Customer Complaints Can be Great or Bad for Business

By Michael Hill of Complaints R Great

The quest for 100% customer satisfaction is like the quest for most forms of perfection - a little unrealistic. Problems often happen because the environment in which your business operates changes with the changing wants and needs of customers, market regulation and so on.

Any business should put processes in place to identify customer satisfaction, put problems right, deliver quality services and products and build better business relationships. The best will invest in effective complaint handling processes recognizing the return in terms of fully understanding the needs of customers, increased customer loyalty and retention, positive word of mouth advertising and free notification of potential service problems, product failures or non-compliance with regulations and legislation.

Give me contact!
Most businesses encourage contact from both customers and staff in one form or another. The monitoring of contacts is vital for effective performance management and, ultimately, better products and services. You will receive suggestions, compliments, product and service enquiries and complaints.

Attitudes to complaining in a business to business environment
The National Complaints Culture Survey 2000 gathered the opinions of consumers and a variety of businesses. The survey found that 44% of people will now complain all or most of the time when they encounter a problem with a service or purchased goods. Incidence of complaining in a business to business environment is greater than consumer complaints. An average of only 25-30% of business customers will not pursue a complaint compared to 56% of consumers not making the effort. Interestingly, consumers have a greater tendency to escalate a complaint to a manager or head office. Only 45% of consumers said they complain to the front-line – but 75% of business to business customers complain to a front-line member of staff. Often, a complaint to the front-line goes unrecorded – important information about a product or service is lost.

The number of complaints can also be affected by the perceived loss. A high loss can result in 75% of customers complaining and a low-loss can reduce the figure to 5% or less.

Customers sometimes want written confirmation of action taken but 73% of people would like some personal contact by phone or face to face to quickly resolve the problem.

You should note that the National Complaints Culture Survey 2000 found 58% of employees expressed dissatisfaction with the level of empowerment given to them to resolve a complaint. Employees expressed concern about being untrained in complaint handling and being left unsupported. Many said their organization actively discouraged them from resolving complaints. An unresolved complaint in a business to business environment could be particularly damaging to you business…

Complaints can improve customer loyalty (…or drive customers away!)

Your business customers who complain are likely to be regular users of your services or products. A well-handled complaint can actually increase customer loyalty:

• Customers are more likely to use your services again or purchase further products in future (and also sing your praises)
• The use of 0800 numbers for reporting complaints increases customer reporting of problems but also shows your customers that you are sincere in wanting to know about problems (improving your image)
• A study carried out by the Warwick Business School revealed that 53% of examples of outstanding service resulted from complaints handled well by a business

A well-handled complaint will also:

• educate a customer in the workings of your business
• ensure that your customer will be easier to deal with in future contacts
• be an opportunity for you to impress your customer with your sense of responsibility in business

Remember the impact a poorly handled complaint can have on business. A customer experiencing difficulties in achieving a resolution is likely to spread bad press about your business:

• A dissatisfied customer tells 10 to 25 others about a bad experience
• Internet customers are becoming increasingly aware of the possibilities for tarnishing your image following a poorly-handled complaint (making use of e-mail chat with colleagues and other business partners)

A poorly handled complaint can create customers who are:

• badly informed about your business
• time-consuming or go elsewhere

Ease of complaint reporting can be equally important in making sure that your customers complain in the most cost-effective way. If you have a complaint process that is difficult to access you will find that the process:

• is only accessible to your most knowledgeable customers
• creates difficult customers who may:
• withhold or delay payment
• give up and go elsewhere
• make successive (costly) contacts across your business
• misses out on vital information for your business

The cost of winning new business compared to retaining existing business can be as high as 20 to 1. An effective complaint process will be far-reaching across your business - touching the parts that most other customer retention systems fail to get to! Your processes will be more customer-focused with customers aiding the business through quick reporting of possible problem areas. You will have a valuable source of information for flagging possible problem areas – ideal for feeding in to quality assurance processes and testing compliance with any relevant regulations and legislation.

When developing or reviewing a complaint process make sure you get the basics right. Easy access to the process is all important. You will need to consider:

• A free-phone help-line for reporting complaints
• Publicity – why not give information on how to complain on invoices or as an insert with contract documents
• Don’t limit customers in the ways they communicate problems – give fax and email contacts and consider the differing needs of customers in your particular market place – do you need to have a specific form on your web site for business to business customers to report problems?

Communicate in clear terms – remember a complaint is an opportunity to educate a customer about your products and services. A complaint may highlight that a business partner is not using the full capabilities of a particular product – maybe the customer needs to purchase an additional add-in. A complaint is an opportunity for you to sell the benefits your business can provide. Poor communication will cause you to lose out.