CUSTOMER COMPLAINTS- Gifts or Hindrances?

Presenter: Rosemarie Price

AIM Breakfast 14 April 2010

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Overview of presentation

What is a Complaint? Why do customers complain? How is a complaint a gift? Impact of Management’s view of complaints handling Complaints handling in a global environment What can be achieved with a “Complaint is a gift”

strategy- looking at complaints differently

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What is a Complaint?

AS ISO 10002 Customer satisfaction – Guidelines for complaints handling in organizations defines a complaint as –

“An expression of dissatisfaction made to an organization, related to its products (services), or the complaints-handling process itself, where a response or resolution is explicitly or implicitly expected”

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Why do customers complain?

Their expectations have not been met!

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Recent experience

Activity-1 minute Turn to the person sitting next to you and

discuss a recent experience where you handled a complaint, focusing on how you reacted to your complaint

Alternatively, discuss a recent experience where you made a complaint, focusing on how the business reacted to your complaint

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Recipient’s normal reaction to complaints

Ignore complaints Defensiveness Anger Concern re loss of trade, reputation Annoyance, time consuming, rectification costs Hindrance- wish they would just go away! Not believe some or all of what the customer was saying These reactions are as a result of “negative attribution” –

blame is being attributed to us or our business. A complaint is evidence that, in the customer’s view, we have not met their expectations.

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Customer’s manner

Lack Gracious Social skills to communicate Nervous Harsh, one sided Emotional Lack understanding of commercial/regulatory

limitations Rude Unreasonable complainant

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Complaint deterrent techniques

Apology only, no rectification Blame Promise but don’t deliver No response Rudeness Pass on to another department Customer Interrogation

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How could complaints be gifts?

Underlying Principles1. There are 2 Levels of messages embodied in complaints

2. The customer has 2 separate needs when complaining-needs as individuals and needs relating to the complaint

3. The benefits of Customer recovery far outweigh the cost of losing a customer or attracting another customer

4. The majority of customers are honest

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1. Two levels of messages in Complaints

Example 1 Surface message – product is not working as expected Underlying message – I don’t understand the new

technology, I need help

Example 2 Surface message- I am disappointed with the service

during my last visit/purchasing experience Underlying message – I am testing the value of my

loyalty to your business

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2. Customer’s needs when they complain

Needs as individuals To be heard To be understood To be respected

Needs relating to the complaint To have their concern dealt with quickly, fairly and

properly To be given what they have been denied and perhaps an

apology To have action taken to fix a problem or address a

concern- a resultant process change

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3. Benefits of Customer Recovery

Only 4% of dissatisfied customers complain. 96% leave without any communication to business

Of the 96% who leave, 91% will never return A typical dissatisfied customer will tell 8 to 10 people about

the issues with your business- significantly more in global communications

1 in 5 dissatisfied customers will tell 20 people about the issues with your business

It takes 12 positive service incidents to make up for one negative incident

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3. Benefits of Customer Recovery (cont’d)

7 out of 10 complaining customers will do business again with you if resolve the complaint in their favour

Of complaining customers, 95% will do business with you again if you resolve the complaint at the first contact

On average, a satisfied complainer will tell 5 people about their problem and how it was solved

It costs 6 times more to attract new customers than it does to retain current ones

Customer loyalty is worth 10 times the price of a single purchase

“How to win and Keep Customers” – Michael LeBoeuf

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4. The majority of customers are honest

1-4% of customers systematically cheat businesses If complaining customers are treated with suspicion

or rudeness, customers will take a defensive position

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The Gift

If a customer is complaining, you are being given a chance to retain that

customer

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Unwrapping The Gift

Free direct communication from customer about service failures, competitors offerings-no survey costs

Readily available market research-Complaints define what customers want

Opportunity to increase customer trust Opportunity to build long term relationships-customers will

re-purchase if they believe complaints are welcomed Opportunity to rectify service failures Opportunity of engaging customers as advocates

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Engaging Customer as your Advocate

Customers becoming your advocates is based upon “reciprocity” principle – humans like to return favours

When businesses handle customer complaints in a respectful way and a token of atonement is offered beyond their expectation, customers are likely to reciprocate with positive advocacy

Token of atonement can be financial, but can also be an apology, acknowledgement of making a difference- recognition of their value

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What are the elements of “Complaint is a gift” strategy (1)

Complaints Policy and guidelines based on “complaint welcoming” culture

Complaints data base to maximize complaints capture

Complaint handling training, including empathy and conflict handling training- front line staff and induction training

Target response and resolution times Regular complaints reporting

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What are the elements of “Complaint is a gift” strategy (2)

Clearly defined Escalation path for difficult complaints

Specialist Complaints case managers Customer Surveys Continuous improvement focus Unreasonable Complainant conduct management

guidelines (demands, persistence, lack of co-operation, arguments, behavior)

Complaints Analysis- root cause analysis

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Practical Implementation of Gift Strategy

Thank customer for contacting you Explain why feedback is appreciated Apologize for service failure Take responsibility and make commitment to customer to do

all you can to rectify situation Collect all information from customer Correct or facilitate correction of service failure as promptly

as possible Check customer satisfaction Prevent future service failures of this type-root cause

analysis (5 whys, causal factor tree analysis etc)

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Impact of Management view of Complaints Handling

Customer Charter set by management- includes complaints handling

Focus on complaints “welcoming” not reduction of complaints

Culture, Complaints Handling guidelines/policy, KPIs, reporting, escalation path for complaints

Management set mandate for staff re customer recovery, give confidence/framework

Mindset of staff is easily sensed by customer

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What can be achieved from a “Complaint is a Gift” strategy

Improved Customer Experience Access to valuable source of knowledge- at no cost Knowledge of most common service failures Increased customer trust and loyalty Opportunity to partner with customer as advocate Opportunity to strengthen service quality

management Increased satisfaction for complaints handling staff

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Application of Gift Strategy

Can be applied to large corporations, individual departments, small businesses, monopoly businesses, government departments or government owned corporations

Comment re monopoly/ businesses – equally important – focus is on improved customer experience, improving complaint handling staff experience, achieving best practice, reducing external ombudsman costs

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Using “Complaint is a gift” knowledge as a Complainant

Be clear and specific in describing what you are complaining about

Be respectful Describe the impact and what you are expecting as

a resolution Make suggestions re improvements Give the business a chance to rectify the issue and

retain your business See your complaint as a gift

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Readings/References

“Complaint is a Gift” – Janelle Barlow and Claus Moller 2nd edition, TMI

“How to Win and Keep Customers”, Michael LeBoeuf

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SUMMARY

Complaints are packages with 2 levels of messages waiting to be unpackaged

Complaints are given freely Businesses can use the gifts in different ways-

correction of immediate and systemic issues through direct communication of unmet expectations

Complaints give businesses opportunities to retain customer’s business and loyalty

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A question to ponder

Putting yourself in the customer’s seat , what is your preference –

Would you rather be dealing with a business that ignores complaints or with a business that welcomes complaints and sees them as a gift – a powerful source of information ?

Let your response to this question be the driver for your approach in managing complaints for your business.

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Questions