Finding Increased Profits through Better Complaints Management
Most of us who manage organizations think of customer complaints as a nuisance to be avoided – like the flu or even a root canal.
Likewise, in life, we tend to think of people who complain as obnoxious. If the person complaining persists, as managers, we tend to believe that an individual is a little crazy, misguided, or wanting something for free. For senior managers, the last in a long conga line of staff who have spoken with a complaining customer, dealing with complaints can seem an unpleasant distraction from the more significant business of running the company.
Ignoring complaints, however, is neither a career nor a profit-enhancing strategy. When it comes to complaints, what leaders don't know can hurt them. In some cases, (for example, the case of a viral recording of a customer trying for 8 minutes to cancel their Comcast internet account[i]) a mishandled consumer interaction can damage the brand of an organization very severely. In this sense, consumer complaints are every organization's canary in the coal mine. An organization's complaints information analyzed correctly, can help leaders to understand the sources of the customer departures appearing in their conversion and customer retention numbers, in time to do something about them.
Moreover, regulators and business standards setters like the Better Business Bureau often focus on how businesses handle mistakes[ii] as much as the mistakes themselves. The more regulated the industry, therefore, the more critical the handling of complaints becomes.
Complaint Statistics – Social Media Bullhorn Effect
Early statistics on complaints showed that 26 out of 27 people would not complain.[iii] However, that does not mean they will go away quietly. On average, researchers tell us, satisfied customers will tell 8 to 10 people about a good experience, while dissatisfied people will tell 17 people of a bad one. (Please see Figure 1 below.) However, with the advent of social media, the impact of those discontented people increases geometrically: people who are dissatisfied and use social media communicate about their dissatisfaction with an average of 53 people, three and one-half times more people than non-social media users.[iv]
Figure 1 Source: Social Media Raises the Stakes for Customer Service. (2012, May 2). Retrieved September 16, 2015, from http://about.americanexpress.com/news/pr/2012/gcsb.aspx
'There's Gold in them thar complaints!'
In consulting with clients on profitability improvement topics, we tend to focus on complaints early in our engagements. We have found no better source information on the shortcomings of an organization in addressing customer needs. When analyzed and interpreted correctly, complaints provide leads to needed changes in processes and systems, changes that can lower costs, increase revenue, and increase profits. In high growth companies, an excellent complaints management department is especially vital in sanding down the rough edges of an organization's newly-hewn processes. Unfortunately, most organizations, especially smaller or newer ones, are less likely to have anything but an ad hoc system for dealing with complaints. Managers may have procedures in place for dealing with customers who complain; however, there is no formal tracking or indexing of those complaints. This absence of indexing information means that no analytical data exists about the sources of complaints, making it hard to draw anything but general inferences, usually based on staff interviews, about the challenges the organization is facing in its systems or processes.
Moving from 'Complaint Folklore' to Data-Driven Decisions
The power of complaint analysis comes in pattern recognition and inference. To move from anecdotal information to a more data-driven approach, an organization needs to develop a formal complaints management program that indexes and organizes complaint data. The first step in such a program is to develop a centralized, digital repository for complaints, one which categorizes each complaint using whatever tags and terms that are relevant to the organization. This information typically includes customer type or segment, product or service, time of day, week or month of the incident, distribution channel, geographic location, salesperson, CSR, and supervisor.
Further, the system will need to identify the customer touch-point and, based on an investigation, the apparent root cause of the complaint about later research and hypothesis testing. Managers should be especially careful not to depend on generic, canned categories from a system vendor. Time invested in categorizing each complaint with sensible descriptors, and keywords will pay off later by making it easier for staff members to search and draw inferences from the complaints data[v].
In fact, over time, this detailed, disciplined indexing can create a robust database that will allow leaders and analysts to discern systemic issues within their organization. Certain types of complaints will repeat themselves, and by sorting and measuring complaints categories, the tracking system will allow a management team to diagnose problems in operational systems, customer service, and product offerings. This information will provide the senior leadership team with both qualitative and quantitative information about where they are falling short with customers or members, turning what was formerly departmental folklore into actionable data.
