The Squeaky Wheel Gets the Grease.An Empirical Analysis of Customer Voice and Firm Intervention on Twitter

Firms are increasingly engaging with customers on social media. Despite this heightened interest, guidance for effective engagement is lacking. In this study, we investigate customers' compliments and complaints and firms' service interventions on social media. We develop a dynamic choice model that explicitly accounts for the evolutions of both customers' voicing decisions and their relationships with the firm. Voices are driven by both the customers' underlying relationships and other factors such as redress seeking. We estimate the model using a unique data set of customer voices and service interventions on Twitter. We find that redress seeking is a major driver of customer complaints, and although service intervention improves relationships, it also encourages more complaints later. Because of this dual effect, firms are likely to underestimate the returns on service intervention if measured using only voices. Furthermore, we find an "error-correction" effect in certain situations, where customers compliment or complain when others voice the opposite opinions. Finally, we characterize the distinct voicing tendencies in different relationship states, and show that uncovering the underlying relationship states enables effective targeting. We are among the first to analyze individual customer level voice dynamics and to evaluate the effects of service intervention on social media.