Many people have learned by habit that they get rapid and quick response from a company when they share their complaints about a businesses’ services and products among their social media followers.
A new report found that by responding to customer complaints on Twitter, companies set themselves to receive additional complaints. It’s the “Squeaky Wheel effect.”
The study, published in the Articles in Advance section of Marketing Science, a journal of the Institute for Operations Research and the Management Sciences (INFORMS), discovered that while social media response indeed improves customer relationships with the company, it also increases customers’ expectations and makes customers more likely to speak up in the future.
For their study, the authors examined the history of compliments and complaints by several hundred consumers of a major telecommunications services provider made on Twitter and the company’s responses. They used a dynamic statistical model to investigate both how consumers’ relationships with the company evolve and how they decide whether to compliment or complain. Accounting for both aspects turned out to be crucial in revealing these opposing effects of social media complaint management.
A trio of professors at the University of Maryland, Carnegie Mellon University, and Cheung Kong Graduate School of Business in China worked on the paper The Squeaky Wheel Gets the Grease – An Empirical Analysis of Customer Voice and Firm Intervention on Twitter.
“People complain on Twitter not just to vent their frustration,” says Liye Ma of the Robert H. Smith School of Business at the University of Maryland. “They do that also in the hope of getting the company’s attention. Once they know the company is paying attention, they are more ready to complain the next time around.”
Despite this side effect, addressing complaints is still worthwhile because by now everyone is hip to the game, and know more likely than not the complainant is speaking out online in frustration from inadequate response through non social media ways..
“What people say about a company on social media does reflect their true perceptions, but only to a certain extent,” adds Ma. “There are also other important factors that affect what they say, the company’s past responses to complaints being one of them. This is a key takeaway for understanding and managing service interventions on social media.”
Managed expectations may ease anxiety over negative online feedback.
“The social media environment is in a sense self-stabilizing,” observes Baohong Sun of Cheung Kong Graduate School of Business who also authored the paper. “and companies should not overreact to negative comments.”
The study suggests that companies take the negative feedback with a grain of salt and realize that “improved customer relationship from such effort outweighs the downside of encouraging more complaints.”
“Social media is a double edge sword – companies need to watch out and weigh the plus side against the down side for marketing and service interventions,” echoes co-researcher Sunder Kekre of the David A. Tepper School of Business at the Carnegie Mellon University. “The viral effects of social media need to be unlocked and leveraged to harness the state of the art in marketing science.”
