Social media as a touch point in reverse logistics: scale development and validation.

• Author: Chandra, Navin
• Position: Report

1. INTRODUCTION

   Reverse Logistics has received much attention in the marketing and supply chain literature as an important function that enables a firm within a channel of distribution to positively influence the relationship with customers (Horvath et al., 2005). Businesses are increasingly recognizing the role of customer service in supply chain management in creating competitive advantage particularly as they globalize their operations. Traditionally customers contact businesses either by telephone, electronic mail or visit the local service center. But social media revolution is empowering customers to share experiences in an integral network that in turn is forcing organizations to provide service to them.

   Today, more companies are contacting customers using social media channels in hopes of sustaining the attention and loyalty of customers who are increasingly spending their time online. Social media has garnered the attention of the business community and they are focusing on reducing the costs of returns by becoming part of the influence chain. In the US, companies spend roughly $950 billion annually on logistics. Around $43 billion is expended on reverse logistics. Estimates at retail level alone vary between $16 billion to $100 billion a year (Chawla, 2007). Drawing from the logistics, marketing and management literature, Carter and Ellram (1998) proposed a model of the factors affecting a firm's reverse logistics practices, including both external and internal factors. Daugherty et al. (2001) provided some of the few theory-based approaches found in the literature to date, focusing on resource and relationship commitments and their impact on overall reverse logistics performance. But little is known about how marketing and logistics managers integrate their decisions and processes with respect to returns. As demonstrated by popular social media websites such as Facebook and Twitter, internet-based networks have become important and many businesses are now involved either as participants or service providers (Suzanne, 2010). This paper presents the development of customer service contact method scale, a multi-item scale for evaluating how customers evaluate social media as a touch point in reverse logistics.

   In addition, the social media scale can be helpful to logistics managers in providing better and more efficient customer service. The high level of control given to end consumers and the possibility of shared experiences has increased the appeal of social media. Though companies often steer the dialogue, the fact is that social media is an online community which extends invitations to many others, makes the company's response publicly visible. Companies, in general, are increasingly becoming aware of public sensitivity about sustainability and customer service expectation in managing returns (Stock et al., 2006). As a result of these developments, contacting and responding to the customer's needs has become more important to companies which are extending the traditional touch points to the social realm.

   An important element of service excellence that is often overlooked relates to the way companies manage the contact process on social media. Touch points have changed in nature and require a major adjustment for managers in customer engagement. Customers need the ability to return a purchase and suppliers often have too many touch points to communicate with the customer, phone, store, email, fax, etc. Customers often do not find an alternative packaging material, or when they receive a call, they are not aware of the immediate process. So they wait until the response is heard by the relevant people. Customers are confused with too many touch points to return a product or call a firm for service complaint. There is no visibility of the item on the returns journey and such experiences lower the expectations of the customers. A recent study of social media by the Center for Marketing Research at the University of Massachusetts at Dartmouth (2010) shows that Fortune 500 companies are adopting social media at a rapid pace. Additionally, 90 percent reported that social media was "very important" to their business/marketing strategy, and all were using at least one social media from a list that included blogs, podcasts, message boards, and social networking sites.

   The remainder of the paper is organized as follows. The next section presents a review of literature on reverse logistics, social media usage and its effects on consumer satisfaction. The literature review is followed by scale development. Finally, the authors demonstrate how this scale can be used by managers to better understand a consumer's post-purchase engagement process and the choice of social media as a contact method. The paper concludes with practical implications and future research opportunities.

2. LITERATURE REVIEW

   This section provides a review of literature on customer service in the reverse logistics literature then presents findings on touch points and social media customer satisfaction in marketing, information systems and logistics literature.

   The reverse logistics process includes authorization of returns, transportation, auditing, product disposition, and creating information about the kinds of products being returned and where they are coming from (Trebilcock, 2001). Companies are now focusing more on reverse logistics on priority because of the the potential effect on customer relations (Daugherty et al., 2005). Rogers and Tibben-Lembke (1999) found a growing emphasis of cost reduction in managing returns and other researchers have also examined the profitability of returns handling systems (Andel, 1997). In addition, researchers (Guide and van Wassenhove, 2003; Dyckhoff et al., 2004) have focused on product recovery to reduce production costs. Thus, reverse logistics poses a problem of sustainable development (De Brito and Dekker, 2004).

   Products are returned...