This article was downloaded by: [Francis Buttle]On: 21 July 2014, At: 17:32Publisher: RoutledgeInforma Ltd Registered in England and Wales Registered Number: 1072954 Registeredoffice: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK

Journal of Marketing ManagementPublication details, including instructions for authors andsubscription information:http://www.tandfonline.com/loi/rjmm20

Managing negative word-of-mouth: anexploratory studyMartin Williamsa & Francis Buttleb

a DBA, University of Technology Sydney (UTS), Australiab Macquarie Graduate School of Management, MacquarieUniversity, AustraliaPublished online: 17 Jul 2014.

To cite this article: Martin Williams & Francis Buttle (2014): Managing negative word-of-mouth: anexploratory study, Journal of Marketing Management, DOI: 10.1080/0267257X.2014.933864

To link to this article: http://dx.doi.org/10.1080/0267257X.2014.933864

PLEASE SCROLL DOWN FOR ARTICLE

Taylor & Francis makes every effort to ensure the accuracy of all the information (the“Content”) contained in the publications on our platform. However, Taylor & Francis,our agents, and our licensors make no representations or warranties whatsoever as tothe accuracy, completeness, or suitability for any purpose of the Content. Any opinionsand views expressed in this publication are the opinions and views of the authors,and are not the views of or endorsed by Taylor & Francis. The accuracy of the Contentshould not be relied upon and should be independently verified with primary sourcesof information. Taylor and Francis shall not be liable for any losses, actions, claims,proceedings, demands, costs, expenses, damages, and other liabilities whatsoever orhowsoever caused arising directly or indirectly in connection with, in relation to or arisingout of the use of the Content.

This article may be used for research, teaching, and private study purposes. Anysubstantial or systematic reproduction, redistribution, reselling, loan, sub-licensing,systematic supply, or distribution in any form to anyone is expressly forbidden. Terms &Conditions of access and use can be found at http://www.tandfonline.com/page/terms-and-conditions

Managing negative word-of-mouth: an exploratorystudy

Martin Williams, DBA, University of Technology Sydney (UTS),Australia

Francis Buttle, Macquarie Graduate School of Management,Macquarie University, Australia

Abstract This exploratory study investigates how executive-level and functionalmanagers in three large organisations understand and respond to negative word-of-mouth (NWOM). The findings, based principally on analysis of 54 interviews over3 years, show that organisations devote far more resources to the management ofNWOM than they do to the promotion of positive word-of-mouth. Marketing andother customer-facing work groups play varied roles in organisational response toNWOM, which often involves complaints management and crisis management. Wefind that seniormanagement, marketing, sales, advertising, PR and contact-centrestaff all have different fears about NWOM and therefore respond to it in variousways. Our recommendations for better management of NWOM stress three points– leadership, organisational readiness and public relations management.

Keywords word-of-mouth; negative word-of-mouth; WOM; complaints manage-ment; customer relationshipmanagement; crisis management; issuemanagement;PR; public relations; case study

Introduction

Word-of-mouth (WOM) has ancient origins going back to mankind’s oraltraditions. One of our earliest written texts, published some 2300 years ago(Aristotle, trans. 2011), recognised the importance of WOM. More recently, andespecially over the last 50 years, there has been a considerable amount of academicresearch into WOM. Much of the research published in the marketing literature hasfocused on the power of positive (PWOM) and negative (NWOM) WOM fromexisting customers to influence the beliefs, feelings, intentions and behaviours ofprospective customers.

In this article, we report findings from exploratory case study researchconducted in three large organisations. Our key objective is to explore howdifferent roles, departments or work groups are touched by, make sense of orrespond to NWOM, whether generated directly by customers as a result of theircustomer experiences or in other ways. This article makes three particularcontributions to marketing scholarship. First, it delivers a better insight into the

Journal of Marketing Management, 2014http://dx.doi.org/10.1080/0267257X.2014.933864

© 2014 Westburn Publishers Ltd.

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

general orientation of organisations towards WOM. Second, to the best of ourknowledge, this is the first article to explore in case-rich detail what different roles,departments and work-groups within individual organisations think and fear aboutNWOM. Third, it offers an improved insight into the disparities between theresponses of different roles, departments and work-groups towards NWOM. Ouranalysis leads us to managerial recommendations that stress leadership,organisational readiness and an important role for public relations management.

Literature review

While there are already a number of excellent reviews of WOM in the marketingliterature (e.g. Buttle, 1998; Davidow & Dacin, 1997; de Matos & Rossi, 2008), thepurpose of this literature review is to present a more dedicated review in support ofour research questions. Our focus is particularly on the NWOM literature.

WOM researchers in the marketing field have tended to focus either on positiveWOM (e.g. Bone, 1995; Brown, Barry, Dacin, & Gunst, 2005) or negative WOM(e.g. Hirschman, 1970; Richins, 1983; Singh, 1990). Some, however, compare therelative impacts of PWOM and NWOM. Arndt’s (1967) field study, for example,showed that NWOM retarded sales of a food product more than twice as stronglyas PWOM enhanced it, and Skowronski and Carlston’s (1989) review concludesthat NWOM is at least as powerful an impact on choice as PWOM. Richins (1983)and Bowman and Narayandas (2001) found that NWOM is communicated to agreater number of people than PWOM. Desatnick (1987) reports that customerswho defect from a service provider tell their story to at least nine other people, and13% of them utter NWOM to more than 20 people. TARP (1986) reports thatdissatisfied customers tell twice as many people about their experience as satisfiedcustomers, while more recent studies of NWOM in Canada and Singapore find that80% of dissatisfied consumers tell at least three others about their experience (Lau& Ng, 2001).

The literature on customer-generated WOM overwhelmingly associates PWOMwith customer satisfaction (e.g. Anderson, 1998; Westbrook, 1987) and NWOMwith customer dissatisfaction (e.g. Goldenberg, Libai, Moldovan, & Muller, 2007;Richins, 1983) that is often caused by poor quality of service (Blodgett, Granbois, &Walters, 1993; Fornell & Wernerfelt, 1987; Spreng, Gilbert, Harrell, & Mackoy,1995). This is also reflected in customer complaint volumes and other forms ofvoicing or exit behaviours (Davidow & Dacin, 1997; Nyer, 1999; Singh, 1990).WOM recommendation appears to play a more significant role in consumers’ choiceof service providers, compared to tangible goods (File & Prince, 1992; Gremler,1994; Murray & Schlacter, 1990), and customers are also more likely to engage inNWOM about services than goods (de Matos & Rossi, 2008). Keaveney’s (1995)research finds that 75% of customers who had experienced a service failure tell atleast one other person about their experience, while 85% of dissatisfied customershad switched providers.

There is limited evidence that some companies have developed strategies andprocesses for promoting PWOM, and stimulating customer-generated PWOM(Blodgett & Anderson, 2000; Buttle, 1998; Carl, 2006) and controlling orreducing NWOM (Bowman & Narayandas, 2001; Buttle, 1998; Haywood, 1989;Pruden & Vavra, 2004). A major motivation for companies investing in NWOM-

2 Journal of Marketing Management, Volume 00

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

reduction is the potentially calamitous impact NWOM can have on organisationalrevenues. Marsden, Samson, and Upton (2005) argue that NWOM is reflected indecreased company revenue. Customers who utter NWOM have a reduced futurepurchase probability (East, Hammond, & Lomax, 2008; Lau & Ng, 2001), are morelikely to switch (Ferguson, 2006) and to evaluate services negatively (Herr, Kardes, &Kim, 1991). NWOM is reported to impact on a number of important metrics,including customer acquisition (Sharp, 2010), customer retention and loyalty (East,Hammond, & Gendall, 2006), profitability (Reichheld & Teal, 1996) andorganisational reputation (Cheng, Lam, & Hsu, 2006; Wangenheim, 2005).Haywood (1989) reports the case of a business that went into receivershipfollowing NWOM based on reports that it was the source of an outbreak ofLegionnaire’s disease.

Given the relatively high costs of customer acquisition (Hart, Heskett, & Sasser,1990), companies may work to reduce NWOM by performing excellent servicerecovery (Haywood, 1989; Levesque & McDougall, 1996, 2000; Maxham, 2001;Webster & Sundaram, 1998) and prevent significant customer churn (Folkes, 1984;Folkes & Kotsos, 1986). Fornell and Wernerfelt (1987) point out that generouscomplaint management practices can convert a negative customer experience intopositive benefits for the firm, as saved customers extol the virtues of their servicerecovery experience and refuse to engage in NWOM.

The Internet, with its potential to accelerate the spread of both PWOM andNWOM through social networks, has sparked further attention on both PWOM orbuzz (Brown, Broderick, & Lee, 2007; Dellarocas, 2003; Godes & Mayzlin, 2004;Jones, Damon, Aiken, & Boush, 2009; Litvin, Goldsmith, & Pan, 2008; Mayzlin,2006; Vilponnen, Winter, & Sundqvist, 2006), and NWOM or bad buzz (Bambauer-Sachse & Mangold, 2011; Sun, Youn, Wu, & Kuntaraporn, 2006; Thomas, 2004).

