2FE16E Independent Degree Project. Social Media and Complaints Handling. Author: Margarit Karapetyan

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1 2FE16E Independent Degree Project Social Media and Complaints Handling Examiner: Tutor: Asa Devine Dan Halvarsson Author: Margarit Karapetyan August 16, 2013

2 Abstract Title Complaints Handling and Social Media Purpose The purpose of the project is to describe how companies conduct complaints handling in social media and how they listen, talk and energize with the help of social media in terms of complaints handling. Research Questions How do companies perform complaints handling in social media? How do companies listen, talk and energize in social media in terms of complaints handling? Theory and Concepts Complaints handling; encouraging customers to voice a complaint; the role of front-line employees in complaints handling; the role of compensation in complaints handling; social media and relationship marketing; listening in social media; talking in social media; energizing on social media Methodology The study is descriptive with deductive approach. The research is qualitative and the research strategy is one-to-one interviews. Interviews were conducted with social media representatives of Beeline, SAS supermarkets chain and Figaro restaurant group in Armenia. Conclusions From the research it was concluded that SAS supermarkets chain and Figaro restaurant group in terms of complaints handling mainly embrace the relationship potentials social media provides. That is they listen to complaints on social media; they always response to complaints either by taking proactive measures or describing the situation; however, they do not energize customers with stories about successful complaints handling experiences. While, in terms of complaints handling, Beeline does not use the tools of listening, talking and energizing properly. It was also concluded that both SAS supermarkets chain and Figaro restaurant group conduct complaints handling in social media environment mainly in accordance to theories about how successful complaints handling can be done, while Beeline does not. 1 P a g e

3 Table of Contents 1. Introduction Background Problem Discussion Purpose Research Questions Theoretical framework Complaints Handling Encouraging Customers to Voice a Complaint The Role of Front-line Employees in Complaints Handling The Role of Compensation in Complaints Handling Social Media and Relationship Marketing Listening on Social Media Talking and Being Interactive on Social Media Energizing on Social Media Methodology Research Approach Research Design Data Sources Research Strategy Data Collection Method Sampling Operationalization Data Analysis Quality Criteria Empirical Data SAS Supermarket s Chain Beeline Figaro Restaurant Group P a g e

4 5. Analysis Listening, Talking and Energizing in Social Media in Terms of Complaints Handling Complaints Handling in Social Media Conclusions Implications and Limitations Managerial Implications Theoretical Implications Limitations References P a g e

5 1. Introduction This chapter presents the background of the research including the emergence of relationship marketing and the recognition of complaints handling as an important part of relationship marketing. Thereafter the tendency of using social media for relationship marketing purposes is presented in the background followed by a problem discussion about complaints handling in social media. The problem discussion ends up in the purpose of the research and the research question that aims to help in achieving the purpose Background The first marketing scholars directed their thoughts toward commodity exchange and distribution. The major goal of marketing was to make goods available and facilitate the exchange of goods. By the early 1950s, the direction of thought was changed towards marketing management, which shifted the focus on customers and their decision-making process. At this time marketing was characterized as a decision-making activity intended to fulfill customers needs at a profit for the company. It was believed that this could be done by targeting a market and then making optimal decisions on the marketing mix or the 4 P's. (Vargo and Lusch, 2004) Beginning in the 1980s, scholars were calling to critically examine the traditional marketing view and start thinking beyond product marketing. Many scholars believed that a paradigm shift was needed and that "4 P's" should be considered as just a helpful tool. From that time on service marketing emerged as a sub discipline in marketing. Moreover, the growing recognition of the importance of long-lasting customer relationships and customer retention increased the demand for relationship-oriented approach in marketing thought. Gradually the focus of marketing moved away from the exchange of tangible goods, in which tangible output and discrete transactions were central, towards the exchange of intangibles in which exchange processes, and relationships were central. At this time a dominant logic began to emerge that largely focused on the continuous nature of relationships between marketing actors. Thus, scholars started to talk about relationship marketing. (Gronroos, 1994) 4 P a g e

