Discovering Profitability through Customer Complaints

Customer Experience
Customer Experience

With inflation on the rise and the cloud of recession hanging over us, more than ever companies need to focus on not just finding new customers, but also on retaining the ones they currently have.Given that the cost of acquiring a new customer is, on average, five times that of retaining an existing one, holding onto even a single percentage of the customers who might switch suppliers has a considerable impact on the bottom line.

That's the point at which a customer complaint is often the greatest test of the relationship between the customer and his service or product provider. So, it is surprising that even today many companies fail to recognize the value that complaints can have on their organization.

Industry research shows that customers who complain and are satisfied with the way their complaints were handled are up to 8 percent more loyal than those who never have had a problem. They are more likely to tell family, friends, and colleagues how pleased they are that the company addressed their issues, even if the problems were not resolved to their liking. If a problem is resolved to their satisfaction, they will tell even more people than if they had received adequate service in the first place. Therefore, companies need to stop thinking about complaints as a nuisance and a drain on resources, and instead view them as an opportunity to take control-not just of the complaint handling process, but also of future relationships with dissatisfied customers.

Instead of burying their heads in the sand, companies need to encourage customers to register issues, problems, and complaints. The process needs to be as accessible as possible. Making it easy for customers to complain is a valuable and cost-effective way for organizations to improve. Having the right systems with the right capabilities is critical. A flexible system allows organizations to capture the information, no matter which channel it comes from, and in whatever context the customer makes contact. Furthermore, it's important to pay attention to whether the customer was happy with the way her problem was handled and understand the impact that can have.

While a primary focus of a complaint management strategy must be process efficiency, the real win is facilitating organizational learning through root-cause analysis to identify the causes of dissatisfaction and deliver insight into customers' attitudes and behavioral trends. By carefully managing and analyzing the data, companies can discover where products and services can be improved and even identify possible gaps and opportunities that can lead to new product development. Successful complaint management is about providing a solution that's right for businesses and customers alike. By strengthening the processes, companies can ensure they deal with complaints in an appropriate manner-all the while prioritizing and driving customer-focused change management and business improvement programs.

Some companies have evolved from a minimum-standard approach to managing customer complaints, but few, if any, have reached the stage of achieving real competitive advantage. To do this, companies need to apply the following steps:

  • Optimize the accessibility of the complaint processes.
  • Invest in a robust complaint management solution to ensure all issues, from those easy-to-resolve situations to complex cases, are captured and managed effectively and efficiently.
  • Listen to customers' experiences when making a complaint.
  • Perform root-cause analysis of the data to identify process and service improvements and prioritize business change initiatives.

Increasingly, the companies that are ahead of the pack are the ones that understand that taking ownership of the complaint management process is a win-win scenario. Treating issues, problems, and complaints seriously is the key to driving up customer retention and, ultimately, profitability. Smart organizations are seizing the opportunity to improve the consistency and effectiveness of its complaints management processes in order to deliver standards of service and outcomes that demonstrate a genuine commitment to customers.

About the Author: Richard Morrison is general manager for CDC Respond.