This literature review shows that despite the long history of research into WOM,we have relatively little insight into how organisations understand and attempt tomanage NWOM, whether generated directly by customers as a result of theircustomer experience or in other ways. Though a number of authors cited abovehave suggested generic strategies for responding to NWOM, we have no insight intohow different organisational roles, departments or work groups – particularly thecustomer-facing work groups – are touched by, and try to reduce or disable, NWOM.To the best of our knowledge, no one has conducted organisational research into howNWOM is understood and managed by different hierarchical levels and differentwork groups.

Our goal in this research is therefore to understand more about how organisationsunderstand and respond to the perceived threats of NWOM. On the basis of ourresearch, we make a number of contributions to marketing knowledge andrecommendations for managers.

Research design

We conducted a multiple case study. Case study research is a suitable method ofinquiry for investigating contextually varied phenomena. Case study sits within thecritical realism paradigm and is essentially inductive theory building research (Yin,2003), focusing on understanding the dynamics present within single settings(Eisenhardt, 1989). Further, case study replies to the desire to understand complex

Williams and Buttle Managing negative word-of-mouth 3

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

social phenomena and ‘real life events’ in depth (Yin, 2009, p. 4). As Yin (1984, p.45) stated, ‘a case study is an empirical inquiry that investigates a contemporaryphenomenon within its real life context when the boundaries are not clearly evidentand in which multiple sources of evidence are used’; these sources can includearchives, interviews, questionnaires and observations (Eisenhardt, 1989). WOM issuch a phenomenon, where the boundaries and context are unclear, and hence thecase study method is appropriate.

Perry, Reige, and Brown (1999) consider case study method to be well suited forexploratory marketing research, where it has been widely deployed (e.g. Belk, 1988;Gremler, 1994; Gwinner, Gremler, & Bitner, 1998). In-depth case studies ofexemplar firms or industries are considered appropriate when inductive reasoningunderpins theory development, as in the case of this research (Karami, Rowley, &Analoui, 2006). Our research was undertaken in three organisations havingoperations and offices in Australia, two of these being international head offices.The companies studied are a regional energy company and two multinationalorganisations – one from the financial services sector and the other from the non-profit (NP) welfare sector. The two service organisations each have consumer andbusiness divisions. The NP organisation is reviewed from its donor managementperspective.

Primary data sources and data collection methods comprised interviews withindividuals, observation and additional texts as described in Scapens (1990). Weused snowball sampling to gain access to interviewees, having initially gained accessat the highest levels of those organisations. We used multiple triangulations (Stake,2010) to provide a clearer understanding of the NWOM phenomenon. The greaterthe diversity and quantity of data, the higher is the level of confidence in the validityand utility of the research findings (Patton, 2002; Webb, Campbell, Schwartz, &Sechrest, 1966). To enhance data diversity and quantity, interviews with a widevariety of organisational members were triangulated against internal documentationincluding marketing plans, customer satisfaction reports, training manuals forcustomer-facing employees, correspondence, emails and memoranda, and otherpublicly available materials such as company annual reports, newspaper stories andcreative communications including television commercials. Where possible thesematerials were entered into N-Vivo, the qualitative coding and text-analysissoftware that we used as both data repository and analytical toolkit.

We conducted 54 face-to-face informant interviews (as described by Lindlof andTaylor (2010)) with 33 respondents. These were purposive and theory-driven (asdescribed by Miles and Huberman (1994)), conversational and loosely structured (asrecommended by Rubin and Rubin (2005)) and based on a pilot interview guidepretested with three professional contacts, one from each organisation.

WOM was explored from the point of view of different actors in a range ofdepartmental roles. Interviews were conducted with executive-level managers,customer management, call-centre, sales, advertising, marketing and public relationsprofessionals with varying levels of tenure, position and responsibility and lastedbetween 45 and 75 minutes. Interviews were recorded with participants’ permissionand transcribed.

These interviews provided the opportunity to explore departmental inter-relationships and the complexities of organisational customer managementprocesses (Bonoma, 1985; Gilmore & Carson, 1996; Lincoln & Guba, 1985;Perry, 1998) (Table 1).

4 Journal of Marketing Management, Volume 00

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

We also performed 11 hours of participant observation (Denzin, 1978) in contextsselected through purposive sampling (Teddlie & Yu, 2007). All three organisationswere participants in a forum called ‘Customer Futures’ at which a small number ofinvited senior executives from selected organisations met six times a year to discusscustomer loyalty metrics and prevention of customer churn. We also participated inthat forum. Other participant observations included the following: a meeting of thesenior sales force management team from the energy company where the mainagenda item was sales force response to customer dissatisfaction over outsourcedcontract work; a meeting of members of the financial services company’s sales forcewho were discussing how to respond to NWOM generated by competitors; a meetingof the financial services company’s research department that was discussing customersatisfaction scores; a meeting with a group of the NP’s volunteers and donors todiscuss their concerns over poor donor-related information which was resulting inreduced donation activity. Other participant observations included attendingmarketing and communication meetings and customer events and working withcommunication teams. These either confirmed our interview findings or promotednew understandings (Daymon & Holloway, 2011; Sanday, 1979).

Additional sources included organisational documentation and correspondence,newsletters and brochures, videos and television commercials, presentations,websites, intranet sites and strategy sheets that included some competitiveliterature. These sources were analysed to ‘corroborate and augment evidence

Table 1 Management levels interviewed by case.

Employee levels Financial case Energy case NP case

GeneralManager/CEO

Credit cards (1) Consumer/businessmarkets (2)

Commissioner (1)

Head of

communications (1)

Head of operations (1)

Chairman ofvolunteers (1)

Sales Directors Consumer/business (2) Consumer/business(2)

Corporate Gifts (1)

MarketingManagers

Retention/acquisitionmanagers (2)

Marketingmanagers (3)

Direct marketingmanager (1)

Database manager (1) Bequests acquisitionmanager (1)

Manager CorporateGifts (1)

Advertising/PR Head of PR (1) Head of PR (1) Head of PR andadvertising (1)

Head of Advertising (1) Head ofAdvertising (1)

PR exec (1)

Call centremanager

Operations head (1) Operations head (1) N/A

Team leader (1) Team leader (1)

Market researchmanagers

Head of consumerresearch (1)

Researchmanager(1)

N/A

Total 11 12 10

Williams and Buttle Managing negative word-of-mouth 5

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

from other sources’ (Yin, 2003, p. 87) and to enhance construct validity (Yin,2003). This established a convergent line of inquiry throughout the datacollection phase, with a clear connection to the methodological procedures suchas the in-depth interviews, the transcripts, existing literature in the researchdatabase and the quotations embedded in this article (Rubin & Rubin, 2005).Reporting the respondents’ own words leaves the reader in no doubt as to thesources of information (Yin, 2009). In addition, using the interviewees’ ownvernacular helped shape the analysis of the data (Lewin & Johnston, 1997), andhaving the interviewees validate their contributions through debriefing sessionscontributed to improving the quality of analysis (Yin, 2009). We also asked keyinformants to review a draft analysis of their interview to ensure that theircontributions had been accurately captured. The quality of our analysis wastherefore judged by the interviewees themselves (Perry et al., 1999; Yin, 1984).

A multi-step process of data analysis was conducted. We initially used a literature-based coding list and subsequently added themes not evident in the literature. Wethen reviewed our data several times, assigning representative codes. Following this,we developed primary conceptual categories, writing notes under each, summarisinginsights and noting patterns. This analysis uses a combination of grounded theory(Glaser & Strauss, 1967; Strauss & Corbin, 1997) and Miles and Huberman’s (1994)pattern-matching approach. Following Ferreira and Merchant (1992), we attemptedto explicitly link the observations to the existing body of knowledge.

Two forms of analysis were performed: within-case and cross-case analysis(Daymon & Holloway, 2011). The cross-case analysis, guided by Creswell (1997),brought together the findings and the literature. Much of the intra-case and cross-case qualitative analysis was guided by the ‘method of constant comparison’ (Yin,2003), with theory construction driven by the similarities and differences within thedata. N-Vivo served as data repository and analytical tool.

Results

The findings show that an elevated importance is given to negative WOM comparedto positive WOM. NWOM dominates the thinking, strategising and practices of allthree organisations; PWOM is very much a subordinate concern. The rest of thissection of our article focuses on presenting what we learned about how theseorganisations recognise and respond to negative WOM whether generated as aconsequence of customer experience or activated in other ways. We make acontrast with PWOM-oriented thinking, strategising and practices whereappropriate. We embed extracts from the transcripts to illustrate and emphasise anumber of issues. Based on these case studies, we present three main findings: (1)suppressing NWOM is significantly more important than promoting PWOM; (2)different organisational roles respond to NWOM in different ways; (3) the NP has adifferent understanding of, and approach to, NWOM, compared to the for-profitorganisations. We now explore these findings in more detail.

