Posted by: Mike Clough

Customer Complaints Are Good for Business!

handling customer complaintsHave you ever noticed how difficult some companies make it to complain? Apparently they don’t want to waste their time handling complaints. However, ignoring or mishandling customers who complain can be the downfall of your company. Pete Blackshaw’s book, “Satisfied Customers Tell Three Friends, Angry Customers Tell 3,000: Running a Business in Today’s Consumer-Driven World” reveals the dangers of underestimating the damage unhappy customers can do to a brand.

Research shows that unsatisfied customers, when satisfied, are ten times more loyal to the company or brand than happy customers. In fact, they often become vocal brand ambassadors for the company. That being the case, a skilled entrepreneur will capitalize on this opportunity by making it easy for customers to complain. They encourage customer feedback by providing toll free telephone and fax numbers, web forms, email and Twitter addresses, and cell phone texting addresses. Each complaint is a marketing opportunity.

With the incredible power of the internet and Social Media, potentially millions of people will know how lousy you treated your customer within minutes. Although in the following case it took longer than a few minutes, it illustrates how customer complaints can go viral spanning the world.

A Taylor guitar belonging to a virtually unknown professional musician, Dave Carroll, was damaged on a United Airlines flight. When Dave complained to the airlines they did nothing to resolve the issue. One excuse after another – one roadblock after another. It became a long drawn out saga with many emails and telephone calls. He became so frustrated and angry at the way he was being treated that he threatened to write three music videos and post them on YouTube if United didn’t take care of the damage they had caused. United’s response was “go for it!” And he did. The results?

Dave’s first YouTube video has had over 8 million views worldwide; his CD sales and musical bookings have soared; he now has a website and a blog; he has an additional website devoted to the customer experience and speaks to various organizations on customer service; and the Taylor Guitar Company’s sales increased so much that they presented Dave with two new Taylor guitars!

What about United Airlines? After the first video, they tried everything they could think of to get Dave to remove the video from YouTube. Instead, Dave added the two additional YouTube videos he had promised United he would do if they did not take care of him. In retrospect, Dave came out pretty well while United Airlines did not. I wonder how much revenue they have lost as a result of this botched customer complaint. The irony is that all of this could have been avoided if United Airlines had been on top of their customer service policies and procedures.

You can view the first video below if you like and you can read the entire story by clicking here.

If you focus only on satisfying customer complaints, you may miss the opportunity to fix the underlying cause of the complaint. Just like a doctor who only treats the symptoms and not the underlying cause of diseases risks losing patients, a business must address the underlying cause of customer complaints or they risk losing current as well as future customers.

According to Stephan Michel, David Bowen, and Robert Johnston in a September 22, 2008 article in the Wall Street Journal (WSJ) titled, “Making the Most Of Customer Complaints”, customer complaints provide opportunities to improve your business.

The article is based on the authors’ years of work in service management, research, and a study they conducted with 60 organizations. Their term for fixing breakdowns in service is “service recovery” and its impact extends well beyond customer satisfaction to repeat business, profits, and growth.

Unfortunately, customer complaints are usually handled by hourly employees who have limited authority to do anything about them. Customers judge companies on how quickly and how well they initially respond to complaints as well as what actions they take to ensure the problem won’t occur in the future. In most organizations, hourly employees seldom have the authority to alter policies and procedures, let alone improve systems or processes.

The authors of the WSJ article see three groups of stakeholders in a business impacting “service recovery”. The stakeholders, who are Managers, Employees, and Customers do all view the issue from a different perspective. Managers can be reluctant to collect and share customer complaint data in spite of the potential benefit to the organization in terms of efficiency and profitability. Employees can view unhappy customers as the enemy. And, customers typically consider failed service as unfair treatment. Only 6% of the 60 organizations the authors studied did well in integrating these perspectives.

My own family’s recent experience with failed service illustrates the potential conflict between these three stakeholders. My step-daughter lives in Western Wisconsin and purchased four chairs from Hom Furniture Stores, a furniture chain in the Upper Midwest. Unfortunately, the local store did not have them in stock so she needed to pick them up from their warehouse which is close by where we live in Minnesota. We were planning on visiting her anyway, so we picked them up and delivered them to her.

After we had returned home to Minnesota, my step-daughter discovered that one of the chairs had a flaw. She contacted Hom Furniture and made arrangements with a customer service representative for us to pick up a replacement at the warehouse location and she would return the damaged one to the local store. However, when we arrived at the warehouse, the cashier told us she knew nothing about the arrangement. Then, she made us wait for close to an hour while she placed numerous calls to her manager, my step-daughter, and the customer service representative at the local store. Then to make a bad situation worse, there was also an issue with the price because Hom said they would give her a credit for the sale price of the chair she was returning but wanted to charge her the higher regular price for the replacement chair.

