Online Negative Word-of-Mouth

Do negative posts in a social media environment impact purchase behavior?
Summary
Air Miles Reward Program provided our researchers a database of purchase behavior and social media posts that were the result of a policy change announcement largely viewed as negative.
Full Paper Summary > 
Context
Word-of-mouth recommendations are among the top influencers of purchase behavior. Thanks to social media networks like Facebook and Twitter, online product reviews on shopping websites and services like Angie’s List, Yelp and TripAdvisor, word of mouth about companies and their products and services can spread quickly. While this acceleration can help companies with positive online word-of-mouth marketing, negative online word-of-mouth can pose a serious problem for brands. Think of the time in 2009 when two Domino’s pizza employees posted a vulgar video on YouTube showing employees preparing sandwiches in an unsanitary way. The video spread quickly boosted by Twitter and other social media and was viewed more than a million times. The company responded quickly by firing the employees, tweeting an apology and posting an apology video on YouTube.
Spiegel Insight
Proof
Action Items for Marketers
Viewing negative word-of-mouth (NWOM) decreased future spending, but posting NWOM increased it, if given a chance to experience the value of the brand. In this case when we say “experience the value of the brand,” we mean redeeming Air Miles loyalty points for travel, gift cards, or merchandise.
Those who viewed NWOM decreased spending (point accumulation) by 12 percent and purchase frequency by 5 percent.
-BUT-
Those who posted NWOM and then experienced the value of the brand (i.e. redeemed loyalty points) increased spending (point accumulation) by 58 percent and purchase frequency by 16 percent.
  • Invite customers to post all comments including negative ones or reviews of your product. (And monitor those who were negative).
  • Respond publicly especially if issue was uncommon.
  • Create opportunities for NWOM posters and viewers to re-experience the value of your brand.
Posters who shared strong negative emotions decrease spending, but posters who posted less intense emotions increased spending.
Those who posted NWOM that had expression of anger, decreased spending (point accumulation) by 5 percent, and they decreased purchase frequency by 3 percent.
-BUT-
Those who expressed concern increased spending (point accumulation) by 183 percent and purchase frequency by 65 percent.
Allow customers to vent about a bad experience on social media to air minor grievances. Know that customers who express that they are extremely upset on social media will likely spend less unless other interventions are taken (i.e. Your customer service department responds to the comment directly and takes the conversation offline to resolve it).
Social Media.org Summit, December 2013
In this 30-minute presentation to social media leaders at Fortune 500 brands, Spiegel’s Executive Director, Tom Collinger, explains our findings about negative word-of-mouth and the difference between posting and viewing negative word-of-mouth.
Social Media Week Chicago, September 2013
Watch our Research Director Ed Malthouse and Research Associate Su Jung Kim present findings about online negative word of mouth.
Academic Publications & Presentations
For a full listing of academic publications and presentations, click here