Cost of customer complaints
Men may boycott your company for 10 years if you don’t resolve their complaint!
Men who are unhappy with how a supplier deals with their complaint will boycott that organisation for an average of 10 years – double the time for women. With a strong focus on developing CRM systems so that customer lifetime value can be assessed, the impact of an unresolved complaint surely needs to be understood. This was one of the fascinating issues that came out of a Customer Champions online survey on customer complaints in the UK. This article considers what customers want when complaining and looks at complaints strategy, complaints management and complaint resolution from a company perspective.
There was no significant difference between men and women on how many complaints were made. There was, however, a belief amongst men that they had a higher success rate in achieving resolution to their complaint, with women stating that 40% of their complaints go unresolved.
So what do customers want when they complain? Perhaps surprisingly for some companies the focus is not on financial reward, it is much more focused on organisations “taking responsibility” and “ownership” of the issue and, particularly for women, “taking the complaint seriously”. This is interesting when you examine companies’ complaints strategies and policies on how to deal with complaining customers, where the focus is often on how much financial compensation can be provided rather than taking ownership, being empathic with customers, taking them seriously and providing successful complaints resolutions.
Colin Bates, Managing Director of Customer Champions, commented that: “This finding has been borne out through client specific work, where the speed of complaint resolution has had a major impact upon satisfying customers, minimising long term financial effects, such as boycotting, and maximising customer lifetime value. Speed, from a customer’s perspective, will be directly influenced by such issues as perception of ownership and taking responsibility.”
It is clear to see from the table above that there is a significant gap for most attributes between what customers expect when they complain, and what they actually receive. The gaps also suggest that companies’ are failing to understand the true value of a complaint and that complaint management strategies are not working as they should.
The table below looks at some of these expectations against reality from the point of view of differences between men and women.
It appears that, as well as an “acknowledgement”, women are also more likely to want a “thank you” from the organisation, whilst men are more focused on receiving compensation as part of the complaint resolution process. Although both sexes have an expectation that suppliers come back to them when promised, it would appear that women do have a slightly higher expectation that this will take place.
Worryingly, when you look at what customers actually experience when they complain, suppliers fall short against customers’ expectations on all but one aspect, and that one is providing no response at all!
The need for these strong interpersonal skills when dealing with an unhappy customer is further illustrated when you examine how people prefer to initiate a complaint. They want to believe that the person they are complaining to is in a position to resolve the problem. Therefore there is a strong preference for initiating the complaint either on a face-to-face basis, or to someone in Head Office. Once they start to believe that the human interaction is becoming more remote, the level of enthusiasm for a channel strongly diminishes. This includes a strong preference for using dedicated complaints call-centres based in the UK, rather than in another country. As a footnote, any organisation thinking of using SMS technology to collect complaints needs to radically rethink, as consumers are as enthusiastic about this channel as they are for using a carrier pigeon!
When asked to identify what types of organisations they most regularly complained to, the focus is very much on those that they have the highest number of transactions with. For example retailers came out at the top of the list for number of complaints followed closely by financial service organisations such as banks and insurers, and utility companies.
Finally, a surprising finding from the survey was how little customers actually complain. It is not necessarily because they have nothing to complain about, it does seem to be more of a question of whether they think it is worth it or not. Respondents were asked to indicate why they didn’t formally complain when they had cause to. Their feedback fell into three categories:
- companies didn’t make it easy to complain
- their complaint wouldn’t be taken seriously
- the “return” they would get from their investment in time and effort in complaining wasn’t worth it
These barriers to complaining should be a major concern to organisations when you consider that people only bothered to formally complain twice a year, on average, yet dissatisfaction with suppliers leads to boycotts and the accompanying loss of revenue as customer lifetime value decreases. Companies really need to see the true value of a complaint and appreciate the significant investment by their customers to give them feedback and develop robust complaints strategies and complaint management strategies that can resolve them. When you consider the millions of pounds being spend upon customer research in the UK every year, why is it that companies do not make themselves easily available to this free and invaluable customer input into their performance?
Take the next step
To discuss how looking at customer complaints from a different angle could improve your company’s performance, get in touch with Customer Champions.