Study Finds Consumers Most Likely to Recommend Reward Programs Offering Everyday Value

CHICAGO, Feb. 8, 2011 /PRNewswire/ -- Each year, billions of dollars are spent by marketers to establish and manage reward programs.(1)  Despite the fact that finance and travel programs have the highest membership of any reward programs, the most positively recommended programs by consumers are those in the retail space.

According to the most recent Recommendation Index study, released by Zocalo Group and M/A/R/C Research, the most-recommended reward program is Rite Aid, followed by Borders and Chase.

While the average U.S. household has more than 14 reward or loyalty memberships(2), the study illustrates that consumers tend to recommend reward programs based on their most recent experience earning or redeeming rewards. Accordingly, consumers are most likely to speak positively about those programs that reward "everyday" purchases and provide some form of instant gratification.

"The Recommendation Index makes clear what drives discussion, recommendations and criticisms in the reward card market," said Paul M. Rand, president and CEO of Zocalo Group. "Marketers spend so much in this area that gaining insight into what really makes a program highly recommended can offer a huge advantage. Consumers are very clear about what they value – and recommend."

Unlike previous metrics that only ask, "Would you recommend this brand?" the Recommendation Index stands apart because it evolves the measurement to determine why, where and how often people recommend individual brands. The Index also creates a score that is used to help show how each brand compares to the overall category as well as competitors.

In addition, the Recommendation Index provides insight into the positive and negative keywords and/or phrases used to trigger recommendations as well as the drivers of word of mouth.

Not surprisingly, words associated with the most favorable aspects of reward programs – "actual rewards," "cash back," "free" and "discounts" – led to positive recommendations. With retail often being attributed to "everyday" rewards, it makes sense that these words are used more often.

Conversely, primary drivers of negative word of mouth and recommendation point to "problems with redemption," "lack of benefits" and "expiring points" – all of which led to negative recommendations. These relate specifically back to the difficulty that consumers have in making use of the rewards they've spent time accruing.

Recommendation Index Results

The Recommendation Index represents the proportion of positive to negative recommendations and is calculated based on the brands most often talked about positively and negatively in the reward program category. It is a single score that provides a brand with a method for benchmarking how they are being recommended in relation to specific competitors and within the overall industry.

The average Recommendation Index for the reward program category is 13.78 and offers a means for gauging the level of recommendation against the overall industry.

While finance and travel reward programs lead in membership(3) and overall recommendation volume, retail brands have significantly lower overall volume and higher Index scores (in other words, they have a higher volume of positive recommendations than either finance or travel). This suggests consumers are finding greater value in and willing to speak more favorably about those programs that provide everyday value.

However, this does not discount the excitement that consumers generate around brands within the travel and finance sectors. Because programs in these areas offer larger, one-time, harder-to-achieve rewards, consumers simply recommend them on a less consistent basis.

"What this tells marketers of reward programs is that it becomes essential to find ways to actively build more everyday reward programs," notes Rand.  

Merrill Dubrow, president and CEO of M/A/R/C Research, added, "The Recommendation Index shows that there exists a tremendous opportunity to get people talking and recommending with greater frequency. Specifically in the retail category, conversation is overwhelmingly positive, so you can assume the increase in recommendations could potentially lead directly to an increase in sales for a brand."

Sample Recommendations

"I got my $20 reward from Rite Aid!"

"I think my rewards card is the best Chase ever gave me. Just got $50 just for using my card!"

"Just got my first free round trip flight through Southwest Rapid Rewards. Pretty excited!"

Methodology

The Recommendation Index was created by word-of-mouth-marketing firm Zocalo Group and research firm M/A/R/C Research and was compiled through offline and online analysis of conversations about reward programs. A representative group of 1,000 reward program participants were asked about brands they most often recommended positively and negatively and the attributes they use to make their recommendations.  

The most frequently recommended brands identified in the survey research were then analyzed in online conversations occurring through blogs, forums, Twitter and other discussion venues. Online analysis focused on the naturally occurring, organic conversations about those brands and the words consumers use in talking about the most recommended reward programs. To learn more about the Recommendation Index and how it can help your brand, please visit www.recommendationindex.com.

About Zocalo Group

Zocalo Group is a full-service word-of-mouth-marketing agency, helping clients become the most talked about and recommended brands in their category. Based in Chicago, Zocalo Group was named the Holmes Report's 2009 "New Media Agency of the Year" for its work in social media, and has since been recognized for excellence in measurement and evaluation through its proprietary Recommendation Index and Digital Footprint Index metrics. Zocalo Group is a unit of Omnicom Group, Inc. (NYSE: OMC) and Ketchum. For more information, please visit www.zocalogroup.com.  

About M/A/R/C Research

M/A/R/C Research is a brand development firm dedicated to helping clients create, evaluate and strengthen their brands. M/A/R/C designs and executes qualitative and quantitative, traditional and online solutions while adhering to a client-service ethic built on being easy to work with and delivering what is promised. A core competency is measuring attitudes and behaviors to accurately explain and predict market share, revenue and bottom line impact of a client's actions. M/A/R/C has been successfully designing, executing and analyzing studies to help clients across a range of industries since 1965. M/A/R/C is a unit of Omnicom Group, Inc. (NYSE: OMC).

(1) CMO Council, Loyalty Programs Dole Out Rewards but Fail to Fully Connect With Consumers Says New CMO Council Study, http://www.cmocouncil.org (Jan. 25, 2010).

(2) StarTribune.com, Retailers work to make shopping its own reward, http://www.startribune.com/lifestyle/yourmoney/112134569.html (Dec. 18, 2010).

(3) CMO Council, Loyalty Programs Dole Out Rewards but Fail to Fully Connect With Consumers Says New CMO Council Study, http://www.cmocouncil.org (Jan. 25, 2010).

SOURCE Zocalo Group