Finding 1: Suppressing NWOM is significantly more important than promotingPWOM

These three organisations are much more concerned with suppressing NWOM thanthey are with promoting PWOM. While management understands that sparking

6 Journal of Marketing Management, Volume 00

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

PWOM could provide benefits to their organisations, their fear of NWOM issignificantly stronger, leading them to dedicate more resources to NWOMreduction or elimination. The potential impact of NWOM on revenues, customerretention and reputation is widely recognised.

We found that NWOM arises from two main sources – customer dissatisfactionand external media comment. There is also some concern about a third source ofNWOM that seems to our informants to be becoming more significant – competitor-activated NWOM that seems particularly pronounced when organisations arelaunching new products and services. Our participants believe that NWOM occurspredominantly through customer dissatisfaction, particularly due to failed servicedelivery. Customer dissatisfaction with the organisation’s offerings has the potentialof spreading NWOM amongst customers’ social networks. This discontent can alsobe picked up by competitor sales forces and leveraged.

NWOM from dissatisfied customers or activated by media comment are boththought to affect company reputation and to estrange customers, prospectivecustomers and other stakeholders. Failure to respond well to customer complaintsis thought to be especially influential in creating NWOM. For the regional energycompany, state government is an important stakeholder, and management fears thatNWOM driven by customer dissatisfaction will result in greater governmentintervention in operations. Although customer complaints normally affect theparticular departments implicated, NWOM from adverse media comment canaffect the whole organisation, and therefore, crisis or issues management processesare employed in all three organisations. A manager from the financial servicesorganisation told us:

The negative stuff can happen, especially from a branded perspective, you getmedia on your case and it can cripple two or three years work. Issuesmanagement is as critical a part of a marketing mix as any other form ofpromotion because, there’s many statistics to prove it, but you could spendmillions and millions of dollars building a brand which is what we’ve done overthe years and it can get destroyed in one day by media. (EE20 100)

Managers in these organisations think that a desirable though informal goal is tosurround the organisation with PWOM. While this can be achieved by igniting goodpublicity, it can also be achieved by extinguishing bad publicity. Of the two,suppressing bad publicity and the associated NWOM is the more salient activity.Our for-profit organisations use customer relationship management (CRM) systemsand processes to promote enhanced customer tenure and satisfaction, butmanagement deploys CRM to combat customer complaint behaviours and reduceor extinguish NWOM, rather than promote PWOM.

The for-profit organisations acknowledge that PWOM can occur if dissatisfiedcustomers’ complaints are resolved to the customer’s satisfaction. This can lead tocustomers reaffirming their loyalty and uttering PWOM towards the organisation orits employees. However, unresolved complaints can escalate further with significantadverse effects. Unlike the NP, the two for-profits have developed complaints-handling processes. However, all three organisations have experienced NWOMspreading beyond the local environment and in some cases eventually beingreported and even championed by the media.

The mitigation of adverse publicity and NWOM provoked by media comment iscritically important to all three organisations. Negative media commentary about

Williams and Buttle Managing negative word-of-mouth 7

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

organisational behaviour – what the organisation does or does not do – has touchedall three organisations, threatening management stability, degrading employee moraleand adversely influencing their operational performance and reputation. In the for-profits, PR departments, working in collaboration with senior management, activatecrisis management procedures in response to negative media comment. In addition,internal PR communication procedures seek to control employee responses, toprepare them to field consumer and media questions or to maintain total silence.

NWOM is also associated with competitors’ counter-marketing practices,particularly when a competitor’s sales force is launching new products or servicesand wishes to denigrate our participants’ offerings. Our informants believe this isbecoming more commonplace, even to the extent of competitors inventing bad newsstories.

Finding 2: Different organisational roles understand and respond to NWOM indifferent ways

In this section, we report how different roles in our sampled organisations recogniseand respond to the perceived threat of NWOM and the resources, strategies andpractices they deploy to mitigate its effect.

Senior (executive-level) management

Senior managers understand that the NWOM associated with customerdissatisfaction, customer complaints and media criticism is a threat to businessperformance, but believe that once in the public domain, NWOM is ‘out of ourcontrol’. This perceived lack of control is a particular fear for the energy companysince its major stakeholder is the state government, which ramps up the anxiety intimes of widespread customer dissatisfaction or media scrutiny. An energyorganisation respondent said:

Our competitors don’t suffer the same GOC [Government Owned Corporation]problems, certainly in our business. None of our competitors care if they’re onthe front page of the paper. They don’t have the investment in brand. They don’thave political shareholders who can be damaged by one domestic customer.(EE60 200)

A common senior management practice is to develop key performance indicators(KPIs) and a reporting regime around NWOM-related variables. Senior managers inthe two for-profit organisations regard complaints volumes and resolution asimportant KPIs. Volumes and resolution rates are reported directly to seniormanagement including the CEO on a weekly basis. Unresolved and escalatedcomplaints are tracked via their CRM systems and monitored until theirsatisfactory resolution (from the company’s perspective, not the customer’s, wenoted!). An energy respondent said:

We have set management processes for complaints which are designed toresolve customer issues. Complaints are a key concern and are what theorganisation is charged with reducing at all costs. (EE 60-20)

However, senior managers are even more concerned about media comment that canhit the organisation ‘out of the blue’. A manager remarked:

8 Journal of Marketing Management, Volume 00

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

We don’t like media comment, it gets out of hand and we can’t control it when itdamages our reputation. (SS4 234)

Although they are fearful of NWOM, senior managers are highly sceptical that it canbe managed if a story takes off in the media. Equally, senior managers are also quitecynical about the influence of PWOM on customer behaviour or acquisition. Theyhave little respect for the way sales team members or customer service representativesreport the source of new business. An energy company interviewee told us:

We don’t have perfect measurement. It relies on the CSR’s pressing a button formarket source, but in market source we do have a big number for WOM. We’renot quite sure if that’s an accurate figure because we think that might be justthe easy button to press, as opposed to where did you hear about us, they’ll justnaturally go WOM and press it as opposed to asking the question. So we’ve got abit of an issue with getting our people to ask the right question. (EE50 748/EE20 215)

While willingness-to-recommend measures are taken during customer satisfactionresearch, operational metrics are preferred to WOM measures because managersfeel they have more control over actions that can lead to improvements. Across allthree sampled organisations, there is no explicit measurement of either PWOM orNWOM.

Public relations

PR managers in all cases view NWOM as a constant threat. They even tend to be ontheir guard during planned publicity events, in case something goes wrong. Eventparticipants receive training and rehearse their roles to ensure beneficial outcomes forthe organisation:

Senior managers do (receive training) because they’re often the ones who say‘oh shit, some journo wants to talk to me because I’ve done something bad, orthey want to crucify me’. (EE20 120)

In the for-profit cases, crisis management and issues management are recognised asimportant by every department. However, PR ‘owns’ these strategies. PR argues thata good deal of their time is spent in defending against NWOM rather than promotingPWOM. PR is central to crisis management and coordinates directly with the CEO inthe organisation’s defence. PR also responds to any need for defensive action in timesof complaint escalation, particularly when customer grievances are ‘adopted’ by themedia. PR personnel are seasoned journalists who are employed because of theirabilities, relationships and media networks. They understand which media and whichcontacts are most likely to provide a pro-organisational perspective. An energycompany respondent said:

You can measure specific journalists because you’ll find that certain journalistsconsistently are on the negative side of things. For a particular organisationothers are consistently on a positive side, so you know where to do the work,you know where to maintain your relationships. You know where to buildstronger ones. (EE20 315)

Williams and Buttle Managing negative word-of-mouth 9

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

When negative media comment arises, typically without notice, the PR departmentswings into action. Working with the CEO, they analyse the media reporting and,depending on their assessment of the severity of the issue, they prepare defensivestrategies and send directives throughout the organisation. PR may place embargoeson employee contact with the media, ensuring the organisation speaks with one voiceor says nothing (see also Table 2). A respondent from the financial services companyexplained:

When we get hit by media contagion, PR are at the centre of it. We work with theCEO, whoever, and we do our bridging, then we go hard into defending ourposition. (AA6-134)

PR ensures that ‘bridging’ arguments are prepared and alternative ‘angles’ considered(see Table 2). An energy company respondent said:

Table 2 NWOM phases in a crisis.

