The "United Breaks Guitars" phenomenon spawned a new era in consumer empowerment. As Kaufman (2012) states, "until very recently, there seemed to be fewer and fewer ways for ordinary people to fight back against powerful corporations." Now, consumers have a range of possible ways to get other consumers to change their purchasing behaviors -- hitting companies where it hurts the most. A friend recently posted on Facebook about a bad experience he had flying with Delta. Never mind the fact that his initial post led to half a dozen other responses relaying their bad experiences with Delta; within two hours, an acquaintance in his friend who happened to work for Delta list emailed him a $50 voucher for his next flight.
The use of social media as a tool for consumer empowerment is actually taken for granted in 2012. Consumers already know that complaining about something on Facebook, YouTube, or anywhere else on the Internet is a good way to vent frustration and possibly get a book deal, as Dave Carroll knows. After his United Airlines fiasco in 2008, Carroll produced a song and a music video that went viral on YouTube. The video is an exceptionally creative outlet for someone who has been treated unfairly by a big, impersonal corporation. Most consumers will not be able to go to the length that Carroll did in garnering attention, but there are other ways than strumming a guitar. Consumers share their gripes on Twitter and Facebook, creating collective responses that match the power of major corporations. The impact might not be as transformative as a class-action lawsuit, but companies do respond, as Delta did to an online friend.
Intelligent, learning organizations will seize the opportunity to use social media as a means to gain competitive advantage and even boost sales. Companies who watch their hashtags on Twitter will be able to do better damage control than those who do not. When public outcry first emerges, public relations departments can quickly step in to prevent the damage from getting as bad as it was for United. When United and Continental gobbled each other up, it was of course not related to the breaking of guitars, but the merger did reveal some of the financial unviability in the airline industries. United, and other airlines, had a lot to learn from Dave Carroll's video. Dave Carroll was most certainly not the first person to be a victim of United's baggage mishandling, but he was the first to go viral with it. What remains to be seen is whether Continental-United or any other airline actually alters the way they train and monitor baggage handlers and handle baggage mishandling disputes. It is highly likely that companies like United write off the viral video as a little bad publicity that is par for the course, but which is not going to hurt their bottom line. After all, most consumers will not remember "United Breaks Guitars" if the cheapest flight from Memphis to New Orleans happens to be on Continental-United.
There are, however, instances in which business respond directly to negative publicity social media and actually change their policies to please consumers. Kaufman (2012) points out several instances in which social media fundamentally transformed its policies: Bank America rescinded a $5 per month charge for the privilege of using its debit cards; Netflix backed out of a fee hike after customers rallied in protest online; Verizon also backed out of a fee scheme due to social media mayhem.
These are small victories, though. Larger victories, such as getting companies to fundamentally alter the way they do business, are harder to win. Bad publicity is not something that BP cares about, for example. The fact is that BP can afford a little negative press; and most of their money is not made in the Business-to-Consumer marketplace anyway.
Businesses have an opportunity to capitalize on social media in ways that were not before realized. Facebook's IPO was predicated on the fact that the social media network is a veritable treasure trove of marketing data, which consumers willingly and continually update for free. Marketing analysis have spent years perfecting tools of data analysis and now they have a pre-packed version in the form of Facebook. Facebook and other social media is directly altering the nature of marketing research, even if it is doing nothing else to change business practices.
The information that can be cleaned on social media includes consumer trends and preferences as well as consumer complaints. Undoubtedly, social media impacted the tone of election politics in the United States in the months leading up to the Presidential election in 2012. Social media enables businesses to influence but also to predict consumer behavior.
In his follow-up book to the "United Breaks Guitars" song, Carroll (2012) refers to statistical insignificance with regards to United's reaction to the music video. On more than one occasion, United issued a damage control press release predicted on the statistical fact that "99.6% of their bags arrive on time and without incident," (p. 108). The number seems impressive, sure. Yet the faulty logic in United's reaction is the fact that even a few thousand, maybe ten thousand, broken guitars each year is nothing to sneeze at. "It will take just a few years for United to amass one million customers who have had delayed or damaged baggage," (Carroll, 2012, p. 108). Social media makes seemingly small statistics even more significant, notes Carroll. For each person experiencing a broken guitar, hundreds of friends will know about the incident through Facebook and Twitter. Some of those will Tweet and re-tweet, and the result is a viral bad publicity campaign. Over time, this phenomenon can wreak havoc on sales and market shares.
Take the Apple iOS 6.0 release, in which the mapping app among other things was faulty. Consumers who had been the first to download the iOS update posted angry notes on Twitter, Facebook, blogs, and whatever other media outlets they could use. As a result, millions of iPhone and iPad users did not download the update on purpose. They waited for the next version, and the credibility of Apple's software developers plummeted. This was especially bad news given that Apple's CEO missed a great opportunity to prove his credibility as a leader in the aftermath of losing their head honcho Steve Jobs.
In Apple's case, the company can and probably is using the feedback they received related to their botched iOS update to reinvest in programming and take the update back to the drawing board. However, there were casualties. The developer of the iOS update quit after the fiasco, most likely because his team was forced to bring the update to market before it was ready.
Social media provides companies and consumers with information that can be empowering to both parties. As a tool for consumer empowerment, social media helps arm netizens of their options. Many Facebook users, for example, crowd-source their next big purchase. If someone wants a new DSLR, where better to go than your group of friends, who can give you personalized advice and opinions that are more reliable than reviews written by people who were sent cameras by the company just so that they could review them favorably?
From the businesses' perspective, social media offers a mode of advertising that is targeted to the point of pinpointing precise peoples' preferences. The 2012 election revealed some curious statistics linking Obama supporters to eating at Red Lobster; Romney supporters to eating at Olive Garden. This marketing data helps companies budget more intelligently for their next ad campaigns.
More importantly for companies that care about what their consumers think, social media is direct feedback. Companies that do not care about their consumers might use the United Airlines statistically insignificant approach as Carroll (2012) outlines…