CALCULATING THE ROI OF EFFECTIVE COMPLAINT HANDLING The University of Newcastle, Australia Professor Tania Sourdin, Professor Jamie Carlson & Emeritus Professor Martin Watts

Research Overview Phase 1: Studied two private sector organisations Phase 2: Analyse three public sector organisations (current phase) Phase 3: Examine Ombudsman sector

Costs Personnel costs Reputational costs Administration costs COSTS ARE EASIER TO RECORD AND MEASURE THAN BENEFITS Personnel costs (both staff working specifically on complaint handling and those in other sections involved in investigation and recovery), 2. Administration costs (such as office space and other infrastructure); 3. Communication costs (such as postage and telecommunications), 4. Compensation costs 5. Negative word-of-mouth 6. Escalation costs (including ombudsmen, tribunal and legal fees) Administration costs Escalation costs (including ombudsmen, tribunal and legal fees) Communication costs Compensation costs

Benefits Repurchase value Customer Lifetime Value Increased stock value Customer advocacy and referral benefit Customer retention Process, service, people improvements Staff retention Decreased escalation rates to third-party agencies

Extended Benefit The improvements to products, services, people and processes derived from effective CM Extended benefits are often not immediately evident, thus not seen as a direct benefit of CM The most substantial financial returns to the organisation occur when extended benefit is generated

GROUP WORK How do you define ‘Benefits’ to calculate ROI of effective complaints handling?

What are the benefits to your organisation of effective handling of complaints? How does your organiastion quantify or measure these benefits? How are these benefits recorded?

TRIALING AN EXPERIMENTAL ROI TOOL

ROI Equation for organisations ANNUAL ROI Algorithm Net benefits X 100 Total Costs (Where Net Benefits = Total Benefits – total costs)

ROI - SCENARIO A

The ROI for this scenario was 1019%. ROI - SCENARIO A The ROI for this scenario was 1019%.

ROI - SCENARIO B

The ROI for this scenario was 76.3%. ROI - SCENARIO B The ROI for this scenario was 76.3%.

INSTRUCTIONS 1.Log into: https://tinyurl.com/UON-ROI 2.Follow the instructions at the beginning of the survey and fill in the fields. 3. Where the survey asks for a numeric value to be entered, leave out the units (e.g. $, hr, pa). 4. If the cost/benefit category is not applicable to your organisation, enter ‘0’.

Phase 2 Early Results-Public On-the-job training rather than formal training. Organic approach to complaint handling rather than systematic. Varying definitions of what a complaint is. Complaints are used for trend identification & continuous improvement.

Phase 2 Early Results-Public Benefits not recorded although time/resource savings identified by staff. Effective complaints handling constrained by legislation / policy. Some organisations empower staff to manage complaints themselves, while others do not.

Reporting on ROI What would you like to see reported/measured? What would benefit your organisation? What other aspects should the research team focus on?

THANK YOU QUESTIONS?