Complaining customers give businesses a key opportunity to uncover problems. Resolving these problems can result in the conversion of these complaining customers into loyal ones who feel bonded to the company and will continue buying its products or services. In other words, it is to the organization’s benefit to think of complaints as gifts.

Suppose a customer calls in with the following complaint: “Your wireless service never works. I keep getting disconnected, but your advertising says you can be heard anywhere in the country. My first bill also had charges for calls I know I didn’t make. But that doesn’t surprise me. If you can’t get the connections right, you probably can’t get your billing right!”

The organization’s typical response is: “Thanks for calling and telling us. We really appreciate it.” But does the company really appreciate it? Probably not!

An organization’s mind-set is a major factor in how complaints are handled. For example, a survey of European retail banks revealed a direct relationship between the way financial industry leaders view customer complaints, the way customers behave when making a complaint, and ultimately how the customers are treated.[1] That is, customers can sense that an organization sees complaints as a gift or as something to be avoided.

An in-depth study of two Swedish banks also supported the idea that branch managers’ attitudes about complaints impact how customer-facing staff treat their customers; it concluded that successful managers used complaint handling as their primary tool for creating long-term customer satisfaction with small-business customers.[2]

What Is A Complaint?

In order to internalize this strategic idea of the complaint as a gift, we must first understand what a complaint is. In simplest terms, complaints are statements about expectations that have not been met. They are also, and perhaps more importantly, opportunities for organizations to reconnect with customers by fixing service or product breakdowns.

Complaints define what customers want.

Customer complaints can tell organizations how to improve services and products, which, in turn, can help them maintain market share. Leslie Byrne, former director of the U.S. Office of Consumer Affairs (OCA), claimed she can tell which companies were doing a good job of pleasing customers and which ones were not by simply listening to the OCA complaint helpline. “Put a CEO on the company hotline. He will find out what customers think and he will find it out fast,” she said in a newspaper article.[3] In the article, she also cited a study on complaint handling that concluded: “…far from being a pain in the neck as too many managers regard customer complaints, they are a marvelous source of crucial management information.”

John Davis, a former IBM representative, put it in terms of competition: “The selling edge trick is to establish a continuously flowing pipeline from the customer’s mind to the salesperson’s ear. When you keep track of what customers want and do not want, what pleases and gripes them, you can adjust your sights accordingly and stay a step ahead of competitors.”[4]

Complaints are one of the least expensive market research tools around.

Complaints that are brought directly to businesses are the most efficient and least expensive way of understanding customer expectations about products and services. More costly and less direct methods include reviewing customer expectations in parallel industries; conducting transaction-based studies, such as using mystery shoppers or external auditors; and conducting comprehensive customer expectation research, such as focus groups. But none of these methods bring customers closer to you as they are being conducted. Furthermore, while large companies can afford to conduct or commission market research of this type, medium and small companies are forced to rely on their customers to tell them what they think about their products and services.

In most cases, customers are not going to generate groundbreaking ideas for companiesthey will not come up with the next Toyota Prius hybrid, Apple iPhone, Bose noise-reduction headset, or Segway personal transporter. Innovation is the purview of a company’s research and development department. However, customer feedback is extremely helpful in fine-tuning product concepts. For example, the idea to have onboard massages on Virgin Atlantic flights came from a passenger, the masseur of founder Richard Branson’s wife.[5] In fact, it is well known that the computer technology industry has been developed almost as much by user feedback as it has been by developers.

In addition to calling attention to product defects, service shortcomings, and poorly designed systems, complaining customers can also alert managers to personnel problems. Customers are usually the first to know when the company is being badly represented. In fact, managers may never learn about poorly treated customers because, generally, employees behave better when managers are around or when telephone calls are taped.

Complaints can build stronger relationships.

Loyal customers are not easily created. The multitude of statistics generated in this area suggest that if customers believe their complaints are welcomed and responded to, they are more likely to become repeat customers.[6] In addition, long-term customers are not only easier to sell to; they are also easier to serve because they know how to get their needs met.

Of course, some complaints beg for more attention than others, for example, complaints expressed by highly consequential customers or that indicate a customer is considering leaving. In general, customers who state their complaints with anger are easier to address (and, consequently, retain) compared to those who state their complaints with sadnessmore often than not, they are sad because they are going to leave.[7]

Every organization should establish a hierarchy of customer dissatisfaction that ranks importance to both the organization and the customer. This is not a simple taskit is not always easy to properly categorize either complaints or customers. For example, a 30-year-old, seemingly inconsequential complainer could grow up to become the CEO of a major corporate customer. In addition, sometimes identical complaints are not equal. Because of the knowledge gained every time an employee handles a customer complaint, teams should be encouraged to share what they have learned in the resolution process.

