The way brands address being called out on X affects the bottom line

New research conducted by a joint team of researchers from the University of Waterloo and the University of Birmingham, both in the United Kingdom, suggests that social media plays a significant role in decision-making, customer satisfaction and managerial performance in the tourism and hospitality industry – achieved by incorporating non-financial measures and service recovery techniques into social media practices.

The study, titled ‘Service Recovery via Twitter: An Exploration of Concerns to Consumer Complaints’, is published in the peer-reviewed journal Accounting Perspectives.

How frequently a company tweets and its overall engagement with customers on X can directly impact its future performance and financial outcomes. 

“This study contributes to our understanding of how service recovery is conducted on social media platforms, specifically [X],” says Assistant Professor Seda Oz from the University of Waterloo. 

Explore how companies handle service failures and engage with customers online

“With social media playing an increasingly important role as a communication channel, it is crucial to explore how companies handle service failures and engage with customers online. By including service recovery measures in performance systems, managers can have a better grasp of their controllable results and perceive managerial performance systems as more effective.”

The study, a collaboration between Dr Oz and Dr Doga Istanbulluoglu from the University of Birmingham, addresses the gap in previous research by examining the link between customer complaints and managerial performance. 

Focusing on service recovery techniques employed by tourism and hospitality companies on the X platform, the research sheds light on the potential of non-financial performance measures in improving decision-making and resource allocation.

The researchers collected and analysed 10,305 tweets that documented organisations’ responses to consumer complaints across four industries: airlines, casual dining chain restaurants, hotels and fast-food restaurants. 

By applying the traditional service recovery model, which consists of five service recovery elements (apology, urgent reinstatement, empathy, symbolic atonement and follow-up), the study reveals varying degrees of implementation within the sample. 

Additionally, three additional service recovery elements that have not been previously discussed in research were identified: feedback acknowledgement, information request, and channel transfer.

“When companies address customer complaints online in a favourable way, there are economic implications for both individuals and companies,” Dr Oz says. “Satisfied customers are more likely to continue doing business with companies, leading to improved customer retention and increased revenue.

“Additionally, companies that prioritise service recovery and customer satisfaction tend to enjoy a better reputation, attracting more customers and gaining a competitive advantage in the market.”

The researchers further suggest classifying recovery elements based on common characteristics, such as interpersonal treatment and policies and procedures. This approach can aid in developing performance measures aligned with specific recovery goals, enabling companies to deliver purpose-specific solutions to customer complaints.

You can find out more about the research here.