Phases in acrisis Financial case Energy case NP case

Early warningsystem

External PR agency,Internet, news feeds

External PR agency,online, news feeds

Employee‘intuition’

Field-force datacollection

Crisispreparation

‘Worst-case’ scenarioswork-shopped, regulardepartmental riskassessments

‘Bridging’ strategieswork-shopped, riskassessments

N/F

Journalist/channelidentification

Journalist/channelidentification

N/F

Crisiscontainment

PR department lead withCEO, employee script‘bridging’ strategyformulation, may alsoinvolve legal departmentand media liaison caninvolve CEO

PR department leadwith CEO, ‘bridgingstrategies’formulation andemployee mediatraining and PRsupervision. Medialiaison can involvethe CEO

PR departmentlead, nomandatedCommissionerinvolvement

Set internal protocols andemployeecommunication

Set internal protocols,and employeecommunication

Internalprotocols

External liaison withmedia

External liaison withmedia

No medialiaison/one-waycommunication

Learning fromthe experience

Internal and externalactions assessed

Internal and externalactions assessed

N/F

Customer exit research N/F N/F

Note: N/F = Not found.Source: Adapted from Mitroff and Pearson (1993).

10 Journal of Marketing Management, Volume 00

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

You work out your bridging. Politicians live it, it’s one great big mediamanagement exercise is what they do, it should never be forgotten, it is anabsolutely critical part. (EE20 215)

Online NWOM is a great worry to our PR participants. PR staffers watch theInternet for material that might stimulate NWOM. They monitor blogs, socialnetworks, chat-rooms, customer forums and sites like crikey.com for negativesentiment. None of our three organisations have found effective methods ofcounteracting this form of NWOM, as they believe they have with traditional printand broadcast media. A PR manager in the NP explains how she coped with anegative news story:

The process meant I handled all logistics for an Australian BroadcastingCorporation program [name de-identified] and put in place a very strictprotocol in relation to enquiries when they came in. Everybody was informed,the divisions, (our) Care Line and we kept it very tight… not only through themedia but we had that information in place internally right through (theorganisation) to ensure that everybody was singing from the same song sheetand negativity isn’t. (SS5 85-98)

Advertising

Advertising team members in our three organisations think they have little in theirarmoury to counter NWOM at times of crisis – other than to remain silent. They do,however, take some remedial action, such as pulling scheduled advertising,abandoning sponsorships and reverting to a focus on core competencies. Some ofour participants believe that media expenditure to counteract NWOM ‘will achievethe opposite’. A respondent from the energy company told us:

There’s absolutely no point is doing anything. The damage is often so great thatit’s better to do nothing. It’s a waste of money pouring good money after bad totry and retrieve the situation. It’s better to wait and just rely on what [reputationreserves] you’ve got. (AA60 -332)

The energy company buys space in local newspapers to prevent NWOM whenmaintenance of infrastructure and local road works are likely to inconvenience thepublic. The financial services organisation places advertisements and uses direct mailto prevent misuse of their card products and subsequent NWOM.

Marketing

Marketing becomes involved in the PR and advertising processes that touch onNWOM. For instance, a major worry for the energy company is the NWOM thatit experiences when carrying out infrastructure development or maintenance. Thiscan cause the public and customers considerable inconvenience, either throughdisruption in supply or delays and diversions when using the roads. To counteractNWOM effects, marketers have developed CRM mapping software that identifiesgas pipelines and the households or traffic that might be affected by maintenancework. This is used to target messaging at appropriate householders with direct mail,telemarketing, advertising and sign posting, and to alert local services. The financial

Williams and Buttle Managing negative word-of-mouth 11

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

services company knows that reduced use of the charge card is often associated withdissatisfaction and may be an advance indicator of NWOM. Consequently, theylaunch event-based direct and email marketing campaigns triggered by significantdeclines in customers’ use of the charge card.

A particular strategy marketers use to counteract NWOM is the ‘Cause-RelatedMarketing’ campaign, which aligns the organisation with a third-party, usually acharity or NP organisation. Sponsorship of those third parties is a feature of Cause-Related Marketing campaigns. An energy company manager stated:

There’s 100% awareness [of the energy company’s brand] but ongoingmaintenance because from time to time the lights go out as they doeverywhere. Now our objective (of using sponsorships) is to build ‘a bank ofgoodwill’ and we’ve been particularly successful in this. We’ve built a bank ofgoodwill through supporting various community activities … selectively.(EE20 200)

The marketers in our research also reveal that the value propositions offered tocustomers are sometimes themselves responsible for customer-generated NWOM.When customers compare past service levels to current service levels that have beenreduced due to cost cutting, NWOM is stimulated, affecting new customeracquisition.

Sales force

Sales teams encounter NWOM when they learn about business customerscomplaining to competitors’ sales people, particularly about service dissatisfaction.This form of NWOM provides competitors with ammunition to attack our sampledorganisations. NWOM also occurs when competitor sales forces attempt to findnegative arguments about our organisations’ new products and services. Ourinformants told us that they themselves engaged in the same ‘badmouthing’practices and that this sometimes provides opportunities for new customeracquisition and sales or, in the case of the NP, donations. NWOM fromcompetitors is considered a significant threat to sales to newly acquired customersand potentially damaging to the organisation’s reputation. A manager from thefinancial services organisation said:

Our competitors are putting out stories about [us]. I was recently going upagainst Bank 1 and Bank 2’s [names de-identified] sales people, who weredefinitely putting a story out which was a story about [us] which wasinconsistent with what we try to put across – introducing the element of doubtin our customers’ minds… and not doing our reputation any good. (AA7 178-186)

The sales forces collect data about the NWOM-stimulating actions of competitors’sales forces and discuss retaliatory action at sales meetings. The financial services salesforce has experienced significant NWOM jolts from previously loyal customers. Thisreflects their failure to identify and respond to customer dissatisfaction. In oneextraordinary case, a corporate client of the financial services organisation hadbeen recruited to deliver a positive endorsement of the service organisation’scapabilities at an industry-sponsored event. Instead, in front of a room full ofprospects, this ‘advocate’ did the opposite. Furthermore, a second clientcontributing one sixth of the service organisation’s turnover, a client they had

12 Journal of Marketing Management, Volume 00

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

believed was ‘a certainty’ to generate PWOM, was lost when it went with acompetitor instead, simultaneously delivering NWOM when asked to endorse theorganisation, as explained in this extract:

We lost a big opportunity for us, I mean big, from a referral that went sideways.Our processes were all over the place. A testimonial which should have goneour way went the other direction when our service delivery was questioned. Alot’s being done, but it’s a bit late. We hadn’t checked our references. (AA10)

These events have motivated the financial services firm to consider reconfiguring itsvalue propositions (including relaxing the conditions of their locked-in servicecontracts) and revising its customer satisfaction monitoring and customertestimonial processes. On an account-specific level, the financial serviceorganisation’s sales managers call customers whose charge buying has significantlydeclined to identify the cause and to nip potential NWOM in the bud. They alsoattempt to resolve problems by offering loyalty incentives.

Contact centre

The contact centres’ CRM processes are more focused on customer complainthandling than other activity such as cross-selling and up-selling. A high percentageof agent workload involves dealing with customer complaints and customerdissatisfaction. The energy organisation has implemented CRM processes thatdiscourage low-value customers from making telephone contact with the servicecentre, pushing them into online self-service, which has itself been a cause ofcustomer complaints and NWOM.

When the financial service organisation’s customers’ use of their charge carddeclines, managers are alerted through the CRM system (see Table 3) and triggercampaigns are initiated by marketing. These are supported by outbound calls, whichare not only designed to boost customer expenditure and strengthen the customerrelationship, but also to identify sources of customer dissatisfaction before theybecome sources of NWOM aired in the customer’s business and social networks. Acontact centre manager explains:

We also do trigger campaigns so when we can see expenditure is going downwe will proactively phone up and find out whether there is a problem, ‘what’sthe problem?’ and try and proactively resolve that. (AA5 115-117)

Speedy resolution of complaints is of vital importance to the two for-profitorganisations. Contact centre employees are empowered to resolve complaintswithin certain cost constraints without referral to a senior colleague. An energycompany respondent said:

We have a filter. The first filter that comes through the call centre, and I say tothem you have the authority to fix the complaint there and then, if you can, andas long as it’s not going to cost us a fortune. Use your best judgment. If they candeal with it there and then, bang, it’s finished with. Only when they can’t dealwith it, does it come to me. (EE60 300)

A ‘win-back’ customer recovery process and ‘win–win’ outcomes are pursued withvigour. A financial services employee stated:

Williams and Buttle Managing negative word-of-mouth 13

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

It’s about turning that complaint into a positive. I wasn’t about to say ‘Wellyou’re wrong’… in the end the customer was quite happy, it was a Win–Winsituation and that’s what we want. (EE30 300)

So entrenched is the customer’s expectation that complaints will be handled by theorganisation’s more senior staff, that the financial services firm has created a cadre of‘pseudo-managers’.

Table 3 NWOM management processes (adapted from Davies, Chun, Da Silva, &Roper (2003)).