Now, how do you think my family feels about doing business with this store after they sold flawed merchandise, made no effort to compensate us for the inconvenience they caused us and then, to add insult to injury, wanted to charge us extra to for the replacement? What annoyed us the most was their total lack of concern for how much inconvenience they caused us or why the problem had occurred in the first place.

Although the Hom brand has been diminished in my family’s eyes, none of us are professional musicians. So, we won’t be making any music videos. In fact, to my knowledge, although we complained during the process, no one in my family has even complained to the store after the fact. I have no doubt that we will share our negative experience in conversations whether in person, on the phone, or online, as I have done here.

You too may have unhappy customers who haven’t complained but are having negative conversations about you and/or your business. No matter how good your products and services may be, there are bound to be customers who complain. And, at any given moment, your current and prospective customers may be having online conversations (both positive and negative) about you and your business. Once online and in search engines, these conversations last forever. The good news is you can easily find out what is being said and quickly address complaints or fan the flames of positive reviews using Social Media tools such as LinkedIn groups, FaceBook, and Twitter.

In conclusion, customer complaints are actually golden opportunities to protect and build your brand. Here is my top ten list of how to capitalize on this opportunity:

  1. Develop policies to ensure customers are treated fairly and with respect
  2. Make sure employees are trained and rewarded for good customer service
  3. Monitor online and social media conversations with free tools (i.e. Google Alerts, Giga Alert, TweetBeep, Back Tweet Alerts, etc.) and be prepared to join the conversations while the world watches you solving the problem or thanking a brand ambassador for their kind words
  4. Give employees as much authority as possible to satisfy customers
  5. Respond immediately to problems with an apology, ask questions, and listen
  6. Don’t argue or be defensive
  7. Deal with the complaint privately, if possible
  8. Offer compensation for the customer’s inconvenience
  9. Thank the customer for bringing the problem to your attention
  10. Learn what needs to be fixed from customer complaints

Those who enjoyed this article also enjoyed:
Differentiate Your Company with Superior Customer Service
Is Your Business Open or Closed?
The Difference Between Brand and Branding

If you would like to contact me, you can do so by visiting my LinkedIn page or emailing me at mike.clough@bestbizpractices.org.

Share

Responses

If a customer took the time to complain, then it means that many more have the same complaint and are just silent.

Your list of how to deal with the complaints is spot on. I think the most important is to listen and not be defensive. Just listening and apologizing for the issue goes a long way in keeping customers.

A little humility and a lot a listening can go a long way in turning a customer complaint into a launch pad for improvement in your business. Most people understand that people make mistakes; we just want to know that our position was validated.

I just went through a horrible customer experience with Procter & Gamble. Their TIDE TOTAL CARE laundry detergent caused color streaking on many of our clothes. There are complaints all over the internet regarding this. They treated me as if I was the first one bringing this to their attention. I had to ‘jump through hoops’ to file a damage claim, send all the clothes to them, constantly call to see what the status of my claim was – never got a return phone call, and then the ultimate slap was a package I got yesterday with my clothes and a letter saying I must have used bleach or acne cream to cause the damage to my clothes. Total denial of culpability by Procter & Gamble. And the irony is I purchased this more expensive TIDE TOTAL CARE in order to make my clothes look better & last longer. Instead, TIDE TOTAL CARE ruined my clothes & I’m out a lot of money & wasted time dealing with their dishonest tactics.

Kristen, we will quickly see whether or not Procter & Gamble is LISTENING. If they are using the free tools in #3 of my list above (or even more sophisticated paid tools), they will have already been notified of your comment and now the ball is their court to make a very unhappy customer a loyal brand ambassador.

That is the main reason I mentioned Hom Furniture in the article – to see if they are even listening. I have heard nothing back from them yet. Maybe they are not. Yet, thousands of people will read this article that includes a negative story about them. Wouldn’t they be much smarter to be listening?

I suspect we will hear more bad customer experiences in these comments and it will be interesting to see if these companies are listening and how they handle it. I expect that some will amaze you with how quickly they respond and what they will do to make you happy. They will no doubt comment right here.

To small biz owners: conversations like this are happening all over the net. Some of them are probably about your company. Are you listening? If no, it takes very little time to set up the tools to monitor your brand. If yes, then what are you doing to turn an unhappy customer into a loyal brand ambassador?

Thanks for visiting my blog and taking the time to comment!

Thanks Mike. In the fury of venting I misspelled the company name. Advice to all you fellow angry consumers like me – spell company name correctly so that it makes it easier for them to see & listen: Procter & Gamble.

