[Image of: RetailWire Logo and Tagline (for print)]

BUSINESS TIPS

ChannelAdvisor:
Online Selling Strategies
RR Donnelley:
In-Store Marketing
LoyaltyOne:
Enriching Customer Relationships
 
[6 comments]

COLLOQUY: The Positive Power of Negative Word-of-Mouth

September 19, 2013

Through a special arrangement, what follows is a summary of an article from COLLOQUY, provider of loyalty-marketing publishing, education and research since 1990.

A July report by our company, LoyaltyOne, and researchers at Northwestern University shows that negative word of mouth may actually indicate brand passion and lead to increased sales if acted upon appropriately and quickly. Further, potentially negative experiences and comments can be translated into enhanced brand engagement and, in the case of loyalty programs, increased redemptions.

As the report, The Positive Power of Negative Word-of-Mouth, puts it, "The very instance of negative engagement is both a warning and, when best practices are employed, an opportunity."

The study relies on a 2011 event when the AIR MILES Reward Program, operated by LoyaltyOne, made a couple of program changes. One of these changes affected guidelines for reward miles redemption, a sensitive area for loyalty customers.

Realizing this, and knowing that engaged members tend to express their opinions when program rules change, LoyaltyOne paid close attention to shared member commentary on its community website. We worked with researchers and linguistic analysts from Northwestern University's Medill IMC Spiegel Research Initiative to examine posts related to the program's changes.

We did expect some verbal pushback, but were surprised by actual member activity afterward.

First, LoyaltyOne determined that those members who posted comments were generally more valuable customers — they were 70 percent more actively engaged with the AIR MILES program than those who did not post. So their negative comments stemmed from their emotional connection with the brand or, as the report puts it, they were "more passionate in expressing their opinions."

Passion can lead to activity, and it did. About one third of those who posted comments made redemptions afterward. They also increased their collection activity by 36 percent. That compares with a 21 percent lift among redeemers in the control group.

How do we account for such positive results? During the commentary period, LoyaltyOne responded to specific questions and clarified any inaccuracies when they were posted. This is a critical point of the research: LoyaltyOne's strategy at the time was to offset the negative perceptions and comments with simultaneous positive experiences, basically exposing our most engaged members to the core values that initially attracted them to the brand.

Through the research, we learned that we could test the loyalty of even emotionally engaged consumers. It is up to us to monitor the relationship regularly and reinforce the elements that make it positive. This goes double when implementing change.

If we have the data and the resources to launch a timely response plan that is genuinely worded, we can turn negative word of mouth into good publicity and improved business. That's not an old phrase — that's just smart marketing.

Discussion Questions:

What do you see as the relationship between negative word of mouth and top loyalty program members? Is negative word of mouth from rewards customer members actually a good thing?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How effectively do retailers typically respond to negative feedback from customers?

Comments:

The key here is that the company/retailer must respond quickly, appropriately and publicly to the negative comments, then it can be turned into a positive for the brand. We've seen in other spectrums, such as the celebrity arena, for example, how negative comments shed a spotlight on a person or company. Bad publicity is better than no publicity at all...if no one cared to comment then the celebrity or brand may be irrelevant.

But certainly there is a line companies and celebrities must be careful not to cross...and it is different for each one. In the case of Paula Deen, for example, I believe she just may have crossed a line she and her empire may not be able to recover from. Martha Stewart and her empire, on the other hand, have bounced back nicely.

[Image of: View Braintrust Panelist button]
Debbie Hauss, Editor-in-Chief, Retail TouchPoints

People have said there is no such thing as bad publicity. I'm not sure if I agree 100% with that concept. That said, anyone passionate to jump on social and respond, even negatively, is an opportunity to create positive dialogue.

Also, if you take care of a person's complaint, problem, etc., the right way, many times the confidence you create with that customer is even higher if the negative situation had never happened in the first place.

Bottom line: Don't run from the negative comment. Embrace it.

[Image of: View Braintrust Panelist button]
Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

It's not that negative sentiment is necessarily a good thing, however the timely, appropriate and genuine response of the brand can turn most any dissatisfaction on the consumer's side into a true brand loyalty story for the future. It all comes down to how well the challenge is handled.

[Image of: View Braintrust Panelist button]
Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

The problem is that negative word of mouth is often because the company in question actually has a problem or has done something to offend its customers.

Recently, a major hotel chain devalued its loyalty program. Self proclaimed high value members flooded the chain's Facebook page with negative comments. As best I could tell, the brand ignored the comments and did not change their devaluation. It probably made sense to the bean counters and perhaps has paid off for the company, but they definitely lost a lot of high-spending customers for good. Spin only goes so far, and if the company is treating its customers badly enough, no amount of spin/marketing will fix that.

[Image of: View Staff button]
Al McClain, CEO, Founder, RetailWire.com

This study verifies what great businesses know: Only passionate consumers care enough about a brand when changes affect them negatively and they just have to comment. Secondly, a great 'recovery' technique is to respond quickly and sincerely to those who comment.

Basic Corporate Reputation Management.

[Image of: View Braintrust Panelist button]
Jerry Gelsomino, Principal, FutureBest

It has always been true that effectively handling a customer complaint is more valuable to long term engagement and loyalty than ongoing positive experiences. This is true because during a negative situation, the customer is quite emotional. We all know that when someone is able to change our mood from negative to positive, our connection with that individual goes up. It is no different in a retail situation.

So, the key is to be active and intentional on social media and immediately and authentically move to engage with a complaining consumer or poster and "turn that frown upside down."

[Image of: View Braintrust Panelist button]
Mike Osorio, Senior VP Organizational Change Management, DFS Group

Search RetailWire
Follow Us...
[Image of:  Twitter Icon] [Image of:  Facebook Icon] [Image of:  LinkedIn Icon] [Image of:  RSS Icon]

RetailWire's
Getting Started video!

View this quick tutorial and learn all the essentials...

RetailWire Newsletters