Negative WOMmanagementtools Financial case Energy case NP case

CRM continuingcustomertransactionalanalysis

Customer ‘charge buying’defection analysis,trigger campaigns/loyalty incentivesoffered

Customer value ‘Cost-to-serve’ analysis

N/F

Customer facingemployeetraining

Customer servicefocused 100%satisfaction

Customer servicefocused

Welfare clientfocused

CRM ‘touchpoints’ system/complaints

CRM tools Additional tools andcrisis managementinfrastructure

N/F

Complaintshandling

First receiver handlescomplaint to ‘speedy’solution with win/winoutcomes

First receiver handlescomplaint, if possible,fast solution with win/win outcomes

N/F

Complaintsprocesses

Set identification/solutionprocedures

Set identification/solution proceduresthrough customer –facing departmentsand third parties

N/F

Task forces appointed

Complaintsescalationmanagement

‘Pseudo’ managersappointed /categorymanagers drafted,loyalty incentivesoffered

Skilled line managersdrafted/incentivesoffered

N/F

Media liaison Relationships built withjournalists

Skilled journalists hiredto relate togovernmentstakeholders and tomedia

ThroughAdvisoryBoard with PRmanagement

ManagingDirectorinvolvement incrisis

CEO and PR (and legaldepartment)

CEO and PR dept Commissionernotnecessarilyinvolved

Note: N/F = Not found.

14 Journal of Marketing Management, Volume 00

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

Our service levels are a key concern for us, we have our (US) bosses beratingus. Although our service levels have improved a lot we still have to employtactics like promoting employees to higher roles than they are to keepcustomers happy and resolve complaints. (AA5 215-230)

Customer service representatives receive continual customer service training thatstresses speedy complaint resolution and promotes ‘100% customer satisfaction’ asa means of reducing NWOM and churn. A financial services participant explains:

Making customers as happy as quickly as possible. We have to ensure we havean appropriate exchange of value and that we are determined to keep theirbusiness. We have to reassure them of that. We don’t want them to switch.(AA6 446)

Finding 3: The NP has a different understanding of, and approach to, NWOM,compared to the for-profit organisations

While the for-profit organisations use resources such as their CRM systems, andprocesses such as crisis management and complaints management, and media-skilledpeople to diminish and weather the most severe impacts of NWOM, the NP has nosuch resources, processes or expertise in place. Donor satisfaction – the NP’s proxyfor customer satisfaction – is not considered critical. Indeed, it is rarely raised as anissue. Strategies to counteract NWOM from complaining donors have not beendeveloped.

Donor attrition, due mainly to aging, is an increasing problem for the NP.Donors are simply allowed to lapse. Though changes to donors’ addresses aretracked through external database overlays, after 3 years of non-response, contactis discontinued. No donor dissatisfaction systems or processes are in place.However, the NP is increasingly conscious of its relationships with its volunteer‘sales force’ on which its annual door-knock and business fundraising relies. The NPhas identified significant dissatisfaction and NWOM because of breaks inrelationship continuity when its officers, who assist the volunteers, are moved onto new positions. However, it has done nothing to address relationship concernsamongst volunteers.

Unlike the for-profit cases, PWOM surrounds the NP’s work. However, the NP isdeeply concerned about NWOM generated by harmful media comment as thisthreatens its relationships with key stakeholders and important influence groupssuch as the federal government, corporate donors and higher net-worth prospects.Thus, the NP’s emphasis is on protecting the organisation’s reputation and not‘breaking the public’s trust’. The NP has been able to directly link negative mediacomment to significant reductions in donations. Further, when the NP’s competitors,other charitable organisations, experience negative media comment and associatedNWOM, the reputations (and thus the fortunes) of the sector as a whole suffer, theconsequence being significant reductions in fundraising across NPs generally.

While the for-profit organisations recognise that NWOM is associated withcustomer churn, stock market devaluation or industry resentment, the NP isfocused solely on the consequences of NWOM for its reputation and its directimpact on finances.

Williams and Buttle Managing negative word-of-mouth 15

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

Discussion

This research has produced three main findings: (1) suppressing NWOM issignificantly more important than promoting PWOM; (2) different organisationalroles respond to NWOM in different ways; (3) the NP has a different understandingof, and approach to, NWOM, compared to the for-profit organisations. We nowdiscuss the implications of these findings for theory and management.

Implications for theory

This exploratory research adds to marketing scholarship in three significant ways.First, we have a better insight into the general orientation of organisations towardsWOM. These three organisations believe that NWOM can cause significant damage.The complaint management literature suggests that defensive marketing – thereduction of customer churn due to dissatisfaction or other causes – is bothdesirable and profitable (Davidow, 2003; Nyer & Gopinath, 2005). Our for-profitcase organisations highlight their efforts to resolve complaints, thereby decreasingNWOM and customer churn. Further, their CRM processes are biased towardsmanagement of NWOM, as opposed to the stimulation of PWOM, which theyclosely associate with customer loyalty, or cross-selling and up-selling. Thischallenges management theory that suggests that CRM is largely focused onbuilding long-term valuable relationships with customers (Buttle, 2003; Campbell,2003; Zineldin, 2006). Our sample organisations believe that media-hyped NWOMcan cause massive reputational damage, as well as have negative effects on employees.A large body of research (Cravens & Oliver, 2006; de Chernatony, 1999; Dowling,1993; Gotsi & Wilson, 2001; Kennedy, 1975; Shamma & Hassan, 2009; Stuart,1999) suggests that employees play a very important role in shaping an organisation’sreputation. Declining employee morale under the assault of negative media commentcan therefore be very damaging to organisational reputation. Managers worryparticularly about NWOM in the online environment, where they believe theyhave even less control. In general, across these three organisations, managerial timeand talent, organisational resources such as CRM technologies and processes such ascrisis management are dedicated to handling NWOM. There is relatively insignificantallocation of people and resources to igniting and maintaining PWOM.

Second, to the best of our knowledge, this is the first article to explore in case-richdetail what different roles, departments and work groups within individualorganisations think and fear about NWOM. We now know, for example, thatsenior management is alert to the link between customer retention and profitabilityand is therefore committed to reducing customer dissatisfaction and its associatedNWOM. PR departments worry more about NWOM’s impact on organisationalimage and reputation, whereas sales teams fear the impact of NWOM on newbusiness acquisition and existing customer loyalty.

Third, this article presents new insight into how different roles, departments andwork groups respond to NWOM. For example, while senior management commonlydevelop KPIs and a reporting regime around NWOM-related variables, PRpractitioners own and implement the crisis management and issues managementprocesses that our sampled organisations believe are central to preventing NWOMcontagion. Marketers, however, look for advance indicators of NWOM so that they

16 Journal of Marketing Management, Volume 00

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

can run pre-emptive campaigns or engage in reputation-enhancing Cause-RelatedMarketing.

Our research is indicating a potential synergy between two streams of marketingliterature: the WOM literature and the corporate reputation literature. Further, thisstudy also goes some way to marrying the WOM and crisis management literatures(Coombs, 2007).

Implications for management

Our findings have three major implications for the management of WOM; thesefocus on leadership, organisational readiness and PR management. First, theorganisation’s leadership needs to be alert to the possible consequences of NWOMfor customer loyalty, customer acquisition, brand equity, organisational reputation,employees’ morale and management tenure. Business leaders should have theirfunctional managers identify appropriate KPIs that track both NWOM and theconditions that trigger NWOM such as customer dissatisfaction, service failure,product recalls, breaches of law or voluntary codes of practice, publication ofbenchmarking data and upcoming adverse news coverage. There are neitherNWOM nor PWOM measures in our case organisations. Some companies, thoughnot our case organisations, use Net Promoter Score to measure WOM behaviours(Netpromoter, 2011; Reichheld, 2003), though this metric has been subject to somecriticism (Keiningham, Cooil, Andreassen, & Aksoy, 2007). Leadership should also beprepared to invest in technologies (e.g. CRM), processes (e.g. complaintsmanagement, crisis management) and talent (e.g. PR) that will enable theorganisation to monitor NWOM and respond appropriately. Furthermore, seniormanagement should take a lead role in rebutting negative media comment, workingin close partnership with PR and following proven PR practices (Pearson & Clair,1998). For leaders to prevent or fix NWOM, there also needs to be a focus on issuesdetermination, risk assessment and risk management.

Our second managerial recommendation is that there should be organisation-widealertness to the potential damage that NWOM can cause and readiness to respond. Aswe have shown, NWOM can touch many different work groups in an organisation ina number of unattractive ways. Education and training can stress how NWOM andPWOM are connected. Efforts to diminish NWOM by resolving complaints to thefull satisfaction of the complainant may result in PWOM (Ang & Buttle, 2006; Stauss& Seidel, 2004; TARP, 1986). The reverse can also happen, when attempts togenerate PWOM, ineptly performed, have unintended consequences for NWOM(Roberto, 2011). Managers who learn to identify advance or even concurrentindicators of NWOM are better positioned to guide senior managers and PRdepartments to dust off and rehearse their crisis management procedures and totrain and script customer service agents to deal with incoming calls.

