The effects of different Social Media Strategies on
Consumer Loyalty
Leon Elshof 10647155 14-07-2016 2015/2016 Supervisor: Dr. H. H. Meg-Lee Bachelor ThesisStatement of Originality
This document is written by Leonardus Cornelis Elshof who declares to take full responsibilit y for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completio n of the work, not for the contents.
Abstract
It is getting increasingly harder for companies to create loyal consumers when consumers these days are able to see so little advertisements which is made possible by TV on-demand streaming sites, or ad-blocking programs. Because a lot of possible consumers are on social media these days, it is studied to see how CEOs can use social media to gain more loyal consumers for their brand. To explain this, I draw on the commitment-trust theory of relationship marketing. It is suggested in this study that a social media strategy influences the way people trust a CEO and brand, and the amount of loyalty that consumers have. More specifically, it is hypothesized that if consumers trust a brand or CEO, they are more likely to be a loyal consumer of their products, and that social media strategies affect the way people trust a CEO and brand. These hypotheses are tested with a sample of 105 respondents. All hypotheses were confirmed, but not for all social media strategies. Based on the results we can suggest that a professional strategy has a more positive effect on trust and loyalty, where a personal strategy has a more negative effect.
Table of Contents
Introduction 4
Literature Review 6
Conceptual Model Development 16
Research Method 24
Results 30
Discussion 35
Conclusion 37
Implications for practice 38
Limitations and suggestions for future research 38
References 41
1. Introduction
It is an era where price competition in high intensity markets are increasing, and where consumers are getting more empowered in case of their exposure to advertising. This brings a challenge to the companies who want to stay in touch with consumers and want to create loyal consumers. This research has its purpose to find out how a CEO can use his or her social media channels to create more loyal consumers.
In an environment where all people have the capability to be online everywhere they go, companies can accompany them on the social media networks. Whether the people are browsing through Facebook or scrolling through their timelines on Twitter or Instagram, a company should always try to be in contact with their potential consumers. These interactio ns, which a company can create with their consumers, enhances the relationships with them (Heller Baird & Parasnis, 2011). If relationships are established and nurtured through the social media interactions, the trust from consumers in a company increases (Pivato, Misani, & Tencati, 2008).
In the past decades, the most important marketing channels where companies marketed their products where through printed advertisement and TV commercials. But, the times are changing. Consumers gained control of how much they are exposed to commercials. Due to the growth of the number of TV channels and the ease of changing channels, the consumers have more viewing options (Woltman Elpers, Wedel & Pieters, 2003).
Atop of these changes, websites like Netflix and cable suppliers are giving consumers options to watch TV shows and movies on demand and without advertisement. Even through so called ad-block applications, consumers can make sure they will not be exposed to commercials on websites. These are all perfect examples why companies need to attract their potential consumers through social media and need communicate with them in a dialogue.
Most researches about social media are done for the perspective about the entire firm, or in most cases, brands (Rybalko & Seltzer, 2010). The dialogic potential of twitter has been investigated, on how it can help companies to create or maintain relationships with the public (Bortree & Seltzer, 2009). This research is more focused on the CEOs of the companies. This research found that CEOs have to become more aware about the ways they can communica te through social media. What are the techniques that CEOs can apply to gain more trust from their consumers, so, that they are more willing to use the products or services which the CEO’s firm sell?
For a lot of companies, the ultimate marketing goals is to create good customer relationships with a great amount of loyalty from their consumers. In this research the aim is to discover how a CEO can use social media to incorporate these goals in their social media strategy. The research question for this research is as follows: Can social media strategies from CEOs have an effect on consumer loyalty for the CEO’s brand?
In this research we will first discuss the previous literature that has been done, followed by a theoretical framework and the hypotheses drawn from this framework. Then a conceptual model will be developed. This is a quantitative research which will gather its data by self-selection method where the survey is distributed through social media platforms. Then the results will be analyzed quantitatively, after that the results will be discussed and a conclus io n and discussion will follow.
2. Literature Review
2.1. Social media and marketing
It has been found in previous researches that most companies use Facebook, Twitter and YouTube to reach out to their consumers (Ashley & Tuten, 2015). They also found that the brands who did this were recognized for their engagement with their consumers. It was
suggested that in order for brands to engage with consumers, that they should go where the consumers are, on the social networks. They do warn for a possibility of clutter and psychological interference if consumers are approached by brands on their social media networks. This is why in this research we want to find out what an individual, namely a CEO, can do to market their brand and create loyal consumers, but without creating the clutter and psychological interference.
The potential of creating a dialogue with potential consumers online has been investigated (Kent, Taylor & White, 2003), they found that internet allows organizations with different resources at their disposal, to still reach new and existing publics. In previous researches a lot of attention has been given to how a company should integrate social media into their marketing strategy (Rybalko & Seltzer, 2010; Ashley & Tuten, 2015; Dutta, 2010).
It is suggested that companies should try to create dialogic loops with consumers through social media (Rybalko & Seltzer, 2010). This way there is a greater degree of conservation of visitors. However, if a company wants to generate return visits, they are usually not engaging in a dialogic loop, but surprisingly they are more referring to their websites in their social media messages. They also clearly state a key limitation to their research, they noted: “the study of dialogue and online communication will need to move from analyzing the dialogic features of online communication and start determining what effect engaging in dialogue has on stakeholders” (2010, p. 40).
In the research of Alghawi, Yan and Wei (2014), two categories were found in the social media strategies of CEOs; a professional strategy and a personal strategy. Professiona l communication is defined by Jameson (2014) as communication which arises from the person’s work, vocation or organizational roles. Personal communication is communication which arises from other activities or roles.
Facebook, Twitter and LinkedIn are the most popular social media platforms (Saravanakumar & SuganthaLakshmi, 2012). They argue that because of the newer technologies, it is more important to innovate the marketing practices too. Businesses that learn the fastest from the innovative technologies increase great reimbursement. Among the best-known examples are companies such as Google and Microsoft. The explosive growth of the smartphone market is affecting strategies, as the connectivity made possible by social media is becoming easier and making it grow faster. Big brands are already using social media to transfer their strong existence and friendly customer relationship. Companies like Burger King often make headlines by creating a social media buzz with marketing that goes viral really quickly. Thirty-nine percent of surveyed companies use social media as their most important tool to reach consumers, and they predicted that 47 percent of the companies will use it in 2016.
