Walk Your Talk: An Experimental Investigation of the Relationship Between Word of Mouth and Communicators’ Loyalty

Abstract

Research provides ample evidence regarding the impact of word-of-mouth (WOM) communication on recipients. Service providers increasingly attempt to harness this power of WOM by introducing referral reward programs and other marketing instruments that aim to stimulate positive WOM. However, scholars have neglected to research the possibility that providing WOM also has consequences for the sender. Building on self-perception theory, this article argues that recommending a service provider improves the current customers’ loyalty to the provider and that positive WOM is not only effective for gaining but also for keeping customers. By conducting experiments in two different service settings, it is demonstrated that providing a recommendation influences the senders’ attitudinal and behavioral loyalty. The effect is found to be stronger for customers with low expertise in the service category and little experience with the provider. This means that encouraging customers in the early stages of their customer life cycle to give recommendations is specifically effective in increasing loyalty to the provider. Managers should consider using positive WOM as a loyalty-enhancing instrument and take the additional value from increased loyalty of their customer base into account for return-on-marketing calculations regarding WOM marketing campaigns, as well as customer equity calculations.