6 Intended to create long-term relationships with customers and retain customers, relationship marketing emphasizes the importance of focusing on existing customers satisfaction. Higher customer satisfaction can result in loyalty, which will not only increase purchases among the existing customers, but also generate favorable word-of-mouth to attract new ones. (Gronroos, 2004) However, no matter how hard companies work, service failures and dissatisfaction caused by those failures are inevitable. While companies cannot eliminate service failures and complaints generated by failures, they can learn to effectively respond to them. This response to complaints, termed and often mentioned by scholars as service recovery, is defined as the process by which the company tries to correct a service- or product- related failure that has become a reason for a complaint. (Maxham and Netemeyer, 2002) The latter is crucial for businesses, because companies that leave not so satisfied customers without custody will run the risk of losing customers. They will also have to deal with the possible harmful consequences of negative word-of-mouth. (Hart, et al., 2000; Maxham and Netemeyer, 2002; Tax, et al., 1998) Regarding word-of-mouth communications, it is worth mentioning that it is one of the most influential factors in making purchase decisions. The reason is that personal communications are considered to be more reliable, than non-personal. (Reynolds and Beatty, 1999) Moreover, considerable researches show that satisfaction with complaints handling can enhance the evaluation of the overall service experiences. (Tax, et al., 1998) Thus, an important part of relationship marketing is complaints handling. An emerging, effective channel for relationship building is social media, which provides an attractive opportunity for companies to get closer to consumers. This is due to the fact that Internet facilitates interactions and interactions are the building blocks for relationships. By facilitating interactions, relationships between firms and consumers can be enhanced. (Yoon, et al., 2008) Katona, et al. (2011) state the development of technology in recent years has gradually transformed the way people interact and socialize with each other; people spend more and more time communicating through different technology platforms. Social media is defined as the collective name for communication channels that, in contrast to traditional mass media which allows only one-way communication, enables two-way communication among the users. Through traditional mass media a sender can convey a message for many receivers who cannot respond through the same channel, while through social media users can communicate with each other directly by sending a message or responding to a message by the same means. Social media 5 P a g e

7 is the combination of technology, social interaction and user-generated content. Examples of social media are blogs, online forums, wikis, such social network sites as Facebook, Twitter, MySpace, etc. (Ne, 2013) Social media provides the opportunity to connect with customers using media with greater reach. The evolution of the Internet and in particular the emergence of social media with its enhanced ability to facilitate interactions and relationships between buyers and sellers has captured the interest of managers seeking to better understand and serve their customers using these technologies and tools. The increased importance of social media has led to a big interest of marketers who want to use this medium for marketing purposes. Leading companies are setting up dedicated capabilities to monitor and actively manage social media activities. (Yoon, et al., 2008) 1.2. Problem Discussion Thus, there is a growing tendency of using social media for relationship marketing purposes. Social media enables marketers to listen, talk and energize customers which all facilitate the development of relationships between companies and customers. This is due to that listening helps understanding customers better; talking makes the conversations between companies and customers two-way facilitating interactions which are the building blocks of relationship marketing; and energizing, in its turn, takes talking to another level by finding company s most enthusiastic customers and boosting their word of mouth in order to generate new customers to build relationships with. Thus, social media provides a new attractive environment that facilitates customer-firm relationships in new interesting ways enabling companies to listen, talk and energize. (Li and Bernoff, 2011) But how can these tools apply to complaints handling which, as mentioned in the background, is an important part of relationship marketing? Do companies use social media to listen to complaints, talk to customers by responding to their complaints and energize customers by boosting positive word of mouth about successful complaints handling experiences? After all, nowadays social media has become one of the channels through which customers tend to make complaints and company s indifference to the complaints shared through social media can strongly affect customer loyalty as well as customer relationships. (Aula, 2010) 6 P a g e

8 According to Maxham and Netemeyer (2002) though service failures and complaints generated because of those failures are inevitable, companies can learn to effectively respond to them. This is important, because satisfaction with complaints handling can improve the evaluation of the overall service experience. Tax, et al. (1998) states that satisfaction with complaints handling can lead to more favorable customer-firm relations, than if no problem had occurred in the first place. In order to carry out successful complaints handling scholars advice encouraging customers to voice a complaint; paying more attention to the role of the front-line employees and to the role of compensations in the complaints handling. (Donoghue and Klerk, 2009; Hart, et al., 2000; Huppertz, 2007; Orsingher, et al., 2010; Stone, 2011; Tax and Brown, 1998) At the same time Aula (2010) states that more and more customers tend to voice complaints on social media, which urges companies to learn to effectively respond to complaints made on social media. Regarding complaints shared on social media, Aula (2010) presents several cases where customers shared their complaints through social media, which generated negative publicity and had been a serious risk for companies reputations. According to Corstjens and Umblijs (2012) negative comments should not be ignored in any case, as negative social media causes 4.4 times more sales decline than a unit of positive comment. Companies should investigate what negative commenters complain about and plan how to fix the problem. Aula (2010) states that companies reputation and relations with customers can be risked not only because of the complaints been shared, but more because of companies unprofessional responses to those complaints. That is why it is so crucial for companies to be able to handle complaints on social media professionally Purpose The purpose of the project is to describe how companies conduct complaints handling in social media and how they listen, talk and energize with the help of social media in terms of complaints handling. 7 P a g e