Social media is not a money making machine, but they believe that social media is about ordinary people who can take control by having a voice. 56% of consumers who are on social media platforms say they are more likely to express a positive word-of-mouth if they like a brand on Facebook (Saravanakumar & SuganthaLakshmi, 2012).
Kent and Taylor (1998) argued that technology itself could not create nor destroy relationships, they suggested that the way how technology is used can influence the public relationships. Rybalko and Seltzer (2010), concur with this standpoint, they see social media sites as Facebook and Twitter as tools to perform a particular job, but it is up to an experienced public relations practitioner to know which one is suited to building good relationships with stakeholders. This is why this research seeks to find answers on what strategy to implement to gain the most loyal consumers.
The impact of consumer to consumer communications is magnified by social media platforms because it is easy for one consumer to communicate with thousands of other consumers about the products and services of one company (Glynn Mangold & Faulds, 2009).
A company cannot control the communications between the consumers, and this is what makes social media so contrasted to the traditional integrated marketing communicat ions, where a company is in full control of what they communicate.
2.2. Consumer Loyalty
Loyalty can be divided into two categories, behavioral loyalty and attitudinal loyalty (Ball, Simões Coelho & Machás, 2004). Behavioral loyalty is seen as the highly priced loyalt y, because it inclines that consumers will be making repeated transactions. Attitudinal loyalty is somewhat intertwined with behavioral loyalty, because the repeated purchasing behavior will lead to positive affect and high levels of involvement (Ball et al., 2004).
Consumers show varying degrees of loyalty to different companies, brands or stores. Loyalty is defined as “a deeply held commitment to rebuy or repatronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior” (Kotler & Keller, 2012, p. 149). Additional to that definition is that loyal consumers are people who perceive the brand as differentiated, these consumers have a set of behaviors that enhance the relationship between the consumer and service provider (Agustin & Singh, 2005; Dick & Basu, 1994)
In previous research a framework has been established (Oliver, 1997). In this framework, loyalty was divided in three phases which followed a cognition-affect-conat io n pattern. In the first phase, cognitive loyalty is established through prior experiences with a brand and its products. In the second phase, affective loyalty is created by cumulatively satisfyi ng usage occasions. This affective loyalty is still subject to switching and thus it is desirable for consumers to be loyal at a deeper level of commitment. The third level is conative loyalty; this is a loyalty state that is influenced by repeated episodes of positive affect toward the brand (Oliver, 1999).
Day (1969) looked at brand loyalty from an attitudinal consideration, he viewed brand loyalty as a strong internal disposition towards the brand. Consumers with a higher brand loyalty view a brand as better performing, these dispositions are formed from previous experiences and social norms (Dick & Basu, 1994). Dick and Basu add that the disposition can also be caused by high switching costs, which causes a consumer to stay with a particular brand or that the disposition can be caused due to sunk costs, which makes the consumer think that it would be a waste of their invested time and money to switch from one brand to another.
Kotler and Keller (2012) say that creating a strong, and tight connection to consumers is a key to marketing success. These tight connections cause consumers to advocate on behalf of the company and causes a spread of positive word-of-mouth.
High consumer loyalty leads to a resistance to counter persuasion (Dick and Basu, 1994), consumers whom are loyal to a brand and have strong commitments to it demonstrate enhanced resistance to attempts of persuasion. This is driven by message selectivity, biased cognitive responses, cognitive consistency and self-persuasion (Dick and Basu, 1994). Another perk of high consumer loyalty is that it leads to word-of-mouth behavior. Word-of-mouth behavior is, in this case, a result of consumption satisfaction. In the case of this research, positive word-of-mouth can travel even faster due to the social media interactions.
2.3. CEO Trust
Trust can be defined as a state your mind is in when you agree to make yourself vulnerable to the trustee because you have positive expectations about what the outcome will be (Rousseau, Sitkin, Burt & Camerer, 1998). Mayer, Davis and Schoorman (1995) add to this that it should be “irrespective of the ability to monitor and control that other party” (p. 712).
One of the most important characteristics of human behavior is the need to be in control, to understand and to predict our social environment. Humans need to know what the future
might bring them and how their behavior influences others behavior. Individuals rely on rules and regulations to predict how other will react, but most of the time this can be cognitive l y overwhelming for the mind of a human (Gefen & Straub, 2004). A simpler way for a human to deal with this difficulty to predict behavior is to presume that other will act in a socially acceptable manner. These social standards are often created by the rules and customs, but when these are not enough, trust will be a replacement for the rules and customs which will predict the outcomes. This assumption is the essence of trust (Luhmann, 1979). There are three different types of trust; cognitive trust, affective trust and behavioral trust.
Cognitive trust is the trustor’s confidence or willingness to rely on the trustee’s competence and reliability (Moorman, Zaltman, & Deshpandé, 1992). This is created from knowledge which is gathered from previous experiences. This knowledge allows the trustor to make confident predictions on how likely the trustee will live up to the obligations that they have, this is described in literature as ‘predictability’ or ‘reliability’ (Rempel, Holmes & Zanna, 1985; Johsnon-George & Swap, 1982). It is also suggested that trust is a reflector of issues such as reliability, fairness, honesty and integrity (Dirks & Ferrin, 2002). Even though cognitive trust is driven by knowledge, the need to trust presumes a state of incomplete knowledge (Johnson & Grayson, 2005). If there is complete certainty, it means that risk is eliminated and trust is redundant. This can be the cases in B2B commerce, but with consumer transactions, however, there are less safeguards and knowledge asymmetry causes the absence of comprehensive due diligence (Johnson & Grayson, 2005).
Affective trust is the confidence the trustor places in a trustee on the bases of feelings that is created by the level of affection, care and concern the trustee demonstrates (Johnson-George & Swap, 1982; Rempel et al., 1985; Dirks & Ferrin, 2002). Dirks and Ferrin (2002) describe affective trust as a form of trust which reflects a special relationship with the trustee. It is characterized by feeling secure with the trustee. This affective trust can be won by an act
of benevolence, for example when the trustee proposes a transaction where the trustor benefits more than the trustee, this benevolence causes an emotional bond between the trustor and the trustee (Johsnon & Grayson, 2005). Cognitive trust can transform to affective trust, this can happen when a relationship starts from trust in the trustee’s cognitive ability, but through previous experiences affective trust arises (McAllister, 1995).