Being organisationally ready to respond to NWOM requires managers torecognise the conditions that give rise to it, for example a failing service deliverysystem or damaged relationships with key influencers. Key influencers are well-networked individuals who exert WOM influence on others and motivate them tobehave in particular ways. The financial services case shows how key influencers canturn face. Service organisations often find it hard to deliver consistent, customer-satisfying, service. Developing and implementing a customer recovery program isessential if NWOM connected to service dissatisfaction is to be nipped in the bud and

Williams and Buttle Managing negative word-of-mouth 17

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

the customer retained (Hart et al., 1990; Maxham, 2001). Organisational readinesscan also be enhanced by learning practices that have been successful in otherindustries (Williams & Buttle, 2011). For example, the financial services firm usessales force-based processes to sense and collect NWOM in the field, and its CRMsystem to launch trigger campaigns if account activity seems unusually quiet.

Our third managerial recommendation is that PR should take a lead role incoordinating and responding to NWOM, particularly when the organisation isexposed to negative media sentiment or comment. PR can then liaise with otherbusiness units, such as advertising, marketing, sales and customer service. Althoughall three case organisations are aware of the possibility of online NWOM, they areunfamiliar with ways to monitor and respond to it. PR, advertising and marketingpractices are also changing because of the shift from traditional to online media, andmanagers must learn new skills and become familiar with new tools (Buttle, 2010).

Limitations and opportunities for future research

There are two particular limitations to this research. First, we only investigated threecases, and as is common in case study research, we make no claim torepresentativeness or generalisability (Smith, 1978; Yin, 2009). However, our casestudies have, we believe, provided a ‘nuanced view of reality’ (Flyvbjerg, 2006, p.223). Second, although this research involved 3 years of engagement within thesubject organisations, it was impossible to interview all parties that might have hadviews on the significance and management of WOM. Data collection was confined toexecutives and managers working within the three subject organisations and did not,with one volunteer donor exception, include customers or donors.

Future research may involve further exploration of our research questions inadditional case contexts. As Kuhn (1987) observed, a discipline without a largenumber of thoroughly executed case studies is a discipline without systematicproduction of exemplars, and a discipline without exemplars is an ineffective one.The participants and interviewees in our research held the strong opinion thatNWOM could cause serious damage to customer loyalty, customer acquisition,brand equity, organisational reputation, employees’ morale and managementtenure. Rarely did we view or hear hard evidence of these effects of NWOM. Thisis certainly a question that should be explored further – does NWOM always havenegative or potentially catastrophic impacts? Is it possible to scale NWOM andidentify tipping points at which the weight or severity of NWOM begins to haveundesirable consequences? Our research suggests NWOM could have a moresignificant downside for the organisation than PWOM has upside. This is certainlyworth exploring further. There is also an opportunity to investigate further the cost-effectiveness of the various managerial responses to NWOM, whether event-basedmarketing, public relations, Cause-Related Marketing or anything else.

Conclusions

Organisations in this study are considerably more concerned with suppressingNWOM than promoting PWOM. Senior management fears the downside ofNWOM more than they desire the upside of PWOM. NWOM is regarded as asignificant threat to revenues, customer loyalty, customer acquisition, brand equity,

18 Journal of Marketing Management, Volume 00

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

organisational reputation, employees’ morale and management tenure. NWOMhyped by adverse media comment is a major fear. Consequently, the caseorganisations invest in issues- and crisis management processes. So deep is theanxiety, they monitor the media for negative comment on a day-to-day basis. Whenit is encountered, the PR department swings into action and in association with theCEO produces counter arguments and liaises with pro-corporate media andjournalists. These NWOM processes contrast significantly with their managementof PWOM. Indeed, there is an overriding scepticism that PWOM can be managed.Despite these organisations’ emphasis on NWOM, the true impact of NWOMremains a mystery. Many assumptions concerning NWOM are made in theseorganisations. For instance, they assume that the satisfactory resolution of acomplaint diminishes or extinguishes NWOM. However, no evidence is collected.No measurement is made of NWOM amongst churned customers, nor is there anymeasurement of NWOM from media criticism. There is also an overriding, almostfatalistic, feeling that whatever the organisation does, its efforts to thwart orneutralise NWOM, especially from media criticism, will fall far short of addressingthe problem amongst customers and other stakeholders.

References

Anderson, E. W. (1998). Customer satisfaction and word of mouth. Journal of Service Research,1, 5–17. doi:10.1177/109467059800100102

Ang, L., & Buttle, F. A. (2006). Customer retention management processes: A quantitativestudy. European Journal of Marketing, 40(1/2), 83–99. doi:10.1108/03090560610637329

Aristotle. (2011). Rhetoric. (G. A. Kennedy, Trans.). Oxford: Oxford University Press.Arndt, J. (1967). Role of product-related conversations in the diffusion of a new product.

Journal of Marketing Research, 4(3), 291–295. doi:10.2307/3149462Bambauer-Sachse, S., & Mangold, S. (2011). Brand equity dilution through negative online

word-of-mouth communication. Journal of Retailing and Consumer Services, 18, 38–45.doi:10.1016/j.jretconser.2010.09.003

Belk, R. W. (1988). Possessions and self. Wiley International Encyclopedia of Marketing, 3.doi:10.1002/9781444316568.wiem03037

Blodgett, J. G., & Anderson, R. D. (2000). A bayesian network model of the consumercomplaint process. Journal of Service Research, 2(4), 321–338. doi:10.1177/109467050024002

Blodgett, J. G., Granbois, D. H., & Walters, R. G. (1993). The effects of perceived justice oncomplainants’ negative word-of-mouth behavior and repatronage intentions. Journal ofRetailing, 69(4), 399–428. doi:10.1016/0022-4359(93)90015-B

Bone, P. F. (1995). Word-of-mouth effects on short-term and long-term product judgments.Journal of Business Research, 32(3), 213–223. doi:10.1016/0148-2963(94)00047-I

Bonoma, T. (1985). Case research in marketing: Opportunities, problems, and a process.Journal of Marketing Research, 22(2), 199–208. doi:10.2307/3151365

Bowman, D., & Narayandas, D. (2001). Managing customer-initiated contacts withmanufacturers: The impact on share of category requirements and word-of-mouthbehavior. Journal of Marketing Research, 38(3), 281–297. doi:10.1509/jmkr.38.3.281.18863

Brown, J., Broderick, A. J., & Lee, N. (2007). Word of mouth communication within onlinecommunities: Conceptualizing the online social network. Journal of Interactive Marketing,21(3), 2–20. doi:10.1002/dir.20082

Williams and Buttle Managing negative word-of-mouth 19

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

Brown, T. J., Barry, T. E., Dacin, P. A., & Gunst, R. F. (2005). Spreading the word:Investigating antecedents of consumers’ positive word-of-mouth intentions and behaviorsin a retailing context. Journal of the Academy of Marketing Science, 33(2), 123–138.doi:10.1177/0092070304268417

Buttle, F. A. (1998). Word of mouth: Understanding and managing referral marketing. Journalof Strategic Marketing, 6, 241–254. doi:10.1080/096525498346658

Buttle, F. A. (2003). Customer relationship management: Concept and tools. Amsterdam:Elsevier, Butterworth Heinemann.

Buttle, F. A. (2010). Social CRM: What is it and what does it mean for your business? Retrievedfrom www.buttleassociates.com

Campbell, A. J. (2003). Creating customer knowledge competence: Managing customerrelationship management programs strategically. Industrial Marketing Management, 32(5),375–383. doi:10.1016/S0019-8501(03)00011-7

Carl, W. J. (2006). To tell or not to tell? Assessing the practical effects of disclosure for word-of-mouth marketing agents and their conversational partners. Social Science ResearchNetwork. Retrieved from http://ssrn.com/abstract=877760

Cheng, S., Lam, T., & Hsu, C. H. C. (2006). Negative word-of-mouth communicationintention: An application of the theory of planned behavior. Journal of Hospitality &Tourism Research, 30(1), 95–116. doi:10.1177/1096348005284269

Coombs, W. T. (2007). Protecting organization reputations during a crisis: The developmentand application of situational crisis communication theory. Corporate Reputation Review,10, 163–176. doi:10.1057/palgrave.crr.1550049

Cravens, K. S., & Oliver, E. (2006). Employees: The key link to corporate reputationmanagement. Business Horizons, July–August 49(4), 293–302. doi:10.1016/j.bushor.2005.10.006

Creswell, J. W. (1997). Qualitative inquiry and research design: Choosing among five traditions.Thousand Oaks. CA: Sage.

Davidow, M. (2003). Have you heard the word? The effect of word-of-mouth on perceivedjustice, satisfaction and repurchase intentions following complaint handling. Journal ofSatisfaction, Dissatisfaction and Complaint Handling, 16, 69–80. Retrieved from http:/lilt.ilstu.edu

Davidow, M., & Dacin, P. A. (1997). Understanding and influencing consumer complaintbehavior: Improving organizational complaint management. Advances in ConsumerResearch, 24, 450–456. Retrieved from http://www.acrwebsite.org/search/view-conference-proceedings.aspx?Id=8085

Davies, G., Chun, R., Da Silva, R. V., & Roper, S. (2003). Corporate reputation andcompetitiveness. London: Routledge.