A first complaints database can be as straightforward or as complicated as an organization can afford. Excel spreadsheets or Access databases work fine. Enterprise call-monitoring system vendors often can tack on some complaint management solutions to their systems. Higher-end solutions offer keyword or even speech pattern recognition systems to highlight for management intervention calls during which customers use expletives, or express anger, or extreme dissatisfaction.[vi] In the middle market, software as service is emerging that offers complete, web-based, software as service (SaaS) complaint management systems. Indeed, there are some emerging software-as-service, cloud-based vendors who have developed systems that can affordably perform these services for small and medium-sized businesses, easily integrating with organizations' Facebook, Twitter, and Salesforce.com accounts right out of the box.[vii]
Why Encourage Customers to Complain?
Once a complaint management system is operational, leaders can also begin to solicit feedback, both positive and negative, by leveraging customer surveys, websites, social media, email, and customer service 800 numbers. Connecting input from these sources directly to a complaints management database allows leaders to drive the costs of processing complaints down. At the same time, a database allows the tracking of customer satisfaction and building up the amount of information they are receiving about consumer dis-satisfiers. This approach can make an organization much more responsive and provides companies with a lightning-fast source of feedback about new products and services almost immediately after rollout.
A robust complaint management system gives customers a convenient means of redress, without forcing them to escalate their complaints to the sales line or even up through the organization's senior management ranks. And escalate they will. Our work has shown us that dissatisfied customers will call anyone they can to resolve their problems. In some cases, angry customers engage in so-called "consumer vigilante" activities using a burgeoning set of electronic tools to communicate their dissatisfaction.[viii] And, the angrier they are, the more time and diligence they will apply to let their issues be known. That means that if a company sells over the phone and customer service personnel or complaints, management personnel are not resolving customers' concerns. Then customers will call the sales line or the President's office. These calls, in turn, will push down conversion, increase acquisition costs, and perhaps cost someone their job. The term failure demand[ix] was coined by a British researcher, John Seddon, to describe this effect. He used the term in the 1990s to explain exploding call volumes at telecommunications company call centers during a period of service transition when calls about service problems choked his clients' sales lines. The bottom line? While facilitating feedback about bad experiences might seem like leaning into the punch, this feedback, properly managed, can allow an organization to neutralize issues quickly before they become regulatory, reputation-changing, or business-threatening nightmares.
Assembling a Complaints Team
Another best practice is to assign an individual or group of individuals to be responsible for investigating each complaint and seeing it through to resolution. The individuals who work with customer complaints must be selected carefully. They must be courteous, friendly people, and they have to be smart. They need to be articulate, intelligent, and, above all, empathetic people with high emotional intelligence. These individuals should be very knowledgeable about how things work around the organization, with a deep familiarity with the organization's people, systems, and processes. They also need a gift for diffusing angry people, maintaining an even tone, even if the person on the phone or at the store becomes angry or profane.[x]
A complaints team should have some latitude to make decisions on behalf of the company to quickly create resolutions, but also understand when to involve the organization's leadership team when the situation calls for it. To keep them, managers will need to provide complaint staff with attractive remuneration -- the business equivalent of combat pay. Staffing levels required will vary by industry, the age of the company, growth rate, and newness of the product, with those organizations with the highest growth rates and the newest products requiring the most substantial numbers of CSR's dedicated to handling complaints.
Following Up On Complaints the Walmart Way
Once a complaint is registered, leaders will want to make sure their team always follows up with complaining customers within a reasonable time frame. A best practice is to apply Sam Walton's "Sundown Rule"[xi] by calling customers before the end of the business day. With this follow-up, Walmart teaches us, the person investigating the complaint needs to acknowledge the person's complaint respectfully, gather more information and then provide a time when they will get back to them. After the organization has completed its review of the complaint, give some form of response to the customer.[xii] In doing so, the representative needs to call the complainant and tell them of their findings and inform the person complaining about what the organization can and cannot do to rectify the situation. (One company we worked with, for example, would offer to make a $100.00 donation in the name of the complaining individual to his or her favorite charity. For legal reasons, of course, they never admitted or denied any fault in the matter.)