For most companies, about two-thirds of sales come from existing or repeat customers.[8] A research group surveyed 1,179 department-store shoppers and found that customers who were satisfied with the stores were more likely to complain than others, and that customers were more likely to remain loyal after they complained.[9] As such, it is necessary to consider the total potential volume of business a customer represents, rather than to focus on the individual, perhaps insignificant item a customer is currently complaining about. For example, in the early 2000s, the average Staples office supply store customer spent between $600 and $700 a year.[10] If that customer also used a Staples catalog, he or she spent twice as much. Someone who used both the catalog and the store, and also shopped online, spent about four times as much as the store-only shopper.[11] In other words, unbeknownst to the customer service representative, a single customer can represent high volume business to companies that offer several purchasing channels.

Customer complaints, whether of great or minor significance, provide an opportunity to form incredibly tight relationships with customers. As one reader commented in response to a post by well-known technology blogger Matt Woodward: “Don’t you love companies that just get it? Companies that reach out and make an effort to be available and accountable to all of their customers inspire a real sense of trust and loyalty.”[12]

Voiced complaints help control negative word of mouth (WOM).

Businesses are understandably interested in what the public says about them. WOM can make or break a business or productevery dissatisfied customer represents a potential threat to the reputation of the company in the marketplace. Complaints can work for or against your company in the following ways:

People are much more likely to believe a personal recommendation than an advertiser ‘ s promotional statements. A General Electric study found that recommendations made by people who customers knew carried twice the weight of advertising statements.[13] Consider the following example: When a customer came into John Robert’s Spa in Cleveland, Ohio, for a hair coloring, she ended up with a stained suit. Manager John DiJulius sent her a large check to cover the cost of the suit after a trip to the dry cleaners did not remove the stain, and also gave her a free facial and pedicure. DiJulius estimates that his good-will gesture generated 30 new customers. In addition, the customer now comes in for facials and pedicures on a regular basis. “At first, I thought about never going back. Now I would never think of going anywhere else,” she said.[14]

‘ A General Electric study found that recommendations made by people who customers knew carried twice the weight of advertising statements.[13] Consider the following example: When a customer came into John Robert’s Spa in Cleveland, Ohio, for a hair coloring, she ended up with a stained suit. Manager John DiJulius sent her a large check to cover the cost of the suit after a trip to the dry cleaners did not remove the stain, and also gave her a free facial and pedicure. DiJulius estimates that his good-will gesture generated 30 new customers. In addition, the customer now comes in for facials and pedicures on a regular basis. “At first, I thought about never going back. Now I would never think of going anywhere else,” she said.[14] When handled effectively, complaints can be a powerful source of positive WOM. Spend some time online reading all the personal service experiences that bloggers and their commenters have had.[15] Saska, who writes a blog called Fiendish Glee Club, posted a lengthy description of fantastic service she received from Nintendo.[16] She bought a new Nintendo Wii game console on its 2007 launch day, and from the beginning, the optical drive was noisy. When the noise persisted, Saska called Nintendo and instead of having to send her unit for repair, she was invited to stop by their offices (close to her house) and have it looked at immediately. “So this is my Valentine to Nintendo. That was the most awesome customer service experience I have ever, ever had,” she wrote. It is a fun read, and to date, almost 100 people have commented on her post, asking additional questions and making similarly positive statements about Nintendo.

Spend some time online reading all the personal service experiences that bloggers and their commenters have had.[15] Saska, who writes a blog called Fiendish Glee Club, posted a lengthy description of fantastic service she received from Nintendo.[16] She bought a new Nintendo Wii game console on its 2007 launch day, and from the beginning, the optical drive was noisy. When the noise persisted, Saska called Nintendo and instead of having to send her unit for repair, she was invited to stop by their offices (close to her house) and have it looked at immediately. “So this is my Valentine to Nintendo. That was the most awesome customer service experience I have ever, ever had,” she wrote. It is a fun read, and to date, almost 100 people have commented on her post, asking additional questions and making similarly positive statements about Nintendo. The more dissatisfied customers become, the more likely they are to use negative WOM to express their displeasure. If customers walk away angry, there may not be much a company can do to stop their negative comments.[17] But if companies make it easy for customers to complain and can handle these complaints well, positive WOM may be generated. If you read complaints posted online, you will see that they almost all involve complaints that were handled poorly. If the companies do not listen to their customers’ complaints, customers will find another audience and the company loses its chance to defend itself.[18]

Some individuals lack social skills and their complaints may appear inappropriate or unreasonable; however, it is the service provider’s job to focus on the content of the complaint combined with the emotions presented, and not whether the complaint is delivered in a socially acceptable way. While this can be difficult, if service providers adopt the mind-set that complaints are gifts, they will have the best foundation to handle one of the thorniest aspects of customer relations.