9 1.4. Research Questions 1. How do companies perform complaints handling in social media? 2. How do companies listen, talk and energize in social media in terms of complaints handling? 8 P a g e

10 2. Theoretical Framework This chapter aims to present relevant theoretical framework for the research. It consists of two main parts. The first part presents theories related to complaints handling. The second part presents theories concerning social media and relationship marketing an important part of which is complaints handling. These two separate parts are aimed to be connected in the analysis of the research to give an overall illustration of complaints handling in social media Complaints Handling Encouraging Customers to Voice a Complaint A problem that companies should overcome if they want to conduct complaints handling is the silence of many unhappy customers. Though there are customers who make a complaint to the company while facing errors, there are also many of them that prefer not to speak up, but switch to another company silently and spread negative word-of-mouth. Studies have shown that consumers would tell 8-10 people about their dissatisfaction in a product/service to get emotional support. Therefore companies should encourage customers to make a complaint as complainers are more useful for companies than customers that switch to competitors or spread negative word-of-mouth. (Donoghue and Klerk, 2009) Hart et al. (2000) and Tax and Brown (1998) mention some reasons of dissatisfied customers silence such as: customers do not want to face the person responsible for the failure and create a scene often because they are not familiar with their rights and the company s obligations; thinking that company will not do anything about that and the situation is hopeless; customers are afraid that the failure recovery will be costly in terms of time and efforts; customers are concerned that their complaints may perish the relationship between the customer and the company, which will cause lower service quality next time when the customer will need the service. Surely, it is important to listen to those who make a complaint, because they provide information that can be used to improve service quality. But it is equally important to encourage those who keep silent to get that opportunity also from them. (Hart, et al., 2000) To overcome the silence of dissatisfied customers, firstly, companies should try to communicate to their customers the significance of their complaints in the contribution of service 9 P a g e

11 development. The latter can be done by embracing customer satisfaction in company s values and communicating it, for example, through slogans. (Donoghue and Klerk, 2009) As Stone (2011) notes, companies should show their willingness to hear customers voice. It is essential that customers know that their voice is important for the company and they are concerned that their service is satisfying. By voice Stone (2011) means customers ability to air a complaint when failures occur. Seeing consumers complaints as important marketing assets and gifts that can help improving service quality can be the first step in building the complaint culture. (Donoghue and Klerk, 2009) Secondly, companies should make easy for customers to make complaints. Huppertz (2007) notes that often firms increase the difficulty of voicing complaints through their complaint handling policies, for example by requiring receipts, making customers fill out forms, requiring manager s approval, etc. This additional hassle around the complaints discourages customers to make a complaint. Stone (2011) states that being able to voice and being able to do so easily can be a release for customer s frustration who has encountered a service failure. According to Hart, et al. (2000), Tax and Brown (1998) and Huppertz (2007) the latter can be done by arranging call centers that are well recruited to make sure the customers do not get many busy signals or internet websites where it is possible to put complaints and suggestions. Donoghue and Klerk (2009) also emphasize the importance of enabling customers to make an online complaint. Huppertz (2007) sees making easy for customers to complain in not requiring paperwork from them. Even if forms are needed to be filled according to the complaint handling policies, it is preferred that the front-line personnel does the paperwork and to save customers time and effort. Thirdly, in order to be able to discover the problems and try to win dissatisfied customers favor back, companies should be active problem-finders. For example, if customers do not volunteer to express their impressions, companies themselves should ask customers to comment on the service. (Tax and Brown, 1998) Stone (2011) also notes that employees should always enquire about customers feelings about the service and take measures in case of dissatisfaction. Finally, Huppertz (2007) suggests giving incentives to complain bringing the example of Sheraton Hotels, which offered the guests cash payments for informing management about problems. Tax and Brown (1998) recommend setting performance standards and promising 10 P a g e

