Customer complaints on Twitter do improve corporate policies, finds U of T study

Feel like you are screaming into the void making Customer complaints on Twitter? You shouldn’t.

Dealing with customer complaints in the age of social media is a headache that some businesses regularly avoid like the plague —to their own detriment, says a new study from the University of Toronto which tracks airline customer complaints via Twitter and compares them with data on airline performance.

The Twitter rants, the Facebook page diatribes, they’re all out there just waiting for a company response. Yet as tempting as it may be to turn away from that smear on your business’s Facebook page, more and more experts are chiming in to say that dealing with the complaint is not just the best way to go but the only way.

Speaking to Forbes magazine, content marketing and customer service guru Jay Baer (whose new book title, Hug Your Haters, should say it all) insists that by ignoring that social media comment, a company is effectively responding by saying, “We don’t care about you very much.” Instead, Baer says, “If you’re willing to invest in customer service and customer experience at a level your competitors aren’t, that is a differentiator.”

Take, for example, the praise recently heaped on Elon Musk for his quick response to a frustrated Tesla customer’s tweet. The complaint was about the lineups at some charging stations, where the customer suspected other Tesla owners of plugging in and taking off to the coffee shop, even when their cars have finished charging. Reportedly, Musk responded on Twitter within minutes and in a few days had announced a change to company policy and services which meant that Tesla owners would now be charged a small ($0.40 a minute) fee for keeping their car plugged in once fully charged. Cue the applause.

But while customer complaints may be getting attention in the marketplace, within academic circles, their value is only starting to be appreciated and appropriately measured, says Mara Lederman, associate professor of strategic management at the Rotman School of Management at U of T and co-author of the new study. “We thought complaints were an important part of the economy but until now, we haven’t had a systematic way to measure them,” says Lederman in a press release.

The study involved Twitter comments made about the US airline industry, which the researchers say represented a unique platform for data collection since it gave them public access to information on the date, time and location of each customer’s posting. “Whereas most traditional channels for complaints are private and observed only by firms, Twitter’s public nature provides us with a way of collecting systematic data on voice,” say the study’s authors.

The researchers compiled a data set of all tweets made between August 1, 2012, and July 31, 2014, that mentioned or were directed to one of the seven major US airlines, representing roughly four million tweets over the two-year period. The information was compared with data on each airline’s on-time performance, with the researchers finding that, predictably, the number of tweets increased whenever on-time performance deteriorated.

But the results also showed that when an airline is identified as the dominant carrier in the customer’s home market, customers are more likely to tweet their complaints and that, in terms of responding to complaints, the airlines themselves are more likely to respond when the tweeting customer is either in a market where the airline is dominant or when the customer is a known loyalty member.

The results show definitively and on a large-scale model that customers do have a voice which plays a significant role in regulating product quality, especially in markets where a company has fewer rivals. “In markets where you don’t have a lot of competition, but you have some – voice might be effective because this is precisely when companies will care to retain customers who have been made unhappy,” says Lederman.