Behavioral trust is the trust between two individuals which is established by observing the behavior of one and another (Adali et al., 2010). This behavioral trust is also called ‘integrity’ (Robbins & Judge, 2015). It means that the trustee has to be consistent with what they do and what they say. This honesty, is found to be the most important factor to win trust (Jones, 2003).
Whether an individual trusts a company’s CEO or not does not solely rely on affective, behavioral or cognitive trust. It also relies on something called a trusting disposition, or as Mayer, Davis and Schoorman (1995) call it, the trustor’s propensity. A trusting disposition is a product of a socialization process which is established as long as an individual lives (Gefen, 2000). This disposition can be influenced negatively or positively by their previous experiences with individuals, situations or organizations (McKnight, Cummings, & Chervany, 1992). Robbins and Judge (2015) concur with their findings. They found that trustworthiness of a leader is defined by their integrity, benevolence and ability, which is similar to affective trust, behavioral trust and cognitive trust. They also say that the propensity to trust is an important factor if a trustor actually trusts someone.
Ultimately, trust can be defined as the willingness to be vulnerable to the trustee based on the belief that the trustee is competent, cognitive able, well willing, concerned and reliable (Mishra, 1996; Rempel et al., 1985; Johnson-George & Swap, 1982).
2.4. Brand Trust
As established above, it can be concluded that trust definitions are all composed by the willingness to rely on uncertainty as well as on risk. In the branding literature however, trust is based on the idea of a brand-consumer relationship (Matzler, Grabner-Kräuter & Bidmon, 2008). This brand-consumer relationship is seen as a substitute for human contact between the consumer and the company.
For most companies, the goal is to create value for their shareholders. This is not only done by creating transactions and acquiring consumers, but it is done by establishi ng, maintaining and enhancing relationships with consumers and other companies at a profit (Storbacka, Strandvik, & Grönroos, 1994). These relationships are most often created by gaining trust from consumers (Pivato et al., 2008). Risk reduction can be seen as an important function for a brand to make the buying decision process easier for a consumer.
Trust is the ability for an object or party to meet its obligations and expectations (Doney & Cannon, 1997). At the same time, they point out that a firm has to act in the best interests of the consumers to be trusted. They have to meet the expectations on shared goals and values, a company has to communicate their shared beliefs, they have to let the people know that they are a safe choice and that they are honest. These are all important facets of trust that a company has to incorporate in their organization (Chaudhuri & Holbrook, 2001). Chaudhuri and Holbrook view brand trust as a process that is carefully considered and well thought out. They define brand trust as “the willingness of the average consumer to rely on the ability of the brand to perform its stated function” (Chaudhuri & Holbrook, 2001, p. 82). Their definition leans heavily toward a cognitive based trust.
There are many different typologies of trust proposed in the literature. When talking about trust in a deterrence-based view, trust is based on the undesirable experience from when
a trustee does not behave trustworthy. The trustee’s reputation will decrease because the trustor will be dissatisfied with the experience (Pivato et al., 2008).
Another way of gaining trust is through cognitive ability. Companies can gain cognitive trust through communicating their specific knowledge, their competencies and their abilit ie s (Pivato et al., 2008).
2.5. Social media and the different strategies
The interaction between companies and consumers is what matters the most to marketers (Kotler & Keller, 2012). Listening to consumers is crucial for Customer Relations hip Management (CRM). But, listening is not all that is to it. It is very important for marketers to look through the consumers’ perspective (Dholakia, 2006), engaging with consumers through social media is an important step to enable yourself as a company to see what consumer want and need.
The effect of CEO image strategies on consumers has been studied (Alghawi et al., 2014). The main goal in that study was to find out how consumers reacted to different types of communication strategies through the CEO’s social media channels. They found that there are two types of consumers based on usage orientation, the social-oriented followers and the goal-oriented followers. Goal-goal-oriented followers are mainly aiming to gain useful business-rela ted information from the CEOs. The goal-oriented followers are also more loyal to CEOs who provide them with useful information about the business. Social-oriented followers are more loyal to CEOs who are less professional and talk more about society (Alghawi et al., 2014).
The first strategy that will be discussed is the personal strategy. Personal communicat io n can be seen as communication which arises from other roles and context as a person’s work, profession or roles in his or her organization (Jameson, 2014). A personal strategy can be divided into two sub strategies; a friend and a daybook strategy (Alghawi et al., 2014). The
topics typically discussed with a friend strategy are often diverse ranging from popular social issues and life philosophies to hobbies like sports. In a daybook strategy, the same topics can be mentioned but there is low or no interactivity with the CEO’s followers.
Next to a personal strategy, there is a professional strategy. The professional strategy is defined as a communication strategy “which arises from a person’s work, vocation, or organizational roles” (Jameson, 2014, p. 11). The professional strategy is divided into two types (Alghawi et al., 2014). The expert type strategy is a strategy where messages contain information highly related to the industry where the CEO is in. These messages can contain information about technological trends, market forecasts or new product development. In these messages it is typical that questions are addressed or discussed with followers. The other strategy is a textbook type professional, where, much like the daybook, there is low to no interactivity with the followers.
Next to a professional strategy, a company can also engage in a strategy which communicates about corporate social responsibility. By communicating about their CSR, companies can generate favorable stakeholder attitudes and enhance behavioral loyalty like purchase intentions (Du, Bhattacharya & Sen, 2010). Additionally, it is found that CSR communications create a favorable corporate image, stronger stakeholder-compa ny relationships, and generate stakeholders who will advocate more on behalf of the company (Du et al., 2010). It has been found in previous research that social media messages who communicate about social cause, like CSR, have a greater Klout score, which implies that they have a greater impact on the followers (Ashley & Tuten, 2014).
