Brand Crisis and Customer Relationship Management on Social Media: Evidence from a Natural Experiment from the Airline Industry

Abstract

The rise of social media platforms has created new opportunities for successful customer relationship management (CRM) activities. Compared with traditional CRM, social media–based CRM enables brands to easily and directly communicate with their customers, which can strengthen customer relationships. The public nature of social media offers an innovative way for brands to engage and manage their customer relationships, increasing brand awareness and enabling easy access to prospective customers. However, public customer engagement on social media does not come without risk. For example, negative word of mouth on social media stemming from poor customer engagement or a brand response can disseminate and reach a large audience. Despite the popularity of social media platforms as customer relationship channels, it is still unclear how a brand crisis can change a brand’s social CRM efforts. Leveraging a natural experiment setting, we investigate the impact of the United Airlines crisis on three dimensions of social CRM efforts: informativeness, timeliness, and attentiveness. Contrary to traditional CRM efforts and recommendations, we find that the brand crisis increases informativeness efforts but reduces timeliness and attentiveness efforts.