• by February 16, 2009

Reward program members are a brand's best word-of-mouth (WOM) advocates, according to new research from Colloquy, the Cincinnati-based loyalty marketing consultancy.

Reward program members are 70% more likely than others to actively recommend products, services and brands, the study found. Proclaiming these active recommenders "word-of-mouth champions," Colloquy said they make up 55% of reward program members, but only 32% of consumers who don't belong.

The WOM champions in reward programs were more likely than their counterparts who were not in reward programs to engage in all types of WOM activities, including Web 2.0 and traditional means. For example, they were twice as likely to provide online product reviews, and about one-third as likely to use both landlines and email, Colloquy reported.

Focusing on reward program members, Colloquy found that active participants are more than three times as likely to be WOM champions than non-active members--and that those who have redeemed points for merchandise and travel awards are 30% more likely than those who have redeemed just for cash. And 68% of WOM champions in reward programs said they would recommend the sponsoring brand to someone else within one year.

What does it all mean? "These new Champion Customers offer the best potential for delivering bottom-line value to the brand," the report states. "They should be treated as a unique subset of best customers who deserve a disproportionate share of marketers' attention."

"Loyalty marketers should consider providing WOM channels to their active members and then find ways to recognize and reward them for engaging n WOM activity that benefits your brand," wrote co-authors Rick Ferguson, Colloquy editorial director, and Kelly Hiavinka, Colloquy partner.

In general, Colloquy found WOM champions most likely to pass along in-store offers (60.3%), followed by online coupons (52.6%), entries for online contests (51%), mail-in rebates (48.9%), trial offers (44.2%), sweepstakes (41.8%) and "packages received in mail" (41.8%).

While women were found to be much more likely to be WOM champions and seniors much less so, Colloquy found that other assumptions didn't hold up. "Young adults, for example, are often assumed to be the vanguard of WOM activity in the U.S.," the authors wrote, "but in fact, this group is actually slightly less likely than the general population to be champions." As a result, "WOM activity must be cultivated at the level of the individual customer rather than at the level of demographic segment."

Colloquy also listed the top five motivations of WOM champions:

• To tell manufacturers what I think, 73%

• To get smart about products/services, 68%

• To be the first to discover new items, 68%

• To get free product samples, 63%

• To share my opinion with others, 61%

The Colloquy study, titled "The New Champion Customers: Measuring Word-of-Mouth Activity Among Reward Program Members," was conducted in October with research firm Ipsos Camelford Graham. More than 3,500 American and 3,500 Canadian consumers were surveyed, including 625 reward program participants in each country. The study is available as a free download at www.colloquy.com/whitepaper.