The loyalty researchers at LoyaltyOne have been busy proving that the impact of negative word-of-mouth may actually increase positive engagement and redemptions with loyalty programs.
The new study, available here and methodology below, offers a very intriguing conclusion which goes against much of the conventional wisdom regarding negative word-of-mouth.
While this research was specifically focused on a loyalty program, there are takeaways about the potential for negative word-of-mouth to boost engagement - a spin on the "no press is bad press" adage.
LoyaltyOne looked at AIR MILES, a popular Canadian loyalty program, when they changed some of their program rules. The changes predictably caused some more loyal users to become upset.
Sensitive to the needs of its Collectors, AIR MILES had anticipated a certain level of Negative WOM from its customers regarding the new redemption policy. As with any established program, when program rules are adjusted or changed, engaged members express their opinions. As can be expected, some customers who expressed negative opinions were only mildly upset by the changes, while others were much more expressive in their sentiments.
After analyzing the comments against a control group, the posters - or the most vocal respondents - were actually more valuable customers to the program.
Beyond that, taking the "temperature" of negative word-of-mouth was an important means of understanding just how to response.
The report positioned these items into two key takeaways from the research:
1) Loyalty program members who spread Negative Word-of-Mouth are often your best customers. Their passion can be leveraged as the core of a well-designed recovery program.
2) Taking the “temperature” of the Negative WOM guides appropriate action in response.
By following those essential guidelines, brands can determine how far to go in their response to negative word-of-mouth. In the case of MILES WISE,
We can conclude that many negative commentators were angry precisely because of their emotional connection with the program.
They were more engaged in the first place, and therefore were more passionate in expressing their opinions. Their commentary contained more detail, with greater intensity of anger and a length three times that of the typical post.
Neil Everett, the author of the study, explains the importance of the findings.
The study dispels some misconceptions about negative word of mouth at a time when customers' voices have a reach like never before. One of the key insights is that angry posters are generally more valuable customers. The LoyaltyOne study found that they were 70 percent more actively engaged with the brand than non-posters. A negative engagement can serve as both a warning and an opportunity.
As far as actionable results when dealing with negative word-of-mouth, the study suggests looking at the data to see what's happening, take action if the social buzz shows an increased negative sentiment, be swift and sincere in responding, and be very public in said response.
Everrett continues:
Brands should recognize that negative vocal activity is a type of engagement that reflects the intensity of brand passion. Brands must attentively monitor the relationship to keep it positive. Importantly, they should use the data. Analyze transactions and social media traffic. Sometimes it's necessary to take action if the buzz and sales indicate a more negative customer sentiment. Be swift and sincere in responding.
Negative word of mouth, when addressed properly, can prove a positive boost for engagement. Our study showed that negative posters who redeemed after posting their commentary exhibited a 36% increase in their transactions over their transaction level before the announcements.
Negative word of mouth in this socially connected age is a reality no brand can afford to ignore.
Publicly responding through the same social media channels can ensure that the positive changes are seen by other viewers of the negative posts and that negative comments don't dampen transaction activity of these viewers.
Here's the full methodology, which explains much about the study:
LoyaltyOne worked with a team of researchers and linguistic analysts from Northwestern University’s Medill IMC Spiegel Research Initiative. The analysts examined the actual posting experience of 76 individuals who posted 110 separate comments which were viewed by 1,094 other unique Collectors. The team categorized every post by the emotional tone and nature of its content, separating questions from statements and measuring emotions such as “Anger,” “Confusion,” and “Concern.”
They also recorded whether a Collector had posted, viewed posts, or both. Linking each posting and viewing event back to each Collector’s transaction and redemption data, the analysts compared behaviors in the four weeks before and eleven weeks after the announcements against a control group of 10,000 offline Collectors over the same period. This information was collected only from a sub-set of Collectors who had granted permission to the company to track their social media behavior there.
NB: Hater image courtesy Shutterstock.