Zero-Party Data and the Power of Word-of-Mouth.

 

By Ray Chelstowski / Hilton Barbour

Astute businesses recognize that there is no silver bullet approach to attracting, and retaining, customers. You need to constantly test, experiment, refine and optimize your approach to find the perfect mix that works for your organization. In addition to brand building advertising, few things can build credibility – and desirability – for your business than customer endorsements and word-of-mouth.

We’re not talking about influencer marketing here, which savvy consumers can typically see right through, but the persuasive power of a story or anecdote from a satisfied customer.

A story from Joe or Jane Public on Yelp or TripAdvisor can be worth its weight in gold.

And a well-run and well-executed loyalty program should be providing a wealth of opportunities for exactly those types of stories.

New research from Penn State's School of Hospitality Management proves just that. The study has found that companies like airlines and hotels can use their loyalty-reward programs to improve word-of-mouth about their business, both online and in the real world.

Not surprisingly, the study further found that consumers who were emotionally attached to the products they redeemed were more likely to promote the products both online and in person. When customers redeem rewards on products they value, they often perceive of themselves as being 'smart and savvy shoppers,' which makes them feel good. Then, they transfer these good feelings onto the company that provided the reward.

At Kognitiv, we make that kind of personalization a priority because it heightens customer engagement and CLV. The integrated components of our SmartJourney process and our continued investments in the burgeoning field of Zero-Party Data are identified to define the optimal loyalty program experience and create incentives for customers to proactively share their aspirations and ideals with us.

Putting Zero-Party Data at the core of your loyalty program will inevitably create a richer customer experience and be more likely to deepen the connection between your customer and your loyalty program.

The results of the Penn State study support our position and recommend that companies who offer loyalty-reward programs should focus on offering experiential—rather than physical—rewards. When they do people become more willing to spread the word about the rewards they received both to their friends and to strangers on the internet.

Penn State noted that these findings are especially relevant in the wake of the COVID-19 pandemic. Airlines and hotels rely heavily on loyal customers—especially business travelers—and these industries tend to have widely-used loyalty-reward programs. The pandemic and its associated restrictions have substantially reduced business travel while giving rise to online meetings via Zoom. Airlines and hotel chains need to cultivate relationships with business travelers during this period of transition in order to thrive, and loyalty-reward programs can be a valuable tool in rebuilding those relationships.

As more and more companies adopt loyalty programs as a tool to better engage their customers, they have a unique ability to amplify their success via digital review forums.

Executed well, your loyalty program may have just become the most important – and the most credible -  post-pandemic public relations tool in your arsenal.

ray.chelstowski@kognitiv.com

hilton.barbour@kognitiv.com