12 refunds or compensations in case of not meeting those standards. For example, if the service is not provided on time, customers will not be charged for it. This would be an incentive to report in case of a late delivery. The latter would also make the customers think that company takes responsibility for failures and their complaints will not be useless. Huppertz (2007) also agrees that lenient refund policy can help to achieve higher levels of intentions to voice complaints The Role of the Front-Line Employees in Complaints Handling In the complaints handling literature great importance is given to the empowerment and behavior of front-line employees. Tax and Brown (1998) state that the interaction between the employee and the customer and how employees try to resolve problems often depends on the authority the front-line employees are given. Hart, et al. (2000) notice that usually the employees, who interact with the customers directly, communicate with them the most, discover the problems the first and can respond to their problems promptly, are positioned in the bottom of the organizational pyramid and are not empowered enough. Tax and Brown (1998) note, that one of the most important determinants of effective complaint handling is how quick the response to the complaint is. While to be able to react quickly to the customer responses it is vital that the front-line employees are empowered enough and are given the authority to make decisions so as the problem does not travel from one department to another. Huppertz (2007) also agrees that from a customer perspective it is more convenient to deal with an empowered employee who can solve the problem than having to wait for that employee to call the manager, re-explain the problem and resolve it. Stone (2011) also addresses to the issue of front-line employees empowerment mentioning that in order to give prompt solutions to customers problems front-line employees should be given the autonomy to allocate resources themselves according to what situation asks for. Moreover, they should be given the authority to offer compensation without management interference. Huppertz (2007) also agree that front-line employees should be able to offer compensations. However, Stone (2011) mentions, that there could be cases where speedy recovery is not possible. In those cases Stone (2011) and Orsingher, et al. (2010) give significance to that employees frequently provide customers with updated information and reasonable explanations about the process of complaint handling. Donoghue and Klerk (2009) and Stone (2011) mention 11 P a g e

13 that employees should be knowledgeable and thoroughly trained about the service processes. The latter is important to be able to quickly understand the problem, allocate what caused the problem and direct towards the solution to the problem. Companies should also think about employees motivation. Tax and Brown (1998) note that one way to motivate employees in complaint handling is to reward those employees who have reported a failure and have recovered from it effectively. Another way is to get the employees involved in service-quality improvement processes, which can stimulate employees to come up with ideas based on the service failures. Realizing the great role that the members of recovery team play, Stone (2011) adds that management should ensure that the best staff is included in the recovery team. Because the frontline employees occupy the lower parts of the hierarchy in the company little attention is paid to their professional characteristics. While employees politeness, friendliness and how they treat customers in terms of respect play crucial role. According to Stone (2011) customers are more likely to perceive outcomes such as monetary funds, credits and so on, as fair if they are treated fairly and respectfully in the interactions. Especially loyal customers always expect special treatment and react most negatively when treated unfairly. Orsingher, et al. (2010) agree mentioning that if employees are not polite and do not demonstrate empathy and effort, customers might still feel dissatisfaction even though there has been a fair redress. Donoghue and Klerk (2009) state, that the friendliness and politeness of employees can reduce the frustration of employees who have encountered a service failure. And the other way around too, unfair treatment can escalate dissatisfaction and become reason for more negative word-ofmouth The Role of Compensation in Complaints Handling Donoghue and Klerk (2009) state that usually dissatisfied customers that make a complaint, want some form of compensation as an outcome, for example refund, price reduction, product replacement or free repair service. Orsingher, et al. (2010) find that the most important role in the satisfaction with complaint handling plays the perceived fairness of the compensation offered to the customer to resolve the complaint. Therefore, company resources should be allocated in a way that enables the immediate provision of compensation. Orsingher, et al. 12 P a g e

14 (2010) also note that it is preferable that the company conveys the types of compensations that will be provided in cases of service failures. Huppertz (2007) suggests implementing lenient refund policies. Hart et al. (2000) state that losing a customer can be more costly for the company than the costs it could undertake to win customer s favor back. Moreover, Tax & Brown (1998) mention that not only companies should think about compensations, but also whether customers think that the compensation offered is fair in regard to the costs they have incurred. Hart et al. (2000) agree and advice the companies to measure and try to compensate the costs customers incur because of the service failures. In the worst scenario, if the costs are so big that the company cannot pay them off, company should at least demonstrate regret, to show that it cares. Stone (2011) also state that companies should focus on the outcome of complaint handling primarily. But it does not mean that customers are always right and compensations should be provided every time. Nevertheless, dissatisfied complaining customers always deserve a good explanation of what has happened, empathy with their situation and an effort to make them happy again. Donoghue and Klerk (2009) mention that in cases when compensation is not possible company should make an apology and explain that measures have been taken to guarantee that the same problem will not occur again Social Media and Relationship Marketing Marketers have become more and more interested in learning about, organizing, and managing social media. Several applications have been created by Facebook and other social networking sites that are designed to help organizations with their relationship cultivation efforts. (Waters, et al., 2009) Such an interest comes also from their ability to influence members choices, rapidly spread awareness about the new products and promote them, as well as to engage, collaborate with, and improve customer relationships in such media channels. (Dholakia, et al., 2004) There is a social trend among people to use technologies to get things they need from each other instead of traditional institutions. Li and Bernoff (2011) call this phenomenon groundswell and emphasize the importance of the use of the new interactive technologies in 13 P a g e

