One might not think bourbon, beer, and loyalty programs have much in common, but they do when it comes to turning an oops into an opportunity.
All three proved as much when faced with the prospective fallout of negative word of mouth.
In the case of bourbon, the popular distillery Maker's Mark realized the depth of its customers’ dedication—and anger—when it announced it would reduce its alcohol level to meet demand. Its customers howled and Maker’s Mark quickly changed its decision, deepening engagement in the process.
The beer boon took place after a Red Cross employee mistakenly sent a tweet referencing a four-pack of Dogfish Head beer with the message, "when we drink we do it right #gettngslizzerd." Dogfish Head quickly jumped on the hashtag and asked its fans to donate to the Red Cross. The Red Cross, meanwhile, responded with humor: "the Red Cross is sober and we've confiscated the keys."
Both of these events lead to a theory—that negative word of mouth may actually indicate brand passion and lead to increased sales and engagement—if acted upon appropriately and quickly. (Of course, there are notorious examples of lost causes.)
So when the Air Miles Reward Program, operated by LoyaltyOne, recently made a couple of program changes, it decided to closely follow the social media response. The results are in a report coauthored by researchers at Northwestern University, called "The Positive Power of Negative Word-of-Mouth."
The research revealed some unexpected numbers, particularly regarding perception and, in the case of loyalty programs, increased redemptions. As the report puts it, "The very instance of negative engagement is both a warning and, when best practices are employed, an opportunity."
Among the findings: Those customers who posted comments to social media were 70% more actively engaged with the brand than non-posters.
The study analyses the outcome of when the Air Miles Reward Program made a couple of key 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 flagged the shared member commentary on its community website. Researchers and linguistic analysts from Northwestern University's Medill IMC Spiegel Research Initiative examined all posts related to the program’s changes. Linking each post and related viewing activity to LoyaltyOne’s transaction and redemption data, the analysts compared behaviors for a 15-week period against a control group of 10,000 offline loyalty program members.
They expected some verbal pushback, but they were surprised by actual member activity afterward.
First, the researchers determined that those members who posted comments were generally more valuable customers—70% more actively engaged—and that their negative comments stemmed from their emotional connection with the brand. They were, as the report describes it, "more passionate in expressing their opinions." A similar phenomenon took place in the story involving Maker’s Mark.
Passion can lead to activity, and it did for air miles. About one-third of those who posted comments redeemed reward points soon afterward. They also increased their collection activity by 36%. That compares with a 21% lift among redeemers in the control group.
How did the researchers 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 its most dedicated members to the core values that initially attracted them to the brand.
This brand-love approach is similar to how the Red Cross restored its reputation by relying on its crisis-management expertise (with humor) and how Maker’s Mark depended on its quality (with alcohol).
Turning Frowns Upside Down
Through the research, LoyaltyOne found that brands could challenge the loyalty of even emotionally engaged consumers. It is up to the organization 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.
Here are some tips for leveraging that brand passion and keeping the relationship strong:
Use the data: Analyze transactions, redemptions, and social media traffic data from both social media posters and viewers during and after any period that may provoke negative word of mouth.
Be fleet of foot: Prepare to act quickly if negative commentary begins to contribute to unwanted media buzz and declining sales. A targeted response plan should express genuine appreciation for the comments and promote positive product or brand qualities.
Watch your own word of mouth: Let customers know their opinions are welcome. Recognize their commentary and react in a nonconfrontational manner to reassure posters and viewers alike that the brand cares about what they have to say.
Go public: Angry comments can diminish brand integrity and cause other readers to second guess their own purchases. Publicly responding through the same social media channels can ensure that the positive changes are seen.
As always, it’s best to prepare for a response plan by first identifying what makes customers loyal to the brand in the first place. Because, whether it’s bourbon or beer, loyalty programs or the Red Cross, any brand can make a mistake. But it takes passion on both sides to turn it into an opportunity.
—Bryan Pearson is president and CEO of and author of The Loyalty Leap: Turning Customer Information Into Customer Intimacy and the forthcoming e-book The Loyalty Leap for B2B: Turning Customer Information Into Customer Intimacy. Follow Bryan at www.pearson4loyalty.com.