Daymon, C., & Holloway, I. (2011). Qualitative research methods in public relations andmarketing communications (2nd ed.). Oxon: Routledge.

de Chernatony, L. (1999). Brand management through narrowing the gap between brandidentity and brand reputation. Journal of Marketing Management, 15(1–3), 157–179.doi:10.1362/026725799784870432

de Matos, C. A., & Rossi, C. A. V. (2008). Word-of-mouth communications in marketing: Ameta-analytic review of the antecedents and moderators. Journal of the Academy ofMarketing Science, 36, 578–596. doi:10.1007/s11747-008-0121-1

Dellarocas, C. (2003). The digitization of word of mouth: Promise and challenges of onlinefeedback mechanisms. Management Science, 49(10), 1407–1424. doi:10.1287/mnsc.49.10.1407.17308

Denzin, N. K. (1978). The research act: Participant observation: Varieties and strategies of thefield method. New York, NY: McGraw-Hill.

Desatnick, R. L. (1987). Managing to keep the customer. San Francisco, CA: Jossey-Bass.Dowling, G. R. (1993). Developing your company image into a corporate asset. Long Range

Planning, 26(2), 101–109. doi:10.1016/0024-6301(93)90141-2

20 Journal of Marketing Management, Volume 00

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

East, R., Hammond, K., & Gendall, P. (2006). Fact and fallacy in retention marketing. Journalof Marketing Management, 22(1–2), 5–23. doi:10.1362/026725706776022245

East, R., Hammond, K., & Lomax, W. (2008). Measuring the impact of positive and negativeword of mouth on brand purchase probability. International Journal of Research inMarketing, 2, 175–184. doi:10.1016/j.ijresmar.2008.04.001

Eisenhardt, K. M. (1989). Building theories from case study research. Academy of MangementReview, 14(4), 532–550. doi:10.5465/AMR.1989.4308385

Ferguson, B. (2006). Black buzz and red ink: The financial impact of negative comment on USairlines. In J. Kirby & P. Marsden (Eds.), Connected marketing: The viral, buzz and word ofmouth revolution. Oxford: Butterworth-Heinemann.

Ferreira, L. D., & Merchant, M. (1992). Field research in management accounting and control:A review and evaluation. Accounting Auditing and Accountability Journal, 5(4), 3–34.doi:10.1108/09513579210019503

File, K. M., & Prince, R. A. (1992). Positive word-of-mouth: Customer satisfaction and buyerbehaviour. International Journal of Bank Marketing, 10(1), 25–29. doi:10.1108/02652329210007867

Flyvbjerg, B. (2006). Five misunderstandings about case-study research. Qualitative Inquiry, 12(2), 219–245. 10.1177/1077800405284363

Folkes, V. (1984). Consumer reactions to product failure: An attributional approach. Journal ofConsumer Research, 10, 398–409. Retrieved from http://www.jstor.org/stable/2488909

Folkes, V. S., & Kotsos, B. (1986). Buyers and sellers explanations for product failure: Whodone it? Journal of Marketing, 50(2), 74–80. doi:10.2307/1251601

Fornell, C., & Wernerfelt, B. (1987). Defensive marketing strategy by customer complaintmanagement: A theoretical analysis. Journal of Marketing Research, 24(4), 337–346.doi:10.2307/3151381

Gilmore, A., & Carson, D. (1996). ‘Integrative’ qualitative methods in a services context.Marketing Intelligence & Planning, 14(6), 21–26. doi:10.1108/02634509610131126

Glaser, B. G., & Strauss, A. L. (1967). The discovery of grounded theory. Chicago, IL: Aldine.Godes, D., & Mayzlin, D. (2004). Using online conversations to study word of mouth

communications. Marketing Science, 23(4), 545–560. Retrieved from http://pubsonline.informs.org/doi/abs/10.1287/mksc.1040.0071

Goldenberg, J., Libai, B., Moldovan, S., & Muller, E. (2007). The NPV of bad news.International Journal of Research in Marketing, 24(3), 186–200. doi:10.1016/j.ijresmar.2007.02.003

Gotsi, M., & Wilson, A. M. (2001). Corporate reputation: Seeking a definition. CorporateCommunications: An International Journal, 6(1), 24–30. doi:10.1108/13563280110381189

Gremler, D. D. (1994). Word-of-mouth about service providers: An illustration of theorydevelopment in marketing. In C. W. Park & D. Smith (Eds.), AMA winter educators’conference proceedings: Marketing theory and applications (pp. 62–70). Chicago, IL:American Marketing Association.

Gwinner, K. P., Gremler, D. D., & Bitner, M. J. (1998). Relational benefits in servicesindustries: The customer’s perspective. Journal of the Academy of Marketing Science, 26(2), 101–114. doi:10.1177/0092070398262002

Hart, C. W. L., Heskett, J. L., & Sasser Jr., W. E. (1990). The profitable art of service recovery.Harvard Business Review, 68(4), 148–156. Retrieved from http://europepmc.org/abstract/MED/10106796

Haywood, K. M. (1989). Managing word-of-mouth communications. Journal of ServicesMarketing, 3(2), 55–67. doi:10.1108/EUM0000000002486

Herr, P. M., Kardes, F. R., & Kim, J. (1991). The effects of word-of-mouth and product-attribute information on persuasion: An accessibility-diagnosticity perspective. Journal ofConsumer Research, 17(4), 454–462. doi:10.1086/208570

Williams and Buttle Managing negative word-of-mouth 21

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

Hirschman, A. O. (1970). Exit, voice, and loyalty: Responses to decline in firms, organizations,and states. Harvard, MA: Harvard University Press.

Jones, S., Damon, A., Aiken, K., & Boush, D. M. (2009). Integrating experience, advertisingand electronic word-of-mouth. Journal of Internet Commerce, 8(3/4), 246–267.doi:10.1080/15332860903467664

Karami, A., Rowley, J., & Analoui, F. (2006). Research and knowledge building in managementstudies: An analysis of methodological preferences. International Journal of Management,23(1), 43–51.

Keaveney, S. M. (1995). Customer switching behavior in service industries: An exploratorystudy. Journal of Marketing, 59(2), 71–82. doi:10.2307/1252074

Keiningham, T. L., Cooil, B., Andreassen, T. W., & Aksoy, L. (2007). A longitudinalexamination of net promoter and firm revenue growth. Journal of Marketing, 71(3),39–51. doi:10.1509/jmkg.71.3.39

Kennedy, S. H. (1975). Nurturing corporate images: Total communication or ego trip?Cranfield: Cranfield Institute Press.

Kuhn, T. S. (1987). What are scientific revolutions? In L. Kruger, L. J. Daston, & M.Heidelberger (Eds.), The probabilistic revolution, vol. 1: Ideas in history (pp. 7–22).Cambridge, MA: MIT Press.

Lau, G. T., & Ng, S. (2001). Individual and situational factors influencing negative word-of-mouth behaviour. Canadian Journal of Administrative Sciences, 18(3), 163–178.doi:10.1111/j.1936-4490.2001.tb00253.x

Levesque, T. J., & Mcdougall, G. H. (1996). Customer dissatisfaction: The relationshipbetween types of problems and consumer response. Journal of Academy of MarketingScience, 13(3), 264–276. doi:10.1111/j.1936-4490.1996.tb00736.x

Levesque, T. J., & Mcdougall, G. H. (2000). Service problems and recovery strategies: Anexperiment. Canadian Journal of Administrative Sciences, 17(1), 20–37. doi:10.1111/j.1936-4490.2000.tb00204.x

Lewin, J. E., & Johnston, W. J. (1997). Relationship marketing theory in practice: A case study.Journal of Business Research, 39(1), 23–31. doi:10.1016/S0148-2963(96)00152-X

Lincoln, Y. S., & Guba, E. G. (1985). Naturalistic inquiry. Beverly Hills. CA: Sage.Lindlof, T. R., & Taylor, B. C. (2010). Qualitative communication research methods (3rd ed.).

Thousand Oaks, CA: Sage.Litvin, S. W., Goldsmith, R. E., & Pan, B. (2008). Electronic word-of-mouth in hospitality and

tourism management. Journal of Tourism Management, 29, 458–468. doi:10.1016/j.tourman.2007.05.011

Marsden, P., Samson, A., & Upton, N. (2005). Advocacy drives growth in UK businesses. BrandStrategy, November–December, 1–9. Retrieved from http://eprints.lse.ac.uk/21889/

Maxham III, J. G. (2001). Service recovery’s influence on consumer satisfaction, positive word-of-mouth, and purchase intentions. Journal of Business Research, 54, 11–24. doi:10.1016/S0148-2963(00)00114-4

Mayzlin, D. (2006). Promotional chat on the internet. Marketing Science, 25(2), 155–163.Retrieved from http://pubsonline.informs.org/doi/abs/10.1287/mksc.1050.0137

Miles, M. B., & Huberman, A. M. (1994). Qualitative data analysis: A source book of newmethods. Newbury Park, CA: Sage.