15 doing businesses nowadays. It is believed, that although the new technologies put power into the hands of the customers, like in jujitsu a Japanese marital art, it can be learned how to use opponents power for your own advantage. Li and Bernoff (2011) state that if businesses want to use the groundswell phenomena to their advantage, they should embrace the principle that the most important factor is to focus on the relationships, not the technologies as new technologies are just tools that enable relationships in new ways. Instead, how the communications and interactions take place in these forums should be under the focus. Technologies should be evaluated from the point if they can make the interaction more interesting, more varied or more frequent and help achieving an important business goal. Li and Bernoff (2011) bring the example of Walmart that has a Facebook page that over 2 million people like. Even though Walmart-haters often put negative comments on the their Facebook wall, Walmart continues building relationships with the help of Facebook by creating posts that embrace customer desire to get great deals and save money, thus accomplishing a useful business goal. That is why it is crucial for businesses to think about what they want to accomplish by getting involved in social media. (Li and Bernoff, 2011) Kietzmann, et al. (2011) think that even though social media participation is not an exact science, companies should have clear guidelines on how to act in social media, which should include when the firm can get involved in the conversations, and which employees can represent the firm online. According to Kietzmann, et al. (2011) employees who can represent the firm online should be chosen with the criteria of being a good communicator and having the ability to listen. Moreover, those employees should be given the authority to enhance relationships by solving customer issues, not just sympathize Listening in Social Media Smith (2009) sees social media as a place where companies can listen and enquire how they are perceived by customers. According to Smith (2009) social media has created an environment where sharing opinions is fun and meaningful. Companies in their turn should always ask questions and permanently listen to their customers opinions. Social media is a place where customers spend a lot of time and offers companies platforms for collecting opinions and 14 P a g e

16 data. Crawford (2009) agrees that companies should listen in social media to understand the level of their customers satisfaction and how the brand is discussed in general. Comparing Facebook and Twitter to giant focus groups, Crawford (2009) believes that listening opinions about the products of the company in social media is cheaper and easier. Li and Bernoff (2011) state, that by listening companies can use social networks to research and monitor their customers in order to understand them better. In opposite to conventional marketing research such as surveys and focus groups, listening in social media is cheaper, more accessible and allows firms to get a deeper insight into consumers opinions and behavior. Consumers leave their opinions, negative or positive, on social networks on a daily or hourly basis. Corstjens and Umblijs (2012) add that customers are no longer just targets. Social media has given customers a voice and companies should learn to listen to their voice. In order to carry out effective listening in social media, Corstjens and Umblijs (2012) suggest companies to filter all social-media events (Tweets, Facebook entries, and so on) and organize into categories. Categories could be: product functionality and quality; service quality and industry specific concerns. Then, evaluate the sentiment of each of the events into positive, negative and neutral and apply additional weight to the comment depending on the size of the audience. Based on the above-mentioned criteria, companies should plan further actions. According to Corstjens and Umblijs (2012) negative comments should not be ignored in any case, as negative social media causes 4.4 times more sales decline than a unit of positive comment. Companies should investigate what negative commenters complain about and, based on the assessment, plan how to fix the problem. Depending on the pressure of the negative comment the company can choose to react by communication and explanation of the situation or taking more proactive measures such as making adjustments Talking and Being Interactive in Social Media Smith (2009) mentions that although listening is important, it is just the start. The next step for companies is talking and engaging in discussions with customers to make the conversation two-way. Corstjens and Umblijs (2012) agree that in addition to listening, companies should also engage in brand conversations. According to Li and Bernoff (2011) 15 P a g e

