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

Abstract

In this study, we investigate the effect of a brand crisis on the CRM efforts of brands on social media. Despite the opportunities social media offers to brands to connect and engage with customers, it is still unclear how a brand crisis can change a brand’s social CRM efforts. Social media platforms can amplify the negative consequences of a brand crisis. However, the unique and public nature of social media platforms could offer new means for brands to handle a brand crisis and publicly manage their customer relationships. Compared to traditional Customer Relationship Management (CRM), social media enables brands to communicate with their customers publicly, which can strengthen their relationships with customers and maintain higher levels of customer engagement. 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.

Keywords: Social media, customer relationship management, brand crisis, difference-in-differences, natural experiment