Serving in a Social Media World - How to React Online to Negative Word of Mouth

Customers often rely on peers’ opinions and experiences when forming expectations and evaluating a service provider. New media channels such as consumer review platforms and social networking sites help customers obtain firsthand information from other customers to evaluate a service. Prior research confirms the effects of positive electronic word of mouth (eWOM) on recipients, yet less is known about how companies should respond to negative eWOM. The authors conducted a series of experimental studies in the context of new media online channels (i.e., consumer review sites and social media brand pages) to investigate the effects of various company response strategies on consumers’ perceptions. The results have two implications for service firms: First, adequate response strategies to negative eWOM compensate for the negative effects that occur when Internet users attribute responsibility to the firm. Second, the findings indicate that firms need both adequate response strategies and an engaged community to restore their perceived trustworthiness in consumers’ eyes. This research expands knowledge from service recovery research to new media channels and assesses the effects on eWOM receivers who observe customer–service provider and customer–customer interactions