In social media context, service failures become public domain, making them visible to vast audiences of customers who are virtually present. Thus, this study aims to discuss the roles of service failure type and management response on observers’ perceived helpfulness.
The authors conducted econometric analyses on a dataset incorporating 107,984 reviews and 34,641 management responses to negative reviews.
The results reveal that, for process failures, specifying a form of action (initiatives for solving the problem) is associated with more perceived helpfulness of reviews than accounts (explanation) or acknowledgments (recognition and acceptance), while responding to an outcome failure by providing an account is associated with increased perceived helpfulness of reviews.
For process failures, managers should make every effort to convince observers through specific actions that similar failures are less likely to occur in the future. For outcome failures, managers should strive to provide clear and fast explanations of the failure causes to restore observers’ evaluation of the firm’s capabilities.
The authors’ work extends sparse insights on observers and sheds new light on the effect of service failure type and response strategy on observers’ actual behaviors. The interplay between service failure type and response strategy provides guidance on how to use management responses to influence potential customers.
