CUSTOMER COMPLAINTS- Gifts or Hindrances?

1. CUSTOMER COMPLAINTS- Gifts or Hindrances? Presenter: Rosemarie Price AIM Breakfast 14 April 2010

2. 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

3. 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”

4. Why do customers complain? • Their expectations have not been met!

5. 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

6. 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.

7. Customer’s manner • Lack Gracious Social skills to communicate • Nervous • Harsh, one sided • Emotional • Lack understanding of commercial/regulatory limitations • Rude • Unreasonable complainant

8. Complaint deterrent techniques • Apology only, no rectification • Blame • Promise but don’t deliver • No response • Rudeness • Pass on to another department • Customer Interrogation

9. How could complaints be gifts? Underlying Principles • There are 2 Levels of messages embodied in complaints • The customer has 2 separate needs when complaining-needs as individuals and needs relating to the complaint • The benefits of Customer recovery far outweigh the cost of losing a customer or attracting another customer • The majority of customers are honest

10. 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

11. 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

12. 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

13. 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

14. 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

15. The Gift If a customer is complaining, you are being given a chance to retain that customer

16. 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

17. 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

18. 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

19. 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

20. 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)

21. 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

22. 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

23. 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

24. 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

25. Readings/References • “Complaint is a Gift” – Janelle Barlow and Claus Moller 2nd edition, TMI • “How to Win and Keep Customers”, Michael LeBoeuf

26. 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

27. 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.

28. Questions