How banks transformed social media complaints into customer loyalty

Businesses can transform customer interactions on social media through strategic response frameworks, improving sentiment and brand perception

When a Bank of America customer tweeted their frustration about unclear mortgage payments and unexpected late fees, the bank’s social media team faced a critical moment. Their response would either escalate the situation or turn an angry customer into a potential advocate. This scenario plays out thousands of times daily across social media platforms, where companies struggle to manage customer conversations that can make or break their reputation.

Social media has fundamentally changed how customers interact with businesses. Yet many organisations remain unprepared for this shift, lacking clear strategies for crafting responses that improve customer sentiment. The challenge becomes particularly acute when dealing with the full spectrum of customer interactions. While much attention focuses on handling complaints, negative posts actually represent a minority of social media conversations.

Research examining major US banks and their customers revealed the formula for turning these challenging conversations into positive outcomes through systematic analysis of conversation patterns and response effectiveness.

The hidden cost of poor social media engagement

Corporate social media teams face an unprecedented challenge in managing customer conversations that unfold under public scrutiny. Many organisations struggle with crafting effective responses, often defaulting to scripted replies that fail to address customer concerns or escalate tensions. The banking industry provides a compelling laboratory for understanding these dynamics, as banks face intense scrutiny on social platforms while dealing with everything from account inquiries to fraud complaints.

A comprehensive study, titled How Firms Can Steer Social Media Conversations and published in the Journal of Marketing Research, was conducted by Assistant Professor Mike Saljoughian from the University of Missouri, Professor Kelly Hewett from Colorado State University, Professor Harald van Heerde from UNSW Business School and Professor Bill Rand from North Carolina State University.

The researchers examined conversations involving Bank of America, Wells Fargo, Citibank, and JP Morgan Chase and analysed how different response strategies affected subsequent customer sentiment across more than 206,000 conversation threads. The study revealed that firms often lack guidance for interacting with customers, including decisions related to content and how to drive engagement. “Many firms struggle with how to craft their messages in conversations with customers on social media,” the researchers noted, highlighting a pervasive challenge across industries.

The research examined the full spectrum of social media conversations rather than focusing solely on complaints, which represent only a minority of customer interactions. In the dataset, negative posts constituted approximately 30% of user tweets, while 22% were neutral and 48% were positive, demonstrating the broader opportunity for engagement beyond crisis management.

Decoding the elements of response strategy

For the purposes or their study, the researchers developed a framework based on dialogic listening theory to examine eight distinct elements of firm-generated content and their impact on customer sentiment. The research team employed sophisticated econometric analysis to account for the complex dynamics of social media conversations.

“We view social media conversations through the lens of dialogic listening, which suggests that a communication partner should offer (1) empathetic understanding, (2) unconditional positive regard, a spirit of mutual understanding as expressed through (3) staying on topic and (4) matching the user’s linguistic style, (5) presentness, and (6) genuineness,” the researchers explained. They augmented these six elements with two more social media response elements: (7) using direct messaging to take conversations offline and (8) the customer service agent signing with their name (as opposed to just initials or no signing). Their analysis revealed that not all response elements carried equal weight in influencing customer sentiment, challenging conventional assumptions about social media engagement priorities.

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In a prior role, Prof. van Heerde explained that research paper co-author Kelly Hewett served as Senior Vice President at the Bank of America. In this role, she found that their social media team struggled to respond suitably to the daily deluge of customer messages on social media. “It was really challenging to craft responses that addressed the focal issue that the user brought up in each social media thread across a wide variety of topics and across a wide variety of customer emotions,” he explained.

In an earlier paper (published in the Journal of Marketing), Ms Hewett and Profs. van Heerde and Rand looked at aggregate user sentiment on social media, but this new research takes a deeper dive and analyses the data at the level of sequences of individual user and firm posts within different social media threads.

The hierarchy of response effectiveness

The most striking finding concerned which response strategies proved most powerful in improving customer sentiment. Topic matching emerged as the single most effective approach, with research demonstrating significant impact on conversation outcomes. “Topic matching (new to the literature) is the most effective firm-generated content (FGC) variable. Along with the second-most effective FGC variable (linguistic style matching), a key takeaway is that conveying a spirit of mutual understanding through topic and linguistic style matching is the most potent way to lift user sentiment,” the researchers revealed.

This finding challenges conventional wisdom about social media engagement that typically emphasises tone or empathy over content relevance. Companies achieve better results by directly addressing the specific issues customers raise rather than focusing primarily on emotional responses. The second most effective strategy involved linguistic style matching, where representatives mirror customers’ communication patterns in their use of function words such as articles, conjunctions, and pronouns.

The research established a clear hierarchy of effectiveness among response strategies. “The next-strongest pair of FGC variables are sentiment (capturing unconditional positive regard) and empathetic understanding,” the study found. These approaches proved moderately effective at improving customer sentiment but significantly less impactful than topic and linguistic style matching.

Interestingly, factors often emphasised in customer service training showed weaker effects on overall sentiment outcomes. “The least effective FGC variables for lifting UGC sentiment are response time (capturing presentness), agent signing, direct messaging, and FGC authenticity (capturing genuineness),” the research revealed, suggesting that speed and personalisation tactics receive disproportionate attention relative to their actual impact.

Context matters: Adapting strategies to customer sentiment

The research uncovered crucial insights about how response strategies should vary based on customer emotional states. Different approaches work better depending on whether customers begin conversations with positive, negative, or neutral sentiment, requiring sophisticated adaptation rather than uniform response protocols.

