Turn Customer Complaints Into Business Success

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For many years, organizations have been able to prosper without investing in customer service. However, as competition increases and markets mature, the financial implications of poor customer service have grown. This has left many organizations with a stark choice: develop new, customer-centric models or watch consumers vote with their wallets.

Part of the problem has been the low value placed on customer feedback, particularly complaints, by companies’ senior management. According to an article by Tom Lester, which appeared in the Financial Times, the majority of chief executives regard complaining customers as “a nuisance and too demanding” (The Cost of Not Caring for Your Customers, Jan. 29, 2006). Increasingly, this is being proven to be an extremely shortsighted approach. In fact, correctly managing customer complaints can be a valuable opportunity for improving customer service, retaining customers and achieving profitable growth.



Based on the findings of Bernd Stauss and Wolfgang Seidel in their book, Complaint Management: The Heart of CRM, customers who complain and have a positive resolution are far more likely to remain brand loyal than those who do not complain at all. According to Stauss and Seidel, complainants are your best advocates, with many of them going on to consider buying your other products if they feel satisfied with the complaint resolution. Where profit margins are tight, such repeat purchases are significantly cheaper to secure than new business.

But that’s only half the story. Complaint and feedback data is incredibly valuable for any organization. By carefully managing and analyzing your customer feedback, you can discover where products and services can be improved—and even identify possible gaps and opportunities that can lead to new product development. This data is critical to your future success.

Listening
One company that is using complaints and feedback to deliver improved customer service is British Airways Holidays (BAH), a wholly owned subsidiary of British Airways. Customer excellence is one of the company’s driving principles and BAH recognizes that listening to customers through the capture and management of feedback and complaints is a critical factor in successfully delivering on this principle. To identify areas for improvement and to consistently provide the level of service demanded by its customers, BAH has expanded its complaint logging process into a feedback capture and management operation that includes all agents and suppliers.

Rather than only managing customer complaints, BAH now logs the entire customer experience—from pre- to post-travel—as well as feedback from thousands of agents and suppliers around the world.

The BAH Quality team deals with approximately 5,000 customer relations files and 1,000 errata files per annum. More than 2,500 complaints a year get fed into the system, and the company manages to turn around 90 percent of complaints—from investigation to full response—within an impressive 14 days. BAH also receives many messages of gratitude and feedback acknowledging staff performance—which also gets fed into the system, as does information from suppliers about any potential problems.



Supplier performance affects the BAH brand, so the data is vital when it comes to enforcing service levels and ensuring that the company meets the high standards set by British Airways. “I use it to generate formal quality reports and complaint ratios for all of our suppliers, who are then able to take actions to reduce complaint levels,” says Kate Downey, quality manager at BAH. “It puts me in a strong position when it comes to negotiating with suppliers, and I use past complaints to back up our compensation claims.”

Through the capture and management of customer feedback and complaints, BAH has succeeded in streamlining processes and improving access to management information. Its ability to track and improve communications between third-party suppliers has enabled the company to adapt and change to consistently provide the quality of service demanded by its customers. In such a competitive market, this approach will only engender loyalty and success.

Companies simply cannot afford to get their customer service strategies wrong. Although customer satisfaction levels are improving in many industries, customer expectation levels are correspondingly much higher. By implementing a flexible and responsive complaint and feedback solution, you can begin to meet your customers’ expectations by sharing data at an enterprise-wide level and understanding the needs and requirements to identify areas for improvements.

Successful complaint management is about resolving both sides of the complaint, providing a solution that’s right for business and customer, alike. By arming your organization with the relevant information about complaints, you can ensure that you deal with feedback in an appropriate manner—all the while developing a better understanding of your customer base in general.



For most companies, the future lies in putting customer service at the very heart of their business functions, sitting alongside other key areas such as sales and marketing. Only by embracing the ascendancy of “customer capital” and building up the infrastructure to deliver to consumers the service they expect, will your organization realize the long-term profitable growth you require.

2 COMMENTS

  1. Is their a number or ration that if you have one complaint it represents x number of people who do not complain?

    thanks

  2. Don

    Some of the early academic research on customer complaining suggest that up to 4% of customers who have had a problem with a product or service, how it was delivered, or how they were treated actually complain. At least 96% thus, don’t complain.

    As the title of the excellent book says, a complaint is a gift: They allow you to recover the customer by responding to the complaint properly, they allow you to fix the problem that caused the complaint in the first place, and they thus ensure that the problem will not be a cause of future complaints nor a drain on the resources used in responding to them. Win. Win. Win.

    It sounds like many of the CEOs in the FT article James quotes need to do take a tour of Toyota to see how problems are fixed through Kaizen.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

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