Attracting a new customer is 5 to 25 times more expensive than it is to maintain an existing one. But how are you currently handling the customers who complain? Or do you consider it to be a cost worth cutting? If so, you are missing opportunities for improving quality, increasing customer retention, and reducing costs. Implementing an effective complaint management process can turn your dissatisfied customers into ambassadors.
Let’s first take a look at the costs and benefits of complaint management.
- Personnel costs (e.g. staff of a complaint management department).
- Administration costs (e.g. office space and office equipment.)
- Communication costs (e.g. phone or postage costs).
- Response costs such as compensation costs (e.g. costs for gifts or vouchers), warranty costs due to contractual claims (e.g. activated guarantees) and gestures of goodwill.
- The information benefit that is generated by using information from customer complaints to improve products, enhance efficiency and reduce failure costs.
- The attitude benefit or the positive attitude changes of the customer due to successful complaint resolution.
- The repurchase benefit when a dissatisfied customer remains with a company instead of switching to a competitor.
- Communication benefits are generated when complaints are resolved and satisfied customers are engaging in positive word-of-mouth, that is, recommending the company and as such supporting the acquisition of new customers.
- Employee retention is the impact that empowering employees regarding complaints has on ownership, and being heard.
A complaint management checklist
Given these benefits and costs, it can be helpful to have a quick check if your complaint management process is potentially holding you back.
- Our complaint process has clear understandable steps? (Yes/No)
- Our complaint process provides a speedy response?
- Our complaint process provides consistent/reliable responses?
- We have a single point of contact for complaints?
- Our complaint process is easy to access?
- Our complaint process is easy to use?
- Our complaint process keeps the complaining individual informed throughout the process?
- Our staff understands our complaint process?
- Customer complaints are taken seriously?
- Our colleagues are empowered to adequately address the complaint?
- We have a process for follow-up with the customers after complaint resolution?
- We use complaints to resolve product/service/solution issues?
- Our complaint process has metrics on resolving causes in addition to complaint volume reduction?
- Our complaint process leaves customers satisfied?
- Our complaint process enables us to retain customers who have complained?
- Our complaints are used to improve company processes?
- Our complaint process helps us to retain employees?
This list ensures that you value the complaint management process as an inherent part of your organisation’s capability to listen, share, and react to customer information. If you are not listening to your customers when they complain, you are disregarding a valuable source of information and opportunity for improvement.
Lastly, one important point that must be kept in mind is that of course it is never pleasant for an employee to hear a customer complain, but it is even worse if the employee does not have the agency to do something about it. Treating customer service or sales individuals as wailing walls without empowering them to make a change will result in them inevitably leaving. In a world of increasing demand for good talent, this might be something to consider.