17 talking is a marketing tool where a company uses some sort of social network to spread messages about themselves. However, this is a more interactive activity than banner ads, s and search ads and encourages a dialogue with the firm s customers. Compared to ordinary advertising (for example television commercials), which is a one-way communication that is shouting messages to customers, the objective with talking is to have a two-way communication with your customers. Talking, listening and responding are crucial if you want to succeed in groundswell. (Li and Bernoff, 2011) When companies get involved in social media, it is not enough to listen; they hold the responsibility to be highly responsive and react quickly and vigilantly. (Crawford, 2009) Yoon, et al. (2008) state that social media has been perceived as a supreme channel for building relationships with consumers due to its interactivity. Interaction is a fundamental building block of a relationship. Therefore, one s motivation to build a relationship is dependent on one s willingness to interact. According to Yoon, et al. (2008) similarly the web site s relationship orientation might be viewed as higher when the site is perceived to be more responsive. The speed of the response is also associated with perceived relationship investment. With the rapid advancement of information technology and infrastructure, immediate feedback becomes more important in the consumers evaluation of companies. (Yoon, et al., 2008) Sashi (2012) notes that interactions between customers and firms can not only provide customer insight, but also customer input in the product/service development. They can improve the understanding of customer needs, especially changes in these needs over time and facilitate adjustments to products to better satisfy these needs. Thus, interaction through social media is becoming a place of value creation and value extraction as it allows customers to participate in the value adding process and collaborate with firms in creating value. Sashi (2012) adds that satisfaction in connections and interactions is a prerequisite for turning transactional customers into loyal ones. That is why Sashi (2012) suggests employing a mix of online and offline strategies for communicating and interacting with customers. Kaplan and Haenlein (2010) also talk about forming relationships with customers with the help of social media mentioning that because social media is all about interaction and communications, if businesses decide to get involved in social media, they should be initiative and active in engaging in discussions with customers. If businesses use social media only for 16 P a g e

18 posting existing TV spots or prefabricated press announcements, customers can perceive those messages as fake. Responding and providing feedback are critical elements of social media. (Kaplan and Haenlein, 2010) Aula (2010) makes aware that company s indifference to the claims shared through social media can strongly affect customer loyalty as well as customer relationships. If unwanted opinions and claims go unchecked or unanswered, the situation will most likely become difficult to correct. Aula (2010) also states that organizations are obliged to respond to all claims made by customers through social media. Moreover, companies should try to make the company s operations as transparent as possible attempting to demonstrate corporate responsibility for those operations. The latter is because no matter how hard companies try, in social media companies cannot look good if they are not good Energizing in Social Media Another reason for companies to get involved in social media is energizing. Energizing takes talking to another level, here the goal is to find company s most enthusiastic customers and with the help of social networks boost their word of mouth in order to generate new customers. (Li and Bernoff, 2011) WOM is a free but yet such an important marketing tool. Many marketers believe that a product s success is related to how good WOM it generates. This makes WOM very important and useful measurement tool, which can be used to see how successful a certain product is. (Godes and Mayzlin, 2004) Smith (2009) states, that enhancing relationships in social media can help building advocates of the brand in social media, who will recommend the service/product online and offline. Sashi (2012) notes, that satisfied customers may keep their delight to themselves or interact with others in social networks to spread the word about their positive experiences products/services or companies. Thus customers can become advocates for companies sharing their delight among those with who they have connections and interactions in social networks. Companies should encourage their delighted customers to spread positive WOM about their good experiences. However, Godes and Mayzlin (2004) note that rewarding people for their recommendations is sensible. Consumers know that incentives may predispose other consumers recommendations, which leads to a decrease in perceived sincerity and WOM effects. 17 P a g e

19 Discussing positive social-media sentiments and threads, Corstjens and Umblijs (2012) state that positive social media can have a significant positive impact on sales and profits. Therefore, it is important to invigorate positive sentiments and threads by, for example, seeding or viral marketing. If a positive social media is losing its drive but still is very beneficial to the company, companies should think about re-invigorating it. In any case, with social media companies need large teams of skilled people to get involved on a daily basis in a vast volume of customer communications. (Corstjens and Umblijs, 2012) 18 P a g e

20 3. Methodology In this chapter methodological choices that have been made to carry out this research are presented with the operationalization which aims to construct questions for interviews based on the concepts presented in the theoretical chapter. Thereafter data analysis method is presented along with the research quality criteria Research Approach Research can be defined as a systematic and scientific search for relevant information on a specific topic. Research is an important source of knowledge and information that can provide guidelines for solving different problems. The role of research in business has greatly increased in modern times. With the help of marketing researches marketers can obtain relevant, accurate and timely information which can enable making efficient and effective marketing decisions. Businesses use researches in their decision-making processes as they replace intuitive business decisions by more logical and scientific decisions. Though decision-making may not be part of research, but the results of research can certainly help in taking business decisions. (Sanjeev, D., 2010) As mentioned above, research is about acquiring new knowledge and information on a specific topic. There are two general approaches to reasoning that can result in the acquirement of new knowledge: inductive reasoning and deductive. Inductive reasoning is a theory development process that starts with investigations of specific cases and pursues establishing generalizations about the phenomenon under the observation. Deductive reasoning is a theory testing process that starts with an established theory and tries to see if theory applies to specific cases. (Hyde, K., 2000) However, Jha, N. (2008) notes, that in reality the acquisition of knowledge involves a back-and-forth motion from induction to deduction. It consists of working inductively from experience to hypotheses, which are elaborated deductively from implications on the basis of which they can be tested. 19 P a g e

