Loyalty and Word Of Mouth Marketing

One of the reasons that customer loyalty is considered such a valuable commodity is the idea of word-of-mouth marketing. Essentially, companies believe that a loyal customer is one that is spreading the value of the business to others, leading new people to the business and helping the company grow. The idea has merit.

Someone that uses your company regularly is likely to be someone that thinks highly of it, and anyone that thinks highly of something is (likely) spreading the word to others. Yet despite this logical idea, the results of market research have shown this is not the case.

To test their hypothesis, researchers look at “loyal” customers of a grocery store – customers that regularly frequented the same grocery store for most – if not all – of their grocery shopping needs. Then the researchers tried to gauge two separate types of marketing: Active Word of Mouth Marketing – Examples of this would be calling a friend and telling them that they should shop at your store, or actively telling others about your products when they are talking about a related purchase. Passive Word of Mouth Marketing – Unlike active marketing, where the customer enthusiastically spreads your brand, passive word of mouth is simply when they acknowledge that they use your company.

For example, if someone asks them “Where do you buy groceries?” and they answer with your store name. The researchers also gauged how “loyal” the customers were, by measuring both their purchase frequency and their subjective opinions of the company’s quality. All of these were conducted via survey to ensure reliable answers.

They then analyzed the results.

The data showed that customer longevity (the traditional measure of loyalty) was a weak link to word of mouth marketing. Indeed, the idea that customers that use a company or product often care enough about it to market it to others appears to be nothing more than a myth, as many survey respondents showed very little interest in spreading information about the company to others. That does not mean that all loyal customers were poor word of mouth marketers.

Researchers found that when customer longevity was also linked with attitudinal loyalty (meaning, the customer actively states how much they appreciate the business or product), then both active and passive word of mouth marketing increased dramatically. These findings show that customer loyalty does have benefits, but only if the customer expresses both longevity AND attitudinal loyalty. Unless they have both, they proved to be unreliable word of mouth marketers.