Protecting the Team
Very rarely, a complaint team will encounter customers or members whose issues they cannot amicably resolve. Some problematic situations will require the attention of senior members of the organization, including General Counsel, Product Development, Marketing, or Human Resources. Worse, sometimes the complaining party is under the influence of drugs or alcohol, is mentally unstable, is threatening legal action, or has become physically threatening. It is here where an escalation process needs to kick into place rapidly, at times involving attorneys and even law enforcement in the resolution of the complaint. Leaders will need to train complaint staff to shift gears and escalate quickly when the complaint starts heading in this very wrong direction. In these instances, the staff's well-being has to be the paramount concern. As with any customer-contact employee, front-line complaint handlers are well-advised not to use their last names.
Getting the Entire Organization Involved
Once the complaints management infrastructure is in place, the company should train everyone in the organization about the complaints process, from top management on down. Training helps to obtain buy-in from the organization as a whole, making it clear it is the new law of the land. Leaders should make complaint management procedures part of new employee orientations and solicit the visible support of the CEO or Executive Director to encourage middle manager and executive participation in the program.[xiii]
When first establishing the program, it will seem to employees that the complaint management process is a "witch (or warlock) hunt." Training will need to address this issue head-on. It is vital that employees be forthcoming about complaints, and that those documenting the complaint focus on the process issues behind the complaint, and not seek to "pin the issue" on one person or another. Of course, CSR's can be rude or short with customers, and this can cause complaints. However, more often, customers become angry because of some breakdown in a system or process. Often, because it is a process, and the CSR is just doing his or her job, his or her manager may have trouble finding a resolution. The person reporting the complaint is just the unlucky messenger.
What If The Complaint Call Comes to You?
Most executives shun complaint assignments because they dislike confrontation or dealing with angry customers. Here's how to neutralize even the angriest caller. When dealing with an angry customer, the best thing to do is to thank the customer! Thank them for bringing this issue to your attention.[xiv] The person complaining, in their turn, will often appreciate your listening to them. Often, customers will say the person who thanked them is the first person who has listened to their concerns. The statement of thanks works because it indicates a willingness to hear the customer out. The manager is on their side now! At this point, management should listen carefully and acknowledge the customer's issue. Be sure to express empathy with the caller. But do so without admitting any failure on the part of the company. They should move the discussion to a higher level by looking for what the caller may know about what may have caused the issue to arise. The manager should work with the caller to identify the process problem or root cause of the concern the customer has raised.
If the customer is demanding and says profane or provocative things, William Ury, a prominent expert on negotiation, tells us leaders should, "Go to the balcony,"[xv] by mentally pretending they are on a balcony, looking down on the situation. A best practice is to emotionally divorce one's self from the conversation to obtain the facts, asking detailed questions in a calm, friendly tone of voice. Whatever a manager does, she or he shouldn't allow him or herself to become provoked into anger, saying, or doing something they will regret later. Once the call is over, the manager should carefully document the request and be sure to keep his or her promises. He or she will need to follow up on the complaint and get back to the caller personally with a resolution, good or bad.
Of course, none of the hard work in managing complaint information identified above matters if no action is taken to rectify the issues identified by the process. Complaint follow-up is where senior leadership can have the most significant impact on complaints management. The executive to whom the complaints team reports must be adept at collaborating with other members of the executive team to bring complaints to a resolution.
The CEO or COO, in turn, must lend his or her ear to whoever is in charge of complaints and should, at a minimum, review complaint reports summaries (with drill-down capability to individual complaints) monthly. For leaders seeking to push forward a customer-centric strategy, the complaints process provides essential information about how the execution is going. Indeed, when there is a leadership message to be sent about the importance of customers, many CEO's will respond to complaints themselves. Rupert Murdoch, for example, is famously said to have responded to criticism from a Wall Street Journal customer on Twitter himself.[xvi] A savvy CEO shares complaint information with his or her Board[xvii] and, in the instances of high visibility or particularly damaging complaints, keeps the Board apprised of developments and how they handle the claim.
Most importantly, the CEO should pay attention to what the organization is doing to address the systemic issues identified by complaint trends, perhaps going so far as to occasionally choose a complaint or two for discussion at senior management team meetings. Focus here should be on turning the information provided by consumers (i.e., "Error with system" messages on a company's website in the purchase sequence into action items for the leadership team (e.g., An assignment to the CTO to investigate and improve consumer website performance.)
A good complaint management process protects the organization's brand, management team, and reputation by identifying and addressing issues early on. By gathering, tracking, sorting, and attacking the root causes of complaints on a routine basis, an organization can make complaints a source of free consulting[xviii] about what is making customers unhappy.
