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 / Omnisis online survey on customer complaints in the UK.

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 people want when they complain? 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’ 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, and taking them seriously.

Colin Bates, Managing Director of Customer Champions, commented that: “This finding has been borne out through client specific work, where the speed of resolution has had a major impact upon satisfying customers and minimising long term financial effects, such as boycotting. 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 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. 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. Companies really need to see complaints as valuable input and appreciate the significant investment by their customers to give them feedback. 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.

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