Social media sites such as Twitter and Facebook provide an opportunity for consumers to both praise and criticize.  It is the negative comments, though, that test retailers’ ability to react and manage customer relationships in a timely and effective manner.

“Social media amplifies the voice of disgruntled customers and makes it easy for others to jump on the bandwagon if they can relate to the pain,” said Jeffrey Grau, eMarketer senior analyst and author of the new report “How Retailers Handle Negative Buzz on Social Media Sites.” “The potential for negative to buzz to escalate into mass criticism puts pressure on retailers to react quickly.

“To avoid a knee-jerk response, retailers need to take a strategic view of customer relationship management on the social Web,” he said.

A cornerstone of retailers’ approach is cultivating customer advocates. That means finding support in the retailer’s fan base, and according to Dynamic Logic and Millward Brown, retailers are the industry most likely to be followed by U.S. social network users.

Many instances of negative buzz circulated by a person or a group stem from age-old retail problems such as poor communications, marketing blunders, operational snafus and bad customer service. Multichannel retailers can prove especially vulnerable, as large chains have more touch points between customers and store employees, providing ample opportunities for things to go wrong.

“Once a retailer is criticized on its Facebook page or a similar social venue, it has three basic options: respond to the criticism, stay silent (perhaps to allow loyal customers to come to its defense) or remove the negative comments when possible,” Mr. Grau said.

“Retailers should have a plan in place and respond according to whether the problem is an isolated event or situation, a systemic problem or a personal issue, such as with a disgruntled customer who has a need for attention or a desire to bait the retailer,” he said.

Grau, Jeffrey.  How Retailers Handle Negative Buzz on Social Media Sites.  eMarketer. 5 May 2010.  Web.  8 May 2010.