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

2. 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. 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. 4 Why do customers complain?  Their expectations have not been met!

5. 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. 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. 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. 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. 9 How could complaints be gifts? Underlying Principles 1.There are 2 Levels of messages embodied in complaints 2.The customer has 2 separate needs when complaining- needs as individuals and needs relating to the complaint 3.The benefits of Customer recovery far outweigh the cost of losing a customer or attracting another customer 4.The majority of customers are honest

10. 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. 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. 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. 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. 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. 15 The Gift If a customer is complaining, you are being given a chance to retain that customer

16. 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. 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. 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. 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. 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. 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. 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. 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. 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. 25 Readings/References  “Complaint is a Gift” – Janelle Barlow and Claus Moller 2 nd edition, TMI  “How to Win and Keep Customers”, Michael LeBoeuf

26. 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. 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. 28 Questions