Beyond adopting an appropriate mind-set about complaints, what else can an organization do? I recommend a five-step process that uses questions to formulate a complete service recovery mapping process.

1. Design What is our mind-set about complaints?

What do we want to accomplish with our service recovery approach?

What experiences do we want our customers to have when they give us feedback?

What guidelines should we follow when handling complaints? 2. Measure What are our goals and how will we know we are getting close to them?

What do we currently do well?

What does our staff think and feel about complaints?

How robust are our current metrics regarding product or service failures?

How widely is our complaint data shared internally?

Have we benchmarked ourselves against our competitors?

Would it be useful for us to use a robust customer relationship management (CRM) program to track our complaints? 3. Align Do our written responses to complaints reflect our service recovery approach?

Does our reward system compensate for effective complaint handling?

Are our return policies, refunds, and guarantees in alignment with our customer philosophy?

Are our internal policies, procedures, and systems in alignment with our feedback philosophy? 4. Respond and Recover Does our staff respond to complaining customers as if they have been given a gift?

How empowered is our staff to respond to complaints?

How do we handle conflicts between our staff and our customers?

Does everyone, in some way, take responsibility for responding and recovering for our customers? 5. Integrate How do we apply what we learn from our customers to help improve our quality?

What is our process enabling staff to learn from each other about effective complaint handling?

What is our system for sharing information across departments?

How do we ensure that the topic of “feedback” is on everyone’s agenda?

How can we use our service recovery approach in our marketing?

Quality processes significantly impact an organization’s success. So, too, can a total service recovery process change the way an organization responds to and learns from customer complaints.

[1] Datamonitor, The Role of Complaints Management in Improving Customer Service in European Retail Banks 2007, report, Datamonitor, February 14, 2007.

[2] Andre Andersson and Fredrik Karlsson, “Kundtillfredsstallelse bland smaforetagare,” bachelor’s thesis, Lulea University of Technology, 2007).

[3] Connie Koenenn, “Pleasing the Customer Should Be Job One,” Los Angeles Times, March 6, 1997, E-5, Orange County edition.

[4] Reymond Dreyfack, “Get the Dope from the Customer,” American Salesman (August 1990): 22.

[5] Rebecca Fannin, “Brand Leaders 2005,” Chief Executive, October 2005.

[6] Priscilla A. LaBarbera and David Mazursky, “A Longitudinal Assessment of Consumer Satisfaction/Dissatisfaction: The Dynamic Aspect of the Cognitive Process,” Journal of Marketing Research 20 (November 1983): 393-404.

[7] Jan Mattson, Jos Lemmink, and Rod Mccoll, “The Effect of Verbalized Emotions on Loyalty in Written Complaints,” Total Quality Management, 15, No. 7 (September 2004): 941-958.

[8] John Tschohl, “Do Yourself a Favor: Gripe About Bad Service!” American Salesman, 39, no. 6 (June 1994): 4.

[9] Tibbett L. Speer, “They Complain Because They Care,” American Demographics, May, 1, 1996. (This magazine ceased publication in November 2004 and is now part of Advertising Age magazine)

[10] Glenn Rifkin, “New Economy: The Staples Merger of Its Web site and Catalog Business,” New York Times, June 25, 2001.

[11] Ibid. In fact, the National Retail Federation has found that multichannel shoppers buy more and buy more frequently than single-channel shoppers. This all makes sense when you consider that a single retail store such as Staples may carry eight thousand items, but Staples.com can offer 200,000 items.

[12] Rod Wilkerson’s comment on Matt Woodward, “Mozy for Mac – New Beta, Great Customer Service,” blog, Matt Woodward‘s Blog: CMFL, OOP, and Miscellaneous Other Stuff, http://www.mattwoodward.com/blog/index.cfm?event=showEntry&entryId=583895D2-B6D1-7932-1ECA2FA194068CA4. (no longer accessible).

[13] Ron Zemke and Chip Bell, “Information Access,” Training: The Magazine of Human Resources Development, July 1990, 42.

[14] Justin Martin, “6 Companies Where Customers Come First,” Fortune Small Business on CNNMoney.com.

[15]The Consumerist: Shoppers Bite Back, http://consumerist.com/

[16] Saska, “Customer Service Gone Shockingly Right,” blog, Fiendish Glee Club, http://fiendishgleeclub.vox.com/library/post/customer-service-gone-shockingly-right.html. (no longer accessible).

[17] For a specific and classic study of this type, see Marsha L. Richins, “Negative Word-of-Mouth by Dissatisfied Customers: A Pilot Study,” Journal of Marketing 47 (Winter 1983): 6878.

[18] Jerry R. Wilson, Word-of-Mouth Marketing, (New York: John Wiley & Sons, 1994).

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