3. Conceptual model development
It is found that by creating a brand community, relationships can be enhanced between consumers and the brands. These relationships are creating trust in the brand and are leading to more loyal consumers (Laroche, Habibi & Richard, 2013). It has also been found that communities with a social structure, like a social media platform, have positive effects on trust and loyalty. When talked about Facebook for example, every time a CEO posts a status update, there is an option to react to the update, or react to other people commenting. This is very simila r to the existing definitions of a brand community discussed by Laroche et al. (2013). By using these platforms, consumer loyalty can then be enhanced. When consumers have a psychologica l sense of community, they are more likely to be satisfied with the core attributes of the brand, they have a higher overall satisfaction, and their loyalty intentions will increase (Drengner, Jahn & Gaus, 2012). Brand community researchers have found that the main function of creating brand communities is creating brand trust, this is created by the social structure of the communities (Laroche, Habibi, Richard & Sankaranarayanan, 2012).
When it comes to more specific social media usage, a prior research has found that the average follower loyalty for a CEO is highest when the CEO talks about his/her expertise (Alghawi et al., 2014), and lowest when a CEO talks more about his/her personal life. However, this loyalty is not measured like purchase intentions or word-of-mouth expression, but as the tendency to continue following the CEO. It is recommended that CEOs who want to build their social image, to use an expert strategy to better present themselves. Also in the research fields of decision- making it is found that when a leader shows he/she is competent, the followers are more likely to be loyal to the leader (Dooley & Fryxell, 1999). It has been suggested that social media interactions can cause an increase in loyalty among consumers (Heller Baird & Parasnis, 2011).
To summarize, with a social media platform, a brand community is created which leads to a better relationship between a consumer and a brand. Also, a CEO who talks about from an expert standpoint, creates more loyalty than a CEO who talks from a personal standpoint. Therefore, the following hypothesis can be noted:
H1: Social media strategies can influence consumer loyalty
It is crucial for company leaders, to create the perception of honesty and integrity, in order to gain trust from stakeholders (Pirson & Malhotra, 2008). However, they claim that it is not enough. They argue that stakeholders who interact regularly with a company, such as loyal consumers, need to perceive that the company cares about their well-being. This caring can also be described as benevolence toward the consumer, which is critical. CSR is a way for a company to show that they care about the well-being of a society. Dialogic communications in social media create trust and commitment from consumers (Park & Reber, 2008).
Because of the characteristics of a professional approach to social media messaging established by Alghawi et al. (2014), it is clear that a professional approach aims to communicate about the business and industry in which the CEO is active. This communicat io n shows the consumer that the CEO is thinking actively about his work and would increase the perception of cognitive ability.
Thus, it has been proven that when a company leader creates an image of honesty and integrity, trust is gained. Also by communicating about the business and industry, an image is created of competence, which leads to trust. Therefore, the following hypothesis can be noted:
H2: CEO’s social media strategies can influence a CEO’s trustworthiness
Many consumers claim that they want to be passionate about the brand first before they engage with a brand, and the consumers aren’t all fully persuaded on how much influence the social
media strategies can have (Heller Baird & Parasnis, 2011). They also wrote that a majority of consumers are only inclined to interact more through social media with brands they already know and trust.
Companies who communicate their Corporate Social Responsibility are not only gaining more trust from internal stakeholders, such as employees and investors, but also from their external stakeholders, the consumer (Hanson et al., 2011). CSR associations can have a positive influence on consumer identification with the brand (He & Li, 2011). According to Martínez and Del Bosque (2013), CSR information can be used to generate a feeling of identification and connection for the consumer toward a company. They suggest that consumers associate CSR with an image of responsiveness to the needs of the society. In several researches it is found that CSR activities reveal a corporate identity on which consumers can relate (e.g., Sen & Bhattacharya, 2001).
Trust is gained when a company has shared societal values with its consumers (Morgan & Hunt, 1994). If a company adapts a strategic decision-making process with ethical and responsible principles, they can gain trust from all stakeholders (Hosmer, 1994). This is also found by Du et al. (2010), they have developed a framework where trust is among others, the outcome of CSR communication. This is the case because the perception of ethical and responsible actions from a company will stimulate the trust-based relationships between the company and their consumer, because the actions surpass any contractual or legal constraint s (Swaen & Cumpitaz, 2008).
It is proposed that trust is created as an immediate consequence of social performances from companies (Pivato, Misani & Tencati, 2008). Because CSR is about the society and the surpassing of any contractual and or legal constraints, this CSR can be seen as benevolence.
If a company or CEO uses a social media platform to communicate about how well it is performing, or about how competent the brand is, the consumer will be more willing to rely on
the brand. This competence refers to the ability of a brand to solve a consumer’s problem and to meet his or her expectations and needs (Lau & Lee, 1999).
To sum up the literature, consumers want to be passionate about a brand before engaging with it, and passion is created through social media interaction. If a company communicate s about their CSR or societal values, or about their competence, trust in the brand is gained from consumers. Therefore, the following hypothesis can be noted:
H3: A social media strategy can influence the trustworthiness of a brand
The most important thing for a company leader is to show that he is trustworthy. This trustworthiness allows followers to accept and commit to the goals and decisions which a leader will make more easily (Robbins & Judge, 2015). In this case, it can be assumed that the same will be true for consumers, if a consumer believes a CEO is trustworthy, a consumer is more likely to commit to buying products from the CEO, because the consumer will believe that products are reliable.
The benevolence part of trust is very important in determining loyalty for companies due to the credence part of a company’s business, these credence components are there because consumers cannot always tell if the service that is provided, is of a high standard (Ball et al., 2004). A consumer is then solely relying on the benevolence and integrity of the service provider, this integrity can only be communicated by an individual, such as a company CEO. When a company makes it easier for consumers to reach appropriate company staff, they can easier voice their needs, perceptions and complaints and this leads to consumer loyalty (Kotler & Keller, 2012).
Other researchers have found that relational trust has an increasing effect on loyalty intentions (Agustin & Singh, 2005). They based their findings on quantitative data and the
trust-commitment theory, which proposes that trust has a big role on loyalty intentions because of the less central role of satisfaction.
If a CEO is perceived as trustworthy, it is easier for a consumer to commit to the products of that CEO’s brand, because they then believe that the product or service is of a good quality. Also, the trust-commitment theory suggests that consumers need trust more than satisfaction, which ultimately will lead to loyalty. Therefore, the following hypothesis can be noted:
H4: CEO trust positively influences consumer loyalty
Previous research has found that trust is a critical variable in relationships (Ball et al., 2004). Those who are not trusting a company in a competitive marketplace, are likely to choose for a competitor who is trustworthy. In the quest to look for loyalty, it has been suggested that loyalt y is always caused by trust (O’shaughnessy, 1992). To win loyalty in the current markets, marketers should focus on building and maintaining trust in the relationship with its consumers (Lau & Lee, 1999).
