Researchers from University of North Carolina at Charlotte, Temple University, University of Arkansas, and Syracuse University published a new paper in the Journal of Marketing that investigates complaint publicization on social media.
The study, forthcoming in the Journal of Marketing, is titled “Complaint Publicization in Social Media” and is authored by Alireza Golmohammadi, Taha Havakhor, Dinesh Gauri, and Joseph Comprix.
Increasingly, consumers use social media platforms like Twitter to make complaints and firms respond to these complaints. For example, a recent survey shows that from 2016-2018 complaints and responses to them increased by 250% on Twitter. The use of social media for complaints is expected to increase further as younger consumers air their complaints online instead of calling customer support phone lines. On Twitter, a firm’s responses to complaints brings them to the top of the firm’s page and makes them accessible to the firm’s followers. In addition, further responses to complaints bring them to the top of the Twitter page each time. These features of Twitter give responses to complaints additional publicity.
Prior research on firm responses to complaints on other forms of social media has found benefits to responding quickly and transparently while showing empathy when responding (i.e., responses by firms mitigate the negative effect of the complaint). However, on some platforms (like Twitter) responses to complaints make them more visible. (The research team calls this phenomenon complaint publicity.) The researchers find that firms responding to complaints on Twitter exhibit lower firm values and daily stock returns around tweets and receive more complaints in the future. Responding to complaints also lowers the effectiveness of a firm’s other tweets (those not associated with complaints).
The study includes two separate studies of firms’ Twitter communications. The sample uses the 375 of the S&P 500 firms with Twitter pages and scrapes information from Twitter for these firms to collect its tweets and responses to others’ tweets. In the first study, responses to complaints are associated with lower firm value (measured by Tobin’s Q). The second study focuses on firms that responded to complaints stemming from product recalls. Of the 375 firms, 107 had product recalls. Product recalls provide a nice setting because their severity is disclosed and they are exogenous (i.e., they are unexpected), which allows testing for causality between complaint responses on Twitter and their effect on firms. In this second study, responses to complaints surrounding product recalls are significantly associated with lower daily abnormal returns and a higher volume of future complaints for firms following open- versus closed-complaint response strategies. Golmohammadi explains that “Our results consistently show that complaint response publicity has negative implications for firms using Twitter to respond to complaints and outweighs any positive benefits from being seen as responsive to consumer complaints. We also provide evidence that firms can mitigate these negative implications by using closed-response strategies.”
“We recommend that managers avoid long interactions about customer complaints on social media to reduce complaint publicity,” adds Havakhor. Firms can employ open- or closed-response strategies on Twitter. An open-response strategy is one where firms handle more than 75% of complaints through multiple exchanges on Twitter. A closed-response strategy is one where firms handle more than 75% of complaints through one public message on Twitter, inviting the complainant to continue the complaint handling process in private. Closed-response strategies mitigate the effect of complaint publicity. Gauri continues with, “Most platforms have specific features that managers can use to reduce potential complaint publicity. For example, firms on Twitter can reduce the amount of exposure that complaints get by ‘pinning’ positive tweets to the top of the page, which leaves less space for responses to complaints to potentially fill. Overall, when responding to complaints on social media, managers should consider and potentially avoid platform-specific features that can make complaints more public.”
Full article and author contact information available at: https://doi.org/10.1177/00222429211002183
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