • Actively participating reward program members are more than 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.

    “These statistics reinforce the importance of social capital to WOM champions,” Hlavinka says. “Indeed, the self-reported motivations of these consumers reflect its importance—‘to be first’ and ‘to share my opinion’ were both top five motivations. What surprised us were the top two motivations for WOM Champions— ‘to tell manufacturers what I think,’ and ‘to get smart about products and services.’”

    Hlavinka added that these findings suggest “WOM champions crave a deeper relationship with their favorite brands and are searching for ways to provide feedback. Four of these top five responses also reflect the importance of confirming self-worth--that is, a champion feels important when she tells a company what they could do better, when she can share information with her peer group, be ‘in the know’ and share her opinions. And, of course, 63 percent of champions admit that they engage in WOM activities to earn free stuff.”