Reducing risk is one of the most important functions of a brand to undertake to make it easier for a consumer to choose their products (Matzler et al., 2008). When this risk is reduced, the trust in that particular brand will increase. They advocated that it is even more important when the perceived risk is particularly high. The study found that when these risks are limited the brand trust will increase.
It was also found that there is a positive relationship between brand trust and repurchase loyalty, which means that if a consumer trusts a brand, they are more likely to repurchase their products from the particular brand (Matzler et al., 2008; Chaudhuri & Holbrook, 2001). If one individual trusts another one, or a company, it is likely that he or she will create some form of positive attitude toward the individual or company. They claim that these positive attitudes
cause behavioral intentions toward the company and leads to purchase behavior (Matzler et al., 2008).
Gefen (2000) found in his research about familiarity and trust in the e-commerce that trust in an e-commerce vendor increases people’s intentions to purchase products from the business. The explanation for this is that people see trust as an additional warranty for products. Luhmann adds, that it reduces the complexity, by ruling out possible undesirable future actions by the e-commerce vendor (Gefen, 2000).
As mentioned earlier, brand trust is established by a company through meeting their obligations and expectations toward consumers. A definition of satisfaction is similar, it is defined as a person’s feelings of pleasure or dissatisfaction between what they expected of a product and the product’s actual performance (Kotler & Keller, 2012). By meeting these product or service expectations, a company will build a reputation and gain trust from their consumers. It has been found in previous studies that consumer satisfaction has a positive effect on consumer loyalty (e.g. Bei & Chiao, 2001). When talked about the consequences and functions of trust, it is seen as a key factor of long-term relationships. Researchers claim that high brand trust leads to higher level of brand loyalty because trust creates exchange relationships (Morgan & Hunt, 1994).
To develop loyal consumers, brand trust is a key element to be developed first. Brand trust functions as a variable that generates commitment from consumers, especially in situatio ns of high involvement. This involvement is created by communicating with consumers through social media. The effect of brand trust is in the case of high involvement even greater than the effect of overall satisfaction with the product or service (Delgado-Ballester & Munuera-Alemán, 2001).
It is argued that the trust relationship creates a more positive mood which would lead to a higher level of brand loyalty (Dick & Basu, 1994). Brands that satisfy consumers and make
them happy, joyful or affectionate, get higher purchase and attitudinal loyalty in return from them (Chaudhuri & Holbrook, 2001). This suggests that brand trust would be an important mediator between social media interactions and consumer loyalty.
In conclusion, because trust is an indicator of perceived risk, consumers seek to find a brand in which they perceive the smallest risk in regards to doing business with those companies and its brands. Also repurchase activities will increase because the consumer creates a positive attitude towards the brand when the brand is trusted. Therefore, the following hypothesis can be noted:
H5: Brand trust positively influences consumer loyalty.
Trust is gained through a social presence in the interactions with the company (Gefen & Straub, 2004). In the modern days where most transactions happen in the e-commerce it is crucial to have a form of social interaction. In this case this interaction will be through social media, and the provider of this interaction is the CEO. It was also found that it is important to have a reputation of fair play and to show that the CEO invests his or her fair share in the relations hip (Gefen & Straub, 2004). They add to this that trust can be built through observed behavior which shows a trustworthy track record. This behavior can be observed through the social media messages of the CEO.
Information quality is an important trust-building mechanism in online interactio ns between a company and a consumer (Fung & Lee, 1999). Information quality provides such positive information traits, like accuracy, that it should influence trusting beliefs like integrit y. Also benevolence would be influenced because the information quality reflects responsivenes s to the needs of the receiver (Nicolaou & McKnight, 2006). Brand trust increases when the quality of information increases about the brand (Ha, 2004). This quality of information is at its greatest when it comes from a reliable CEO of the brand itself.
Finally, it can be assumed that a CEO has a lot of expert knowledge about his or her company and its brands. This implicates that consumers think highly about a CEO when he or she shows confidence in the brands. If a CEO does not have confidence in his brands, he wouldn’t be the CEO of the company, from this we can conclude that if consumers trust a CEO, they should also trust the brand which the CEO represents.
To summarize, because trust is gained from social presence with the interaction of a company, the social media presence of a CEO creates trust with consumers. Because the CEO can communicate directly to the consumers, there is a high perceived information quality which is an important trust-building mechanism. Therefore, the following hypothesis can be noted:
H6: CEO trust positively influences brand trust
The literature suggests that trust also depends on a trusting disposition (Gefen & Straub, 2004). This disposition to trust is a general inclination to feel secure in the dealings with other people, and adapt a trusting stance. A trusting disposition has the most effect on a relation when this relation is not yet fully developed, and the consumer is not yet familiar with a brand or product.
Another factor that influences trust, is the familiarity factor (Gefen & Straub, 2004). In this research, it is chosen to exclude the familiarity factor by choosing to create non-exist ing CEO’s from non-existing companies. This way the loyalty and trust factors are not influenced by already developed relationships between participants and existing brands.
In previous literature, in the form of survey results and experimental findings, it is shown that gender has an effect on trusting behavior. From these results it was concluded that men trust more than women (Riedl, Hubert & Kenning, 2010). It was found that it is less likely for women to believe that people can generally be trusted. With respect to these findings, gender will be measured in this research to find if it has a significant effect on the hypotheses.
Figure 1. A conceptual model
4. Research Method 4.1. Research Strategy
Because this study tries to test a theory, our research will have a deductive approach with a between subject design. This is chosen so any contrast bias between the different social media strategies can be excluded. A survey will be used to gather the data and test the hypotheses. It will be a cross sectional data collection where all the data will be gathered in a few days. A quantitative research will be conducted. The respondents will be recruited mainly through a personal approach with a paper survey at Dutch railway stations and through social media channels like Facebook, where a status post will be shared with a hyperlink to the survey webpage. By choosing for this quantitative approach with surveys, it is possible to generate
findings that represent the whole population at a lower cost than collecting the data for the whole population (Saunders et al., 2012).