Mitroff, I. I., & Pearson, C. M. (1993). Crisis management: A diagnostic guide for improvingyour organization’s crisis-preparedness. San Francisco, CA: Jossey-Bass.

Murray, K. B., & Schlacter, J. L. (1990). The impact of services versus goods on consumers’assessment of perceived risk and variability. Journal of the Academy of Marketing Science, 18(1), 51–65. doi:10.1007/BF02729762

Netpromoter. (2011). Retrieved June 25, 2014, from http://www.netpromoter.com/homeNyer, P. U. (1999). Cathartic complaining as a way of reducing consumer dissatisfaction.

Journal of Consumer Satisfaction, Dissatisfaction, and Complaining Behaviour, 12, 15–24.Retrieved from http://lilt.ilstu.edu

22 Journal of Marketing Management, Volume 00

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

Nyer, P. U., & Gopinath, M. (2005). Effects of complaining versus negative word-of-mouth onsubsequent changes in satisfaction: The role of public commitment. Psychology &Marketing, 22(12), 937–953. doi:10.1002/mar.20092

Patton, M. Q. (2002). Qualitative research and evaluation methods. Thousand Oaks, CA: Sage.Pearson, C. M., & Clair, J. A. (1998). Reframing crisis management. The Academy of

Management Review, 23(1), 59–76. doi:10.5465/AMR.1998.192960Perry, C. (1998). Processes of a case study methodology for postgraduate research in

marketing. European Journal of Marketing, 32(9/10), 785–802. doi:10.1108/03090569810232237

Perry, C., Reige, A., & Brown, L. (1999). Realism’s role among scientific paradigms inmarketing research. Irish Marketing Review, 12(2), 16–23. Retrieved from http://arrow.dit/ie

Pruden, D. R., & Vavra, T. (2004). Controlling the grapevine: How to measure and manageword-of-mouth. Marketing Management, July–August, 25–50. Retrieved from http://elibrary.ru/item.asp?id=8499223

Reichheld, F. F. (2003). The one number you need to grow. Harvard Business Review,December, 1–11. Retrieved from http://www.thedatashop.co.uk

Reichheld, F. F., & Teal, E. (1996). The loyalty effect. Boston, MA: Harvard Business SchoolPress.

Richins, M. L. (1983). Negative word-of-mouth by dissatisfied consumers: A pilot study.Journal of Marketing, 47(1), 68–78. Retrieved from http://www.jstor.org/stable/3203428

Roberto, M. (2011). BP and the Gulf of Mexico oil spill. London, ON: Ivey Publishing. Case9B11C035.

Rubin, H. J., & Rubin, I. (2005). Qualitative interviewing: The art of hearing data. ThousandOaks, CA: Sage.

Sanday, P. R. (1979). The ethnographic paradigm(s). Administrative Science Quarterly, 24(4),527–538. Retrieved from http://www.jstor.org/stable/2392359

Scapens, R. (1990). Researching management accounting practice: The role of case studymethods. The British Accounting Review, 22, 259–281. doi:10.1016/0890-8389(90)90008-6

Shamma, H. M., & Hassan, S. S. (2009). Customer and non-customer perspectives forexamining corporate reputation. Journal of Product & Brand Management, 18(5),326–337. Retrieved from http://www.jstor.org/stable/2392359

Sharp, B. (2010). How brands grow: What marketers don’t know. Oxford: Oxford UniversityPress.

Singh, J. (1990). Voice, exit, and negative word-of-mouth behaviors: An investigation acrossthree service categories. Journal of the Academy of Marketing Science, 18(1), 1–15.doi:10.1007/BF02729758

Skowronski, J. J., & Carlston, D. E. (1989). Negativity and extremity biases in impressionformation: A review of explanations. Psychological Bulletin, 105(1), 131–142. doi:10.1037/0033-2909.105.1.131

Smith, P. (1978). Sampling errors of variance components in small sample multifacetgeneralizability studies. Journal of Educational Statistics, 3(4), 319–346. doi:10.2307/1164776

Spreng, R. A., Gilbert, D., Harrell, R. D., & Mackoy, E. (1995). Service recovery: Impact onsatisfaction and intentions. Journal of Services Marketing, 9(1), 15–23. doi:10.1108/08876049510079853

Stake, R. E. (2010). Qualitative research: Studying how things work. New York, NY: GuilfordPress.

Stauss, B., & Seidel, W. (2004). Complaints management: The heart of CRM. Mason, OH:Thomson.

Strauss, A., & Corbin, J. A. (1997). Grounded theory in practice. Thousand Oaks, CA: Sage.

Williams and Buttle Managing negative word-of-mouth 23

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

Stuart, H. (1999). Towards a definitive model of the corporate identity management process.Corporate Communications: An International Journal, 4(4), 200–207. doi:10.1108/13563289910299328

Sun, T., Youn, S., Wu, G., & Kuntaraporn, M. (2006). Online word-of-mouth (or mouse): Anexploration of its antecedents and consequences. Journal of Computer-MediatedCommunication, 11(4), article 11. doi:10.1111/j.1083-6101.2006.00310.x

TARP. (1986). Consumer complaint handling in America – An updated study. Washington DC:Office of Consumer Affairs, Technical Assistance Research Programs.

Teddlie, C., & Yu, F. (2007). Mixed methods sampling: A typology with examples. Journal ofMixed Methods Research, 1, 77–100. doi:10.1177/2345678906292430

Thomas, G. M. (2004). Building the buzz in the hive mind. Journal of Consumer Behaviour, 4(1), 64–72. doi:10.1002/cb.158

Wangenheim, F. V. (2005). Post-switching negative word of mouth. Journal of Service Research,8(1), 67–78. doi:10.1177/1094670505276684

Vilponnen, A., Winter, S., & Sundqvist, S. (2006). Electronic word-of-mouth environments:Exploring referral network structure and adoption behavior. Journal of InteractiveAdvertising, 6(2), 71–86. doi:10.1080/15252019.2006.10722120

Webb, E. J., Campbell, D. T., Schwartz, R. D., & Sechrest, L. (1966). Unobtrusive measures:Non-reactive research in the social sciences. Chicago, IL: Rand McNally.

Webster, C., & Sundaram, D. S. (1998). Service consumption criticality in failure recovery.Journal of Business Research, 41, 153–159. doi:10.1016/S0148-2963(97)00004-0

Westbrook, R. A. (1987). Product/consumption based affective responses and post purchaseprocesses. Journal of Marketing Research, 24, 258–270. doi:10.2307/3151636

Williams, M., & Buttle, F. A. (2011). The eight pillars of WOM management: Lessons from amultiple case study. Australasian Marketing Journal (AMJ), 19(2), 85–92. doi:10.1016/j.ausmj.2011.01.001

Yin, R. K. (1984). Case study research: Design and methods. Beverly Hills, CA: Sage.Yin, R. K. (2003). Case study research: Design and methods (3rd ed.). Thousand Oaks, CA:

Sage.Yin, R. K. (2009). Case study research: Design and methods (4th ed.). Beverly Hills, CA: Sage.Zineldin, M. (2006). The royalty of loyalty: CRM, quality and retention. Journal of Consumer

Marketing, 23(7), 430–437. doi:10.1108/07363760610712975

About the authors

Martin Williams, DBA, FCIM, has over 30 years experience in advertising and marketing onthree continents and has held leadership positions in advertising, direct marketing, customerrelationship management, online marketing and fundraising. He currently lectures atUniversity of Technology, Sydney. Martin co-founded and was CEO of Australia’s leadingdirect marketing agency Cartwright Williams and CW Database Services. Martin is chair ofthe Salvation Army Red Shield Appeal Direct Marketing Advisory Committee and a Governorof the Medical School Sydney University. He is author of Interactive Marketing and is currentlycompiling a text on word-of-mouth (and electronic word-of-mouth) management.

Francis Buttle, PhD, FCIM has over 30 years experience in marketing and customer relation-ship management on three continents. He is Honorary Professor at Macquarie GraduateSchool of Management, Sydney, and was previously Professor of Marketing and CustomerRelationship Management at Manchester Business School, UK. He was the world’s firstprofessor of CRM. Francis is also Principal of Francis Buttle & Associates, a worldwidenetwork of customer management experts established in 1979. He has published over 300items including 11 books. His most recent books are the third edition of Customer Relationship

24 Journal of Marketing Management, Volume 00

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4

Management: Concepts and Technologies and the eBook Social CRM: what is it and what doesit mean for your business?

Corresponding author: Francis Buttle, Macquarie Graduate School of Management,Macquarie University, 99 Talavera Road, North Ryde, NSW 2109, Australia.

E francis.buttle@mgsm.edu.au

Williams and Buttle Managing negative word-of-mouth 25

Dow

nloa

ded

by [

Fran

cis

But

tle]

at 1

7:32

21

July

201

4