The effect of negative social media sentiment on brand switching within the South African banking industry

Abstract

The social media environment is growing significantly and is being utilised by individuals and businesses alike. With businesses using it as key communication and advertising channels and individuals using it to research and discover brands or products via recommendations on social media channels, with these recommendations being defined as electronic word of mouth (eWOM). The South African banking industry is highly competitive and with new digitally innovative entrants coming into the market it has made it easier for clients to open a bank account and switch banks. Clients are becoming more digitally orientated and want enhanced digital client experience and digital service. If clients do not receive this they resort to voicing their opinions on social media channels or potentially look at switching banks. Brand switching is a concept around which multiple studies have been conducted and contributing factors that have an effect on brand switching within the banking industry have been identified to be pricing, service failure and denied services but the effect of negative social media (negative eWOM) on brand switching within the South African banking industry has not yet been fully studied. This study aims to determine if negative social media sentiment, or the dominant display of negative eWOM relating to a banking brand on social channels, has an effect on clients switching behaviour from one banking brand to another within the South African banking industry. A quantitative study was conducted in which the effect of negative social media sentiment relating to a bank, the banks product offering, the banks service and the banks fees had on the clients intention to switch banks. An online questionnaire was distributed by means of a non-probability sampling method and a total of 79 respondents was achieved. The results attained through the use Spearman correlation tests, used to measure the association between variables, as well as Mann Whitney U and Kruskall Wallis tests indicated that negative social media sentiment, negative eWOM, relating to a bank, its product offering, service or fees does have a positive moderate effect on brand switching intent. Therefore, it is recommended that banks take the effect of negative social media sentiment, negative eWOM, more seriously to identify key frustration points that clients experience and implement strategic operational improvements and marketing campaigns to successfully alleviate these points of frustration in order to retain clients, limit profit losses, build meaningful relationships and create points of differentiation for themselves within a highly competitive industry. These results also have implications for businesses outside of the financial industry.