What do you do when a customer tweets something negative about your company? Many businesses have pursued a strategy of proactive, public engagement — and this certainly seems like a good idea. But despite the advantages of demonstrating that your brand cares about its customers, new research suggests that publicly responding to customer complaints can actually have a significant negative effect. Specifically, when companies responded publicly to negative tweets, researchers found that those companies experienced a drop in stock price and a reduction in brand image. That’s because engaging with these unhappy customers actually attracts more attention to their complaints, turning brands’ social media pages into an area of negativity that drowns out their own (more positive) content. To address this, the authors suggest that companies should respond to complaints with a single message directing customers to a private communication channel, and should also endeavor to limit the visibility of these conversations by pinning their own posts to the top of their social media platforms.
Over the last several years, it’s become increasingly common for consumers to share their negative experiences with brands on social media. According to the 2020 National Consumer Rage Study, the number of customers who prefer to vent their grievances via digital platforms rather than by phone or in-person has tripled in the last three years, and 48% of American consumers rely on social media to gauge other people’s experiences with a company’s products and services. This represents a major shift from traditional, more private mechanisms for fielding customer complaints, creating both challenges and opportunities for brands looking to engage with their customers.
Specifically, while the common wisdom for many firms has been to respond to complaints promptly and publicly, this approach comes with some major potential drawbacks. Public responses can demonstrate that an organization cares about its customers and is proactive in addressing their needs, but these responses can also attract attention to those negative experiences. On Twitter in particular, responding to a complaint makes the original post visible to the brand’s entire audience (whereas if the brand doesn’t respond, the post will only be visible to the customer’s followers). A high volume of customer complaints can turn a firm’s page into a complaint arena, potentially impacting both consumer and investor sentiment towards the brand (a phenomenon we call complaint publicization).
Given these tradeoffs, what’s the best way for companies to handle complaints on social media? We conducted a large-scale analysis of Twitter traffic for S&P 500 companies that had Twitter pages from 2014 and 2015 (a total of 375 firms), and found that the negative effects of complaint publicization consistently outweighed any positive impact of signaling care for customers.
In our first study, we measured the volume of firm tweets, customer complaint tweets, and firm responses for each quarter, and then compared those numbers to changes in the firms’ market value and perceived quality (a measure of consumer attitudes towards brands, based on large-scale survey data). Based on this data, we defined two types of social media strategies: open strategies, in which firms provided public responses to at least 75% of complaints, and closed strategies, in which at least 75% of the time, firms responded with just a single message directing the complainant to a private forum.
We found that the more a firm responded to complaints, the more likely it was to fall in both value and in perceived brand quality. In addition, we also found that when firms responded to complaints publicly on Twitter, it would often drown out their other tweets, leading to lower engagement rates for their non-complaint-related tweets.
In our second study, we looked at firms’ social media activity in the wake of product recalls. Product recalls offered a useful, controlled setting for our tests because they tend to generate a large volume of unexpected negative customer feedback, making it easier to compare the immediate impact of different social media strategies. Controlling for other factors such as the seriousness of the recall, the firms’ financial position, and brand recognition, we looked at whether these different response strategies were associated with short-term changes in firm stock price or changes in the volume of complaints going forward. We found that closed strategies were associated with less volatility in stock price and a lower number of future complaints, while companies that pursued open strategies were likely to experience a greater drop in stock price and deal with a greater number of customer complaints the following month.
Clearly, public engagement with unhappy customers isn’t always the right move. Of course, the answer isn’t just to ignore complaints, but rather, the most successful companies in our sample generally responded to complaints with a public message inviting the customer to continue the conversation using a private channel — that is, a closed response strategy, in contrast to an open strategy that inundates a firm’s page with lengthy exchanges with each complainant.
For example, Delta Airlines uses an open response strategy, consistently responding to customer complaints on Twitter with multiple public messages. The brand is so committed to openly engaging with customers that they actually shut down their designated customer service handle (@DeltaAssist), and now respond to customer service complaints directly from their primary Twitter handle (@Delta). While Delta’s focus on providing customers with a seamless, transparent experience is admirable, our analysis suggests that this strategy could be dramatically increasing the public exposure of their negative customer interactions, and is thus likely having a significant negative impact on their stock price and brand image.
McDonald’s, on the other hand, mostly uses a closed response strategy. They generally respond to any negative tweets that tag their account (@McDonalds) or include the word “McDonald’s” with a survey link, ending the Twitter exchange and allowing the company to respond in a private channel. As a result, their Twitter presence is much less dominated by complaints.
Of course, the complaint response strategy is just one lever marketers can pull when attempting to balance attentiveness to unhappy customers with harmful complaint publicization. For example, many social media platforms offer features that can reduce the visibility of complaints, whether the brand engages with them or not. On both Facebook and Twitter, firms can “pin” posts to the top of their page, ensuring that their own content (rather than complaints and response communications) is always displayed most prominently.
Furthermore, it is always important to consider the unique context of each social media platform, as well as the particular customer engagement strategies that will align the best with a brand’s unique business context. But in general, our results suggest that the broadly accepted best practice of providing timely, detailed, public responses can have some serious negative repercussions, especially on social media platforms where content sorting algorithms are likely to promote complaints more heavily if brands respond to them. Customers love to voice their complaints on social media — but engagement on these highly public platforms can end up excessively amplifying these voices, encouraging other unhappy customers to chime in and ultimately reducing the brand’s value in the eyes of both customers and investors.