21 This research will follow deductive reasoning as it starts with the review of prior studies related to the subjects of interest. The research will aim to test how the prior theories of complaints handling apply to social media environment. Depending on the reasoning approach the preference for quantitative research or qualitative research can be determined. In qualitative research inductive reasoning is more common, while in quantitative research it is the deductive reasoning that is more common. Usually the qualitative research follows the sequence of: collecting and interpreting the data; analyzing the data; drawing conclusions; developing hypotheses from the conclusions drawn; using the hypothesis to develop a theory. While quantitative research begins with theory: prior researches are reviewed; from the theoretical frameworks hypothesis are generated; these hypotheses lead to data collection and the strategy needed to test them; the data are analyzed according to hypotheses; conclusions are drawn; these conclusions confirm or conflict with the theory. Thus the objective of a qualitative research is theory building, while the purpose of a quantitative research is theory testing. (Jha, N., 2008) Quantitative research is based on the measurement of quantity and it is applicable to phenomena that can be expressed in terms of quantity. Quantitative research describes phenomena by converting data into statistics and making generalizations based on it. That is why in order to get more generalizable results it is important to study large set of populations. (Bryman & Bell, 2011) Qualitative research, on the other hand, is concerned with qualitative phenomenon. (Sanjeev, D., 2010) Patton (1990) defines qualitative research as detailed descriptions of situations, events, people, interactions, observed behaviors, attitudes, beliefs, and thoughts and excerpts or entire passages from documents, correspondence, records, and case histories. The drawbacks of qualitative research are that the researcher may interpret the data subjectively and that qualitative research is time consuming. In short, where measurement is sought then a quantitative approach is required; where rich and personal data are sought, then a word-based qualitative approach might be more suitable. (Bryman and Bell, 2011) 20 P a g e

22 This research will be qualitative as it aims to describe "how" rather than measure "what" and "how much". The data sought is descriptive and word-based rather than quantitative and statistical Research Design Each research study has its own specific purpose. Based on the purpose of the study the design of the research can be determined. There are several research designs and the researcher must decide in advance which design would prove to be more appropriate for the research as it determines many aspects of the research, such as what type of data is required, what techniques of data collection will be used, etc. (Sanjeev, D., 2010) The following are the research designs: Exploratory research design: Researches with exploratory research design have the purpose of gaining familiarity with a phenomenon or discovering new insights into it. Such studies must have flexible structure so that many different aspects of a problem may be considered when they arise and come to the notice of the researcher. Descriptive research design: Studies with descriptive research design have the purpose of accurately representing the characteristics of the phenomena under the study. In descriptive studies the research must be rigid and carefully planned. The researcher must be able to define clearly what he wants to measure and must find adequate methods for measuring it along with a clear cut definition of a population he wants to study. Diagnostic research design: Researches with diagnostic research design have the purpose of determining the frequency with which something of interest occurs or the frequency with which it is associated with something else. The studies concerning whether certain variables are associated are examples of diagnostic research studies. Diagnostic studies are also rigid and must be well-planned. Causal or hypothesis-testing research design: The studies with this design have the purpose of testing a hypothesis of a causal relationship between variables. Such studies demand procedures that will not only diminish bias and increase reliability, but will allow drawing conclusions about causality, e.g. (Sanjeev, D., 2010) 21 P a g e

23 The research design chosen for this paper is descriptive research design as it has the purpose of describing the phenomena under the study with the research questions asking how. Also the research is rigid and carefully planned. Moreover, from the beginning of the research it has been clearly defined what is going to be studied with a clear definition of a population to be studied Data Sources After determining the research approach and research design the next step is to understand where the data needed can be found. There are two sources of data: primary and secondary. The two types of data are not substitutes for each other, but they can more preferably complement each other. Primary data are those that are collected by the researcher for the research currently under the investigation. Secondary data involve existing data collected for other purposes than the research at hand. (Cowton, C., 1998) For this research primary data will be gathered from employees of companies that are present in social media in order to be able to reach the purpose of this research Research Strategy For choosing the most appropriate strategy for research three conditions should be taken into account: the research question; the extent of control the researcher has over actual events; the degree of focus on contemporary as opposed to historical events. (Yin, R., 2009) 22 P a g e

