Saving Customer Relationships Despite Negative WOM

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Saving Customer Relationships Despite Negative WOM
Saving Customer Relationships Despite Negative WOM

Things happen with customer relationships. Any number of issues can twist, bend, or break that valuable connection. With the proliferation of social media, these issues can be made public and generate negative word of mouth (WOM) that impacts products, brands, and companies.

The situation can be especially difficult when it originates with participants in customer loyalty programs. However, when addressed properly, a significant percentage of those relationships can be saved and even translate to higher sales, according to the 2013 LoyaltyOne Social Media Transaction Impact Study.

The study suggests that a swift response, promptly communicated to the public, as well as a company's best customers, can make all the difference. If businesses analyze and understand customers' discontent, then make meaningful reengagement efforts through a personalized approach, they can reignite customers' passion for the brand.

The study examines the AIR MILES Reward Program, a coalition loyalty program in Canada, and illustrates the correlation between customers' inclination to post negative feedback on social sites and their level of passion and engagement with a program. The study shows that not only are angry posters 70% more actively engaged with brands than non-posters, but that negative posters who redeemed after receiving a response to their commentary exhibited a subsequent 36% increase in transactions.

LoyaltyOne worked with a team of researchers and linguistic analysts from Northwestern University's Medill IMC Spiegel Research Initiative to examine relevant posts related to the Reward Program. Linking each post and viewing event back to transaction and redemption data, the analysts compared behaviors for a 15-week period against a control group of 10,000 offline loyalty program members.

Analysis revealed that those who posted negative comments were more actively engaged in terms of earning loyalty program currency, redeeming for rewards, and otherwise actively participating. The lesson: While passionate customers are often the quickest to praise, recommend, and advocate for companies, they can also be the quickest to take them to task when disappointed.

A negative engagement with these individuals can serve as a warning and, when best practices are employed, an opportunity. About a third of them made redemptions after posting their commentary. The study examined their downstream activity, and negative posters who received a response and then redeemed exhibited a 36% lift in collection activity over their prior collection level. That's compared to a 21% increase (natural lift) from redeemers within the control group over the same period. The catalyst? Heightened engagement.

Negative WOM commentary appears to place the program top of mind with negative posters. They are further reminded of the program's value, leading to increased activity and getting the relationship back on a positive track. This is potentially the case with any customer who receives a response after posting negative comments.

Of course, loyalty programs want and need passionate members. And brands without loyalty programs want engaged customers. But with any relationship, emotion doesn't always flow in a favorable direction. Programs must attentively monitor the relationship to keep it positive, particularly when implementing changes.

Here are four tips for leveraging that brand passion and keeping the relationship strong:

Use the data. Analyze transactions, redemptions, and social media traffic data from posters and viewers during and after any period provoking negative WOM.

Take action if the social media buzz and sales indicate a notable impact from negative commentary. A targeted response plan should express appreciation and promote positive program incentives.

Be swift and sincere when responding. Recognize opinions and react in a non-confrontational manner to reassure posters and viewers alike that the brand cares about customer feedback.

Go public. Angry comments can dampen transaction activity by other readers, so publicly responding through the same social media channels negative poster use can ensure that the positive changes are seen.

A good starting point for the response plan is to focus on what makes members loyal to a program and customers loyalty to a company in the first place. As with personal relationships, arguing is not fun, but making up is.

Negative comments can hurt, but they don't have to have an adverse effect for businesses. Even a company's most outspoken critics have passion for the brand, and their activity can actually be proof of high customer engagement. Understanding the source of criticism and preparing a strategy for recovery can repair customer relationships and spur surprisingly positive consumer behaviors.

Neil Everett is SVP and CMO of LoyaltyOne
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