By Gary M. Stern, contributor
FORTUNE -- For customers and companies alike, the sprawling world of social networks offers an attractive point of rendezvous. Companies get the near equivalent of all the free advertising and focus groups they want. And consumers get direct access to some of the largest businesses in the world.
A perfect match, right? Well, not exactly.
Like any other business relationship, social connections are only as valuable as the amount of time and energy a company spends on developing this bond. Even free advertising comes at a price.
Indeed, an October 2011 study conducted by Conversocial, a London-based software company specializing in social networking, found that many retailers fail to respond to one major type of consumer response: complaints.
Conversocial’s survey noted that retailers Costco (cost), Kmart and Kroger (kr) missed 100% and Wal-Mart (wmt) ignored 40% of customer Facebook complaints over a five-day period in September. Out of the 10 major retailers examined in the study, only Safeway (swy) shined, responding to 95% of complaints on their Facebook page. <!-- more -->
Joshua March, the CEO of Conversocial, notes that too many retailers “have an ad hoc approach to social networking sites and haven’t gotten serious about customer service. They have one or two people trying to respond, but can’t react to the scale of complaints.”
Dealing with customers on social sites reveals “a fundamental shift in customer service,” March says. Complaints used to be viewed as a nuisance, but ignoring dissatisfaction on Facebook and Twitter can go viral and trigger a steady exodus of customers. “Companies can’t afford to ignore people,” he says.
When an irate customer notified Sears (shld) on its Facebook page this year that despite having a warranty, her refrigerator repair had been taking too long, a Sears representative replied that it was doing everything it could to end her frustration. The customer responded that she had called, sent e-mails, wrote on Facebook, and she still waited a week to receive the part and then had to arrange an appointment. “The last thing you want to do is foster negative feedback against your poor service,” March says.
Conversely, companies like Safeway that excel at online customer service can reap significant business benefits; that is, of course, if they stay on top of their social game.
Curtis Hougland, founder of Attention, a New York-based social media marketing agency, blames customer service departments for not “being on the vanguard of social media.” Instead, many have ignored the opportunity.
This may come as a surprise to some executives, but a company’s social network pages are not corporate love-ins, where customers rhapsodize on their fondness for Frappucinos and stone wash jeans.
Whether it’s on a Facebook page or in a strongly worded letter, all customer complaints call for a resolution. Yet of the 10 companies studied online in Coversocial’s survey, only 35% of retailers responded to customer complaints on Facebook and Twitter.
According to the survey, the firms that responded the fastest frequently did the most damage. When Wal-Mart or Macy’s (m) replied to a complaint, it was often within an hour. But most often, responses were automated and generic, like a form letter, which didn’t deal with the customer’s specific problem or offer a solution. Corporate speak won’t work on Facebook, March says. Most respondents expect a reply in one to two hours on Facebook, compared to longer times on email or one or two days from website support.
Safeway’s approach reveals the kind of attention that customers have come to expect. One customer wrote on Safeway’s Facebook page that he couldn’t find Massimo coffee at his local supermarket and asked if it could be found in other local stores in September 2011. A Safeway rep contacted local managers and first determined that it wasn’t stocked, but then tracked down a store where it was for sale. All of these conversations were posted on Safeway’s Facebook page for the all the world to see.
But even Safeway’s responses don’t always reveal the full story. When one consumer wondered why the Calgary Forest Lawn Safeway closed down in November 2011, a rep thanked the customer for the feedback on Safeway’s Facebook page, notified its real estate department but never explained why it closed or where else she might find an alternative Safeway.
Some companies steer responders away from the public glare of Facebook and Twitter toward e-mail, allowing firms to answer questions privately. But March calls this approach misguided. “It’s not great to force them into a channel they don’t prefer,” he says. “They don’t want to phone or email you. That’s why they’re on Facebook.”
Sending complaints via social networks empowers the customer. If a company ignores a respondent in a public forum like a Facebook wall, friends may respond and gravitate to more attentive retailers.
Make no mistake, angry customers can do serious damage. March cites a loyal Sears customer who spent $5,000 annually on tools but was denied a replacement because one tool broke 31 days after it was purchased, a day after the warranty ended. March says the customer blasted Sears on its Facebook page, ripped up his Sears credit card, and vowed that he would never shop there again. A Sears’ customer service rep read the customer’s note, shipped him a new tool, and included a gift card. Reassured, the customer took out a new Sears’ card.
The ad-hoc approach does not work, so companies should either train their staff to work in this environment or go out and hire a social marketing team. Firms also need to have clear policies on who can address customer service issues on their own and when a manager is needed.
One thing is certain, though: ignoring a complaint is not an option. “In social media, customers control the brand,” Hougland says.