A strong complaint management process involves the whole organization and focuses on improving the process rather than blaming people. When working properly, the complaints management process rapidly and automatically funnels information about what is making customers unhappy back to the people in the organization who are in a position to fix the problems. Finally, a good process follows up doggedly to make sure that the organization makes needed changes. It is these changes that will gradually transform the organization by improving customer experience, and pushing incremental cash flow to the bottom line in the form of newly-found profits.
[i] Comcast's 'Embarrassing' Customer Service Phone Call. (2014, June 16). Retrieved September 16, 2015, from https://www.youtube.com/watch?v=yYUvpYE99vg&feature=youtu.be
[ii] Complaint Handling Guidelines Residential and Small Business Customers. (2015, March 13). Retrieved September 16, 2015, from http://www.prc.gov/docs/91/91747/ChIR13.24a.Complaint-Guidelines.pdf
[iii] Technical Assistance Research Programs (TARP), Consumer Complaint Handling In America: Final Report, White House Office of Customer Affairs, 1980.
[iv] Social Media Raises the Stakes for Customer Service. (2012, May 2). Retrieved September 16, 2015, from http://about.americanexpress.com/news/pr/2012/gcsb.aspx
[v] V.‐W. Mitchell (1993) "Handling Consumer Complaint Information: Why and How?" Management Decision, Vol. 31 Issue: 3
[vi] Regulatory Compliance - Worksite Optimization. (n.d.). Retrieved September 16, 2015, from http://www.verint.com/solutions/enterprise-workforce-optimization/business-need/compliance-and-fraud/regulatory-compliance/index
[vii] Customer Complaint Quality Assurance Management Software & Systems. (n.d.). Retrieved September 16, 2015, from http://www.coretec.com.au/complaintspro
[viii] McGregor, J. (2008, February 20). Consumer Vigilantes. Retrieved September 16, 2015. See http://www.bloomberg.com/bw/stories/2008-02-20/consumer-vigilantes for numerous examples.
[ix] John Seddon, "Freedom from Command and Control, Rethinking Management for Lean Service, Productivity Press, 2005 (pp. 26-28).
[x] Better Practice Guide to Complaint Handling. (2009, April 1) p. 17. Retrieved September 17, 2015, from http://www.ombudsman.gov.au/docs/better-practice-guides/onlineBetterPracticeGuide.pdf
[xi] Farfan, B. (n.d.). Wal-Mart Stores Mission Statement - Vision, Mission, Purpose, Headquarters, Founders Facts, and Trivia about Wal-Mart Discount Stores Chain. Retrieved September 16, 2015, from http://retailindustry.about.com/od/retailbestpractices/ig/Company-Mission-Statements/Wal-Mart-Mission-Statement.htm
[xii] Commonwealth Ombudsman, 2009, p. 21.
[xiii] Jeschke, K., Schulze, H., & Bauersachs, J. (2000). Internal Marketing and its Consequences for Complaint Handling Effectiveness. In Relationship Marketing (Vol. C, pp. 193-216). Heidelberg: Springer.
[xiv] Barlow, Janelle; Moller, Claus, "A Complaint Is A Gift," Barrett-Koller Publishers, San Francisco, 1996, Chapter 6 pp. 85-94.
[xv] Ury, W. (2014, June 13). Go to the Balcony, Excerpt from John R. Coen Lecture Series at Colorado Law. Retrieved September 16, 2015, from http://www.williamury.com/go-to-the-balcony/
[xvi] McGovern, M. (2013, March 11). Should your CEO be taking customer complaints? Retrieved September 17, 2015, from http://www.customerexperienceinsight.com/should-your-ceo-be-taking-customer-complaints/
[xvii] Commonwealth Ombudsman, 2009, April 1, p.6. Retrieved September 17, 2015, from http://www.ombudsman.gov.au/docs/better-practice-guides/onlineBetterPracticeGuide.pdf
[xviii] Temkin, B. (2014, November 24). NBA's Oklahoma City Thunder CLICKs With Its Fans. Retrieved September 16, 2015, from https://experiencematters.wordpress.com/2014/11/24/nbas-oklahoma-thunder-clicks-with-its-fans/