A non-probability sampling method will be used, where the research hopes to find a lot of volunteers. By recruiting the respondents through social media channels like Facebook, there will most likely be a self-selection sampling method. In this case it will be good because all the respondents have an account on at least one social media network.
In this survey there will be three different social media strategies measured which have been communicated by a fictional CEO from a non-existing fashion company. This strategy is chosen so that any disposition toward the loyalty of an existing brand can be excluded. Every social media post is different in the content of the message. This is done so it is possible to see any differences in responses between different social media messages of the same CEO. The questions used in the survey will be derived from previous researches, but are translated to Dutch.
4.2. Measurements
In this section, it will be discussed how consumer loyalty, CEO trust, brand trust and trusting dispositions are measured, with example statements and by whom these statements were developed. A full list of all items is available in Appendix C.
4.2.1. Dependent variable: Consumer Loyalty
In this research, the main goal is to find what social media strategy creates the most consumer loyalty. This consumer loyalty is measured by three items found in the exploratory research of Rundle-Thiele (2005). These statements are chosen to measure behavioral intentions, attitudina l loyalty, word-of-mouth intentions, resistance to competing offers, attitudinal loyalty and behavioral loyalty. An example item is: “I would recommend this clothing company to my
family and friends”. All items can be answered on a Likert scale ranging from strongly disagree (1) to strongly agree (7). A high score on these statements would imply that the respondent is very loyal to the particular brand.
4.2.2. Independent variable: Social Media Strategy
With regards to the social media strategies, a different approach is made, fictive social media messages were created to fit each social media strategy. To make sure this is done right, this research uses tools from previous researches where the strategies are already discussed.
First, there was thought about which criteria a personal social media message should meet. In this study it is decided to use a social media message where the CEO is talking about aspects of life, social issues or hobbies, as mentioned by Alghawi et al. (2004) where they defined this as a personal social media strategy. In this survey we chose to talk about the UEFA Euro 2016 football tournament.
In the development of a professional social media message, criteria where developed which were mentioned in the research from Alghawi et al. (2014). The social media message had to contain industry-related information about either technological innovation, market forecasts, new product developments, or performance results.
During the development of a message about Corporate Social Responsibility, the message had to meet the criteria which Brown and Dacin (1997) developed. The message should at least say that the company tries to protect the environment, that the company shows it is committed toward society by improving the welfare of the communities in which it operates, and that the company directs part of its budget to donations to social causes. If a company meets all these criteria, it is selected to be used as a CSR social media strategy message.
4.2.3. Mediating variable: CEO Trust
CEO trust is measured by six items developed by McKnight, Choudhury and Kacmar (2002). These six items are covering the three main factors of trust; benevolence, integrity and competence. A sample item for benevolence is: “I believe this CEO would act in my best interest”. For integrity an example item is: “I believe this CEO would keep himself/herself to the commitments made”, and for competence an example item is: “I believe this CEO is a competent and effective leader”. All statements are answered on a Likert scale ranging from strongly disagree (1) to strongly agree (7). A high score on these statements would imply that the CEO is very trustworthy.
4.2.4. Mediating variable: Brand Trust
Brand trust is measured by a six item scale developed by Delgado-Ballester, Munuera-Ale ma n and Yague-Guillen (2003). These six items are covering two dimensions, the fiabilit y dimension and the intentionability dimension. A sample item is: “This company would make any effort to satisfy me”. All items can be answered on a Likert scale ranging from strongly disagree (1) to strongly agree (7). A high score on these items would imply that there is a high brand trust.
4.2.5. Control variable: Trusting Disposition
The trusting disposition is measured by a three item scale with items developed by Gefen and Straub (2004). These items are interested in how the respondent feels about trusting people in general. A sample item is: “I feel that people are generally well meaning”. All items can be answered on a Likert scale ranging from strongly disagree (1) to strongly agree (7). A high score on these items means that the consumer tends to already have a lot of faith in other people even without knowing them.
4.3. Procedure
A survey was conducted partially through qualtrics. The data has been collected through Facebook, with an anonymous link to the survey, and through a more personal approach, which meant that the respondents were approached in person with a paper survey, these surveys were later entered manually into qualtrics. Before the survey started, whether it was through the web survey or the paper one, it was communicated that the survey would not take longer than four minutes. Also, it was clearly stated that in the survey, the CEO and the brand were made up and did not exist in real.
5.4. Analysis and predictions
In order to be able to analyze the ordinal variable ‘strategy’ in a linear regression analysis, the strategy variable had to be divided into three dummy variables; professional, CSR, and personal. The analysis is performed through a multiple regression analysis based on Baron and Kenny (1986). First a regression analysis will be performed for the individual effects of a social media strategies, CEO trust, and brand trust on loyalty. From these analyses it is expected that a professional strategy, trust in a CEO, and trust in a brand will cause consumers to be more loyal to the brand.
Then there will be tested with a second model if CEO trust and brand trust are mediators for the relationship between social media strategies and consumer loyalty. This is done by an extension in SPSS with a process tool developed by Preacher and Hayes (2007). It is expected that CEO trust and brand trust will indeed mediate in the relationship between social media strategies and loyalty.
4.5. Sample
The sample consisted of 105 respondents, 73 respondents used the online survey, the paper surveys were filled in by 32 respondents. 54 percent of all respondents were male. The respondents were between the 13 and 61 years of age, with an average age of 26 (SD = 11.3). The average length that respondents were active on social media platforms was 8 years (SD = 3.7). Of all respondents, 63.8% were students. 39% of all respondents finished their high school.
4.6. Reliability and correlations
The measurements were all reliable for loyalty (α = 0.730), brand trust (α = 0.842), and CEO trust (0.745). There is a moderate positive relationship between brand trust and loyalty r (105) = 0.543, p < .001. There are also positive relationships between CEO trust and brand trust r (105) = 0.622, p < .001, and between CEO trust and loyalty r (105) = 0.650, p < .001. This means that when the trust in a CEO increases, the trust in the brand, and the loyalty towards the brand will also increase. It also implies that when brand trust increases, the loyalty towards the brand will increase. Surprisingly, trusting disposition and gender do not significantly correlate with the other variables. In order to later analyze social media strategies for regressions, three dummy variables were created; professional, personal, and CSR. The means, standard deviations and correlations of these variables are also showed in table 1.