24 (Yin, R., 2009) For this research case study will be used as research strategy. This is because firstly, the study has a research question of "how". Secondly, the research does not require control over the behavioural events. Thirdly, it focuses on contemporary events. Thus, survey, archival analysis and case study are left as options. Survey is when a population or individuals from a population are sampled and asked questions relating to variables under investigation to make statistical interpretations about the population. (Yin, R., 2009) However, this study does not intend to make statistical interpretations. Regarding archival analysis, documents, archives are examined for gathering information. Documents can refer to letters, administrative documents, agendas etc. Archives can refer to service records, organizational records, personal records, etc. (Yin, R., 2009) However, empirical data regarding complaints handling in social media cannot be gathered in archives. That is why this option is also eliminated. Instead, case study will be used as a research strategy. Case study is collecting information on some aspect of development of an individual unit (e.g., a person, group, or event) stressing the development in relation to the theory. (Yin, R., 2009) 3.5. Data Collection Method Data collection methods more appropriate for the research depend on the chosen research strategy. The most common data collection method for case studies are in depth interviews (also called one-to-one interviews). (Yin, R., 2009) The formality and structure of the one-to-one interviews can be built up differently depending on the researcher; it can for example be by 23 P a g e

25 phone. However, most interviews are conducted in person (face to face). One-to-one interviews are flexible, are good at revealing hidden issues and are the best method for in-depth study of personal opinions, beliefs and values. A drawbacks with one-to-one interviews are that they are time-consuming and respondents might answer in a way they think is socially acceptable, which means that they can feel a certain fear of judgment from the interviewer/researcher and want to answer the questions in the most favorable way for the study. This can result in a twisted answer from the participant and the interviewer will not get all the information needed. The reason for this is often that the respondent does not completely trust the person who is doing the interview. When doing the interview, there should be a leader who will ask the questions to the participants and takes notes. Interviews will generally last from about 20 minutes to one hour, depending on the questions asked. Before the interview, the researchers have to prepare the design of the interview questions, headhunt for suitable participants and arrange location and time for the interview. As one-to-one interviews have the objective to get in-depth information/opinion, the design of the interview questions should be either unstructured or semistructured in order to enable the respondents to speak up more freely. (Jaya, et al., 2008) The reason is that unstructured interviews are more flexible as the questions can be changed and adapted to the respondent in contrast to structured interviews were a set of limited options are provided to the respondent to choose from. In semi-structured interviews the interviewer has an interview guide with informal decided topics around which the interviewer can ask different questions to get the information needed. Thus the interview is more flexible as the questions can be tailored, but it is also relevant, as they concern the topics of interest. (Bryman and Bell, 2011) 3.6. Sampling On the sampling stage the researcher should : Define a population: All the entities that belong to the group under the consideration in any field of inquiry which establish a population. Define who you are interested in, what your population is. 24 P a g e

26 Identify sampling frame: Sampling frame is the source from which the sample is drawn. The source should contain the list of entities included in the population, e.g. yellow pages, phonebook. Define the sample size: The sample size can be defined according to the judgment; what the researcher can afford; average size samples of previous similar investigations or the statistical method, which is: n = 2500 x N x Z 2 / [25 (N-1)] + [2500 x Z 2 ] where n is the sample size required, N is the population size, Z is the number of standard errors (1.64 for 90% confidence level; 1.96 for 95% confidence level; 2.58 for 99% confidence level). (Bryman and Bell, 2011) For this research data is collected from the employees of Beeline, Figaro restaurant group and SAS supermarkets chain that are responsible for presenting those companies on social media. The reason why those companies are chosen for this research is that in depth study of the subject under the investigation is required and cases that can be rich of information regarding complaints handling on social media are needed. The sample size is constrained by the resources and time available. Beeline, SAS supermarkets chain and Figaro restaurant group seem very active in social media. Beeline is a company that offers integrated mobile and fixed communication services, long distance and international communication, internet access, WiFi, and 3G technologies. Beeline s customer base includes private consumers, large-, medium- and small-scale enterprises. Sas supermarkets chain is one of the biggest supermarket chains in Armenia. And Figaro restaurant group is a restaurant chain which includes Square One, Segafredo, Cinnabon and SFC in Armenia Operationalization Encouraging Customers to Voice a Complaint on Social Media Do you think complaints handling can be one of the business goals which social media can help to accomplish? In your opinion, what could be the benefits of doing the complaint handling on social media? How can a company use complaints and complaints handling on social media in advantage of the business? Trying to find out 25 P a g e