For negative customer sentiment, the study identified specific strategies that proved particularly effective. “To counter negative user sentiment, firms should focus on staying on topic, showing empathetic understanding and using DMs,” the researchers found. When dealing with upset customers, companies should prioritise direct topic engagement, demonstrate understanding of customer concerns, and offer private channel alternatives for continued dialogue.

Conversely, positive customer interactions required different tactical approaches for optimal outcomes. “To reinforce positive user sentiment, firms should respond with positive and authentic FGC,” the study revealed. In these situations, companies should focus on reinforcing customer satisfaction through positive, authentic responses that build on existing goodwill rather than attempting to redirect conversations.

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The research also identified significant opportunities in neutral conversations that many organisations overlook. “We also find that using the elements correctly, FGC can turn neutral user sentiment into positive user sentiment,” demonstrating that effective response strategies can actively improve customer relationships rather than simply managing existing sentiment levels.

The paper’s findings offer important implications for social media managers as each firm-generated content (FGC) element has sizable effects on user sentiment, Prof. van Heerde explained:

•  Mirror the user. Users contact firms on social media for many reasons, such as offering advice, complaining, venting frustration, or giving compliments. The results show that mirroring the user by staying on topic and matching their linguistic style can most effectively improve user sentiment. Staying on topic is especially effective with negative preceding user sentiment.

•  Stay positive. Using unconditional positive regard (positive sentiment) will signal that the firm accepts the user as a person of “unquestioned worth” regardless of their behaviors or their expressed ideas. It also conveys a sense of closeness between conversation partners and compassion toward another and can be associated with caring. One caveat is that when preceding user sentiment is negative, FGC that is unconditionally positive can come across as tone deaf, leading to very little lift in subsequent user sentiment. In contrast, when user sentiment is positive to start with, positive FGC leads to an additional boost in user sentiment.

•  Show empathy. Users post about firms on social media for a reason. Understanding why a user posts requires a firm agent to take the user’s perspective. By using empathetic understanding, FGC can lift user sentiment, and even more so when preceding user sentiment is negative. Obviously, just using empathetic words is not enough, as the core issue the user faces requires addressing as well, but it provides assurances that the firm is listening to the user.

•  Be present. Being quick to respond to social media posts signals involvement and presentness. An hour is an eternity on social media, and users expect firms to respond swiftly. Response speed is required independent of preceding user sentiment.

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•  Be genuine. Genuine FGC is typified by authenticity and by the firm agent revealing something truthful and personal to users. FGC content that uses authentic words lifts user sentiment, especially when prior user sentiment is positive, suggesting that in such cases users are more open to interacting with firms and respond more positively to genuine FGC. However, authenticity is less effective when preceding user sentiment is negative. The unfiltered, personal nature of authentic responses may not come across well if a user is upset.

•  Take conversations private. Direct Messaging (DMing) can lift user sentiment, especially when it is already negative. Firms’ use of DMing is subject to time constraints (e.g., agents need to understand a customer’s case details) which restrict agents’ ability to address other social media conversations. Taking many conversations private also conflicts with the notion of social media as a public communication channel. Thus, firms should use DMing strategically, offering it especially when the preceding user sentiment is negative.

•  Don’t be anonymous. User sentiment is lifted when agents sign posts with their name (e.g., “Kate”) rather than their initials (e.g., “^KS” for Kate Smith) or do not sign them. A straightforward recommendation is to use first names in FGC on social media unless there are privacy concerns about a particular agent. In the data, there is considerable variation, with around 20% of the posts signed by first names, around 75% by initials and 5% have not been signed. The suggestion is to create standards for the way posts are signed, and if possible, this should be done by using the agent’s first names rather than initials.

•  Don’t ignore neutral or positive user sentiment. Firms may naturally be more focused on quelling negative user sentiment on social media, but the findings show there is significant scope to steer neutral sentiment into positive territory and to further propel already positive sentiment. As neutral and positive user messages represent 70% of all social media posts in the data, there is a tremendous opportunity to create or strengthen positive public user sentiment through FGC.

Practical applications for modern businesses

The research provides clear guidance for organisations seeking to improve their social media customer engagement outcomes. Companies should train their social media teams to prioritise direct topic engagement over template responses, moving beyond generic interactions toward personalised communications that address specific customer concerns. This approach requires developing response frameworks that account for customer sentiment levels rather than applying uniform strategies across all interactions.

Response teams should develop sensitivity to customer emotional states and adapt their communication strategies accordingly. When customers express frustration or anger, representatives should focus on topic relevance, empathetic language, and private channel options. When customers share positive experiences, teams should emphasise authentic, positive reinforcement that builds on existing satisfaction levels.

The study highlights the importance of moving beyond speed-focused metrics toward quality-focused assessment criteria. While quick responses remain valuable for customer satisfaction, the research suggests that topic relevance and linguistic matching provide greater impact on sentiment outcomes. Training programmes should emphasise topic engagement skills and empathetic communication techniques, particularly for handling negative interactions that pose reputational risks.

For businesses developing social media guidelines, the research recommends creating response frameworks that account for varying customer sentiment levels. The implications extend beyond customer service to broader marketing and communication strategies, as companies that master these conversation dynamics can transform social media from a defensive customer service channel into a proactive tool for building customer relationships and demonstrating brand values in public forums.