Table 1
Means, standard deviations and correlations (Cronbach’s Alphas on the diagonal)
Variable 1 2 3 4 5 6 7 8 1. Loyalty (.730) 2. CEO Trust .650*** (.745) 3. Brand Trust .543*** .622*** (.842) 4. Personal Strategy -.315* -.462** -.098 - 5. CSR Strategy .038 .056 -.129 -.458*** - 6. Professional Strategy .264** .386*** .218* -.509*** -.532*** - 7. Trusting Disposition .108 .180 .173 -.064 .016 .046 (.811) 8. Male .033 .071 .066 -.140 .063 .072 .169 - Mean (std.) 4.57 4.93 4.75 .30 .32 .37 4.52 .54 (1.03) (.79) (.86) (.46) (.47) (.49) (1.12) (.50) Note: N = 105. *p<0.05, **p<0.01, ***p<0.001 5. Results
To test the hypotheses, the data have been analyzed through a one-way ANOVA, a multip le regression and a process tool developed by Preacher and Hayes (2007). Because the social media strategies are ordinal variables, a one-way ANOVA was carried out to examine the mean scores of brand trust, CEO trust and loyalty between the social media strategies, to test H1, H5 and H6.
Post hoc comparisons using the Tukey HSD test indicated that the mean score for the personal strategy (M = 4.39, SD = .47) was significantly worse than the professional strategy (M = 5.32, SD = .63) and the CSR strategy (M = 5.00, SD = .90) when it comes to creating CEO trust. When it comes to creating loyalty, a professional strategy (M = 4.92, SD = 1.10) is significantly better than a personal strategy (M = 4.08, SD = .65), however, the CSR strategy (M = 4.63, SD = 1.09) did not significantly differ from the professional or personal strategy.
The mean scores of brand trust from a professional (M = 5.00, SD = .77), a personal (M = 4.63, SD = .78), and a CSR strategy (M = 4.59, SD = .99) did not significantly differ among any of the combinations. The results of the post hoc Tukey HSD test are presented in Table 2.
Taken together, these results find support for H1 and H5. It suggests that a social media strategy does really have an effect CEO trust and loyalty, but does not have an effect on brand trust. Specifically, the results suggest that a professional strategy is more effective in creating loyalty than a personal strategy, however it is not significantly more effective than a CSR strategy. Additional to this, a personal approach to social media is significantly less effective in creating CEO trust than a professional or a CSR approach to social media.
Table 2
Results of Post Hoc Tukey HSD Test
Dependent Variable Independent Variable
Strategy Strategy Mean Difference SE
CEO Trust Personal Professional -.939*** .165
CSR Personal .610** .170
Professional CSR .330 .162
Brand Trust Personal Professional -.371 .202
CSR Personal -.032 .209
Professional CSR .403 .199
Loyalty Personal Professional -.840** .234
CSR Personal .544 .241
Professional CSR .296 .230
Note: N = 105. *p < .05, **p < 0.01, ***p < 0.001
From this information, support is found for to confirm hypotheses 1 and 2, choosing a different social media strategy can affect the amount of CEO trust and loyalty that the consumer expresses.
Then after the one-way ANOVA analyses, three dummy variables were created, for each strategy one. Because of the strong correlations between CEO trust and brand trust with loyalt y, both trust variables were considered potential mediators. To determine whether together these two trust variables fully mediated the relationship between social media strategy and loyalt y, process analyses were conducted using methods described by Preacher and Hayes (2007) for estimating direct and indirect effects with multiple mediators. These analyses bring three advantages with them: (1) multiple mediators can be tested at the same time, (2) it does not rely on a normal sampling distribution assumption, and (3) the number of inferential tests is minimized, and with that, the odds of type 1 errors are reduced. The test has been run three times, for each strategy once. Loyalty was entered as a dependent variable, a social media strategy was entered as the predictor variable, CEO trust and brand trust were entered as proposed mediators, and gender and trusting disposition were entered as controlling variables in the SPSS macro created by Preacher and Hayes for analyses with multiple proposed mediators. This analysis is the analysis performed in the sixth model of the three strategies.
5.1. Findings of the professional strategy
A multiple regression was performed to test the effect of a professional strategy on loyalt y, controlled for the effects of gender and a trusting disposition. Model 1, with an explained variance of 8 percent, showed that a professional strategy has a positive effect on loyalty (β = .259, p < .01, R2 = .079). This indicates that respondents that read social media messages with a professional strategy, are likely to become more loyal toward the brand.
The second regression analysis tests the effect of a professional strategy on CEO trust. Model 2 with an explained variance of 18 percent, showed that a professional strategy has a positive effect on CEO trust (β = .378, p < .001, R2 = .176). This effect indicates that
respondents who read social media messages with a professional strategy, also show more trust in the CEO.
The third model, with an explained variance of 8 percent, showed that a professiona l strategy has a positive effect on brand trust (β = .209, p < .05, R2 = .075), supporting H3. This indicates that when respondents read social media messages with a professional strategy, they are likely to have more trust in the brand.
Furthermore, model 4 has an explained variance of 42 percent and it confirms our prediction that CEO trust has a positive and significant effect on loyalty (β = .652, p < .001, R2 = .423), and thus it supports H4. These findings indicate that when respondents who show trust in a CEO are also more loyal towards the CEO’s company brand.
Model 5, with an explained variance of 30 percent, shows that brand trust has a significant positive effect on loyalty (β = .540, p < .001, R2 = .295). These findings support H5, which suggests that when a respondent shows brand trust, he or she will also show more loyalt y towards the brand.
Finally, the sixth model shows that the total effect of a professional strategy on loyalty (β = .259, p < .01) became non-significant when CEO trust and brand trust were included in the model (β = .02, ns). Furthermore, the analyses revealed, that the effects of a professiona l strategy on CEO trust (β = .378, p < .001) and on brand trust (β = .209, p < .05) were significa nt. Also, the effects of CEO trust (β = .504, p < .001) and brand trust (β = .229, p < .05) on loyalt y were significant. Thus, CEO trust and brand trust fully mediated the relationship between a professional strategy and loyalty, controlled for the effect of gender and the trusting disposit io n of the respondent. The specific indirect effect of both proposed mediators showed that CEO trust and brand trust both are unique mediators.
