Background of the research

“All business is based on relationships. The firm only has to make them visible and meaningful for its customers - provided that the customer wants that” (Grönroos 2007, 23).

Internet and social networking have changed the role of the customer from passive consumer to active one (Malthouse, Haenlein, Skiera, Wege & Zhang 2013, 270) as service failures that begin offline immediately find their ways into social media platforms. Most of these complaints being public allows any online user to see them, join the conversation and spread the electronic word-of-mouth (eWOM). (Champoux, Dugree & McGlynn 2012, 22;

Einwiller & Steinlen 2015, 195) Since eWOM creates both opportunities and threats, it can either be a positive or negative opinion by a customer or third party who is willing to say something about the company or its products and services (Einwiller & Steinlen 2015, 195).

Nonetheless, social media not only allows companies to interact with customers but also to collect vast amount of data about them. By dealing with complaints on social media company can not only affect the opinion of the unsatisfied customer but all social media users who see the post. (Champoux et al. 2012, 22)

Companies are not always able to satisfy their customers, yet customer service on social media makes it easier as 2012 conducted survey by Langsdorf shows. 55% of customer communication experiences with companies on social media are either “disappointing” or

“mediocre” (Langsdorf 2012; cited in Schaefers & Shamari 2015, 12-13) whereas Martiz

Reseach (2011) reported that companies’ response rate on Twitter complaints was only about 33%. Authors including Kelleher & Miller (2006), Dekay (2012) and Einwiller &

Steinlen (2015) have concluded that complaint handling and interaction with the stakeholder on social media has not been fully adopted by companies. As empirical research on complaint handling practices on social media is still minimal it provides interesting opportunity to study this area further.

It is clear that companies should invest in maintaining customer relationships by handling complaints from a customer point of view within a reasonable timeframe. It does not require much time or special tools to make customer satisfied again since in most of the cases apologizing, showing empathy and offering a satisfactory solution are enough. Moreover, companies should deliver a service culture that encourages customers to express their dissatisfaction as otherwise it can be difficult to correct the mistakes and upgrade the service to the next level.

When the service process fails to meet customer expectations service failure occurs. (Bell

& Zemke 1987, 32; Johnston & Fern 1999, 69; Grönroos 2007, 125). Grönroos (2007, 125) stated that the company shows its commitment to service by solving not only the mistakes made by the company but also by the customer or third parties. Far too often companies are unable to see service failures from the customer’s perspective. Various researchers (e.g. Halstead, Morash & Ozment 1996, 107-109; Bejou & Palmer 1998, 8) have pointed out that companies should analyze service failures from the side of the customer; the meaning of the failure and how the unsatisfied customer now sees the service provider.

Hogan et al. (2003, 197) suggested that when a failure occurs company should put effort to recover these customers, since if left unsatisfied they not only take their money elsewhere but are also willing to spread their disappointment out loud. The huge influence of WOM on customer opinion on companies is widely acknowledged and has more power than any other marketing source. (Buttle 1998, 241-242) However, service recovery is a process which aims to put things back to normal, which requires ability to understand what delights the customer. (Johnston & Fern 1999, 80-82)

According to Grönroos (2007, 89) the quality components of service delivery can be defined as the “Seven criteria of good perceived service quality model” part of it being service recovery. Moreover, Grönroos (2007, 89-90) describes service recovery as a process-related function that belongs to the dimension of functional quality. Process-based quality

is driven from the customers’ earlier service experiences which has created a trust that the service provider takes actions towards acceptable solution immediately after a problem has occurred. Tax, Brown & Chandrashekaran (1998) pointed out that successful complaint handling process has direct impact on customers’ commitment and trust.

Customers’ interest regarding complaints on social media sites has recently increased. The article of Schaefers & Shamari (2015) outlines stories of unsatisfied customers who have voiced their disappointment on U.S. Airlines, T-Mobile’s, Marriot Hotels’ and Dell’s social media channels. The story of Paul Smith who lost his luggage, demonstrates what drives a customer to public complaint as after calling to customer service and writing several e-mails without receiving any help, he decided to post his problem on the airline’s Facebook page that had 1 Million fans at that time. (Ibid.)

Unfortunately many companies have not provided their employees a protocol on how to react on social media complaints. Worst case scenario would be an employee reply without a strategy and understanding on how customers should be treated. Yle (2016a) reported on a relatively new phenomenon “social media extortion” which has risen due dissatisfied customers, who blackmail the company by threating to post about their negative service experience. Despite the fact whether the allegations are real or not, companies need to take them seriously and adopt both proactive strategies and protocols regarding social media activities. (Yle 2016a; Yle 2016b)

The power of negative eWOM should not be underestimated as many companies have faced unpleasant publicity when customer’s dissatisfaction spreads on social media. One of the recent service failures that attracted publicity on social media is the case Maskun Kalustetalo in April 2016 when a dissatisfied customer who did not get her couch on time raised her voice on Facebook. The post got immediate attention as in two days the post was shared 5028 times making the company privately contact the customer and offering a gift card. Had the dissatisfied customer not posted about the gift card herself, the social media audience would not have known about compensation.

Other examples include the case VR where a disappointed customer shared in Twitter a picture of a hot dog served on train and when a customer complained when Midhill restaurant charged for tab water. Midhill’s case turned out as a disaster since the customer received a rude reply on restaurant’s Facebook page from the company. Posti, which is the case company on this Master’s Thesis has also faced several challenging situations on

social media including a customer who felt confused after several times facing the same annoying situation; never seeing the postman in person made him wonder if the mail was delivered by a silent and invisible “ninja”. The customer posted ironic critique on Posti’s Facebook site, which the company managed to turn to their advantage by creating a hilarious story about the Posti Ninjas. All these cases are presented in Appendix 1 in more detail.

Common factor in these cases is that negative eWOM spreads at the speed of light via social media channels making the stories newsworthy. The way the companies handled these social media storms varied noticeably from clever to inappropriate. One of the goals on this research is to gain new knowledge on service recovery practices conducted on social media. In other words, the aim is to find out which service recovery attributes are used by the case company and how to improve their appearance on social media. Thus, this research will provide firsthand information and supportive ideas for the case company to improve their service recovery performance on social media. Moreover, the service recovery attributes presented on this research can be used as guidelines when establishing or improving service recovery strategy especially on social media.