To find support for our sixth hypothesis, a simple linear regression has been performed. As expected, with an explained variance of 39 percent, H6 is supported, CEO has a positive
effect on brand trust (β = .611, p < .001, R2 = .391). This implicates that when a consumer trusts the CEO of a brand, they will also experience more brand trust. All effects are summarized in the conceptual model in the appendix.
5.2. Findings of a personal strategy
All results are shown in Appendix B. A multiple regression was performed to test the effect of a personal strategy on loyalty, controlled for the effects of gender and a trusting dispositio n. Model 1, with an explained variance of 11 percent, showed that a personal strategy has a negative effect on loyalty (β = -.313, p < .01, R2 = .108). This indicates that respondents that read social media messages with a personal strategy, are likely to become less loyal toward the brand. The second regression analysis tests the effect of a personal strategy on CEO trust.
Model 2 with an explained variance of 24 percent, showed that a personal strategy has a negative effect on CEO trust (β = -.455, p < .001, R2 = .237). This effect indicates that respondents who read social media messages with a personal strategy, also show less trust in the CEO.
The third model, with an explained variance of 4 percent, showed that a personal strategy has no significant effect on brand trust (β = -.084, ns). This means that when a CEO uses a personal approach to social media, it does not have an effect on brand trust. So for this social media strategy, there was no support found for H3.
Furthermore, models 4 and 5 investigate the same linear relationships as previously recorded with the professional strategy. CEO trust has a positive relationship with loyalty (β = .652, p < .001, R2 = .423) and brand trust too (β = .540, p < .001, R2 = .295), both H4 and H5 were already supported. This suggests that when a respondent shows CEO or brand trust, he or she will also show more loyalty towards the brand.
In the last model, model 6, the effects of the two possible mediators are investigated with the process tool developed by Preacher and Hayes (2007). The model shows that the total effect of a personal strategy on loyalty (β = -.313, p < .01) became non-significant when CEO trust and brand trust were included in the model (β = -.08, ns). Furthermore, the analyses revealed, that the effects of a personal strategy on CEO trust (β = -.455, p < .001) was significant, but the relationship between a personal strategy and brand trust was not. Also, the effects of CEO trust (β = .459, p < .001) and brand trust (β = .254, p < .05) on loyalty were significant. Thus, CEO trust fully mediated in the relationship between a personal strategy and loyalty. All effects are summarized in the conceptual model in the appendix.
5.3. Findings of a CSR strategy
Finally, a linear regression analysis has been performed to test the effect of a CSR strategy on loyalty. From the first model it can be concluded that a CSR strategy does not have a significa nt effect on loyalty (β = .035, ns). A CSR strategy also does not significantly affect brand trust (β = -.134, ns) or CEO trust (β = .051, ns), this means that for a CSR strategy, there is no support for H1-H3. From this information, we can stop the testing. The independent variable and dependent variable must be associated in order for other variables to mediate. Thus, if there is no evidence that the IV affects the DV, then there is no point in estimating other effects (Hayes, 2009). All results are shown in Appendix A.
6. Discussion
The research was done using a theoretical framework based on previous studies. The study is aimed to contribute to the literature concerning the creation of loyalty and trust. The research examined the role of social media strategies of CEOs on the creation of consumer loyalty. In order to help this research, two variables were examined: CEO trust and brand trust, to see if
these variables mediated the relationship between social media strategies and consumer loyalt y. This was done to give answer to our research question: Can social media strategies from CEOs have an effect on consumer loyalty for the CEO’s brand? To test these effect, six hypotheses have been developed.
The first hypothesis, which investigated if a social media strategy affects loyalty, can be confirmed. Although a CSR strategy does not affect loyalty, a professional approach and a personal approach respectively increase and decrease the consumer loyalty. This has been investigated in research fields about strategic teams and decision-making, where it is discussed that competent leaders are indeed more likely to have loyal followers (e.g. Dooley & Fryxell, 1999).
Hypothesis 2, which suggested that a social media strategy affects the amount of trust a consumer has in a CEO, can be confirmed too. This study has shown that a professiona l approach to social media causes consumers to trust a CEO more than when a personal approach is used. A personal approach causes consumers to trust a CEO less. More precisely, a consumer expresses more trust in the competence, when a CEO uses a professional approach, and less trust in the CEO’s competence when a personal approach has been used, these findings are in line with studies that claimed that an important factor of trust is the part where the trustor relies on the competence of the trustee (Moorman et al., 1992).
Hypothesis 3, which suggested that a social media has an effect on brand trust, can be partially confirmed. This finding is in line with the existing literature, where it is found that social networking activities positively influence brand trust (Laroche et al., 2012). Although a personal approach to social media does not have an effect on the amount of trust the consumer has, a professional approach does. The professional approach makes consumers trust a brand more than a CSR or personal approach. This suggests that social networking activities can positively influence brand trust, but only when utilizing a professional approach.
Hypothesis 4, which proposed that CEO trust positively affects loyalty, has also found support and can be confirmed. This is in line with previous studies, where it has been found that there are strong effects for credibility or competence trust on loyalty (Ball et al., 2004). The benevolence trust that is found in the CEO was affecting loyalty the most.
The fifth hypothesis, which investigated if brand trust positively affects loyalty, can also be confirmed. This means that consumers who are trusting the brand which they are dealing with, are also more likely to express loyal behavior like repurchasing behavior, advocating on the brands behalf, and being less sensitive about the price of products. These results were supported by the previous studies (Chaudhuri & Holbrook, 2001; Morgan & Hunt, 1994). Brand trust creates loyalty because trust creates an exchange relationship between consumers and brands (Morgan & Hunt, 1994). Thus it is important to continue and maintain the important relationship which is created by trust (Chaudhuri & Holbrook, 2001).
The last hypothesis, H6, which suggested that CEO trust has a positive effect brand trust, can be confirmed. This is in line with what previous researchers have found. By having a personal interaction with a brand, like a CEO, brand trust increases more (Gefen & Straub, 2004).
7. Conclusion
After examining the theory and the gathered data in this research, it can be concluded that a social media strategy does not directly increase or decrease the tendency of a consumer to be loyal to the brand. It does however indirectly, because it does affect brand trust and CEO trust, which then causes the consumers to become more or less loyal.
A professional strategy causes consumers to express more trust in the brand and its CEO, which ultimately leads to more loyalty from the consumer. A personal strategy however, causes