Kristen, I followed your lead and misspelled it myself. I have edited both posts with correct spelling so we can see if they are listening. :-)

I particularly like Robert’s take on this in the comments section, nice work.

Thanks Doug. Unfortunately, there are many small businesses that don’t even know what is being said about them. And with so many free resources out there… It really is unfortunate.

Mike, great topic, with all of cutbacks in businesses staffing during our current economic challenges it is not surprising to hear about terrible customer service stories. Companies are still just not as engaged with customer service as they should be; perhaps even with a whiff of indifference.

I recently attempted to purchase a shirt at a major department store; there was no employees at any of the registers. In fact no employees anywhere that could be determined. I left without the shirt and found other specialty store nearby to make my purchase.

Even with all of the social media tools available are companies really serious about managing their offline and online reputations? I would suspect your readers have some fascinating customer service disaster stories to share.

This is fully correct. However there is a situation of a small company providing services to a much bigger company as well as selling its product and both are government companies and business amongst the two is a compulsion constraint by the government for both. Business losses if any are compensated by the government in terms of packages. So There is a consensus at top level but dissatisfaction at root level. In other words, cost of attending to customer complaint for small company offering services to much bigger company may not be affordable in short terms.

How the situation be overcome?

It is difficult for me to answer your question without knowing much more… maybe even to the extent of being involved. However, I can tell you that from my experience that there is a good solution for every business problem if you look for it. Possibly, some of the other readers will have good suggestions.

However, if I were to generalize and try to categorize customer service problems, most would fall in the category of “Customer Communication.” And if you analyze the processes you have in place for customer communication you may find an opportunity to improve your process… even for a small company dealing with a large company. I hope this helps.

Best that your customers complain to you rather than for them to stay silent and move their business away.

When I ran the Operations Division I introduced a “complaint” database, the Customer Service Reps were told to log any negative comments from customers, even if they were just a small throw away comment. I analyzed these everyday with my management team and we created what was a truly world class Ops organization that was way better than the rest of our competitors.

So in conclusion, let customers tell you their issues, its one of the ways to improve your business!

Spot on Nigel. The only thing I would add is to find ways to make it easier for them to complain.

Mike,

Very good article. I am an employee at HOM Furniture and I found it through Google Alerts. As your article points out it is a good way to stay connected to what your customers are thinking and feeling. Unfortunately I just received the alert today. I would like to help with the situation your family experienced and make it a better experience. Could you forward me a phone number or customer account number so I can get in contact with them? I would also like to look at the history and see where we can work on training the employees that worked with your family. Thanks for your feedback.

Thank you Rosendo. I am pleased that HOM is listening and then taking proactive action. There are two points I take away from this: 1. If you are are using a listening / monitoring service, a paid service may provide a quicker response than a free service (but Google is better than nothing as it did find the conversation, albeit many days after the fact); and 2. Solving a problem while the world is watch is great PR.

Rosendo, I’ll send you the personal information you request by email. To my readers, I will report back how well the issue was resolved.

As a small business owner, consider that conversations about your business are taking place on the Web whether or not you are listening. Imagine how listening / monitoring the conversations can help you protect and build your brand and image. Maybe Kristin will hear back from Procter & Gamble.

Mike,
This article on customer complaints is right on the mark. That has been the airline industry’s plan for dealing with complaints as a whole.

I think it is often the case when you don’t need to worry about customers. The airlines know if you don’t fly with them there will always be somebody else to take your place.

Your mention of a negative experience with Hom furniture made me feel a little disappointed in them which is testimony to your article’s premise on poor customer service. As a good friend, your negative experience carries even more weight with me, another fact of the ramifications of poor customer service.

Back when I was doing our ministry as “The Trucker’s Chaplain” I made deliveries of raw materials to Hom and also picked up their finished products for delivery elsewhere. I wasn’t treated as well as I should have been but that is par for the course for truckers.

As always, as a small business owner, I appreciate your mentoring through these articles from America’s Best Business Practices. Please keep them coming.

Rick

Thanks for your kind comments Rick. The good news if you read the other comments is that HOM furniture was in fact listening (see comments above) and responded today. Assuming they now are proactive with my daughter-in-law, they will have a very loyal customer in her and me. Just in responding to your comment, I am somewhat of a vocal brand ambassador for them.

Thanks again Rick!

Mike,

I was able to connect with Molly and have a few items to work with from a training and communication standpoint. Hearing the customers concerns first hand is a great opportunity. It was unfortunate to hear of her problems with something that should have been very simple. We were able to compensate her for her circumstances and hope to retain her and your families business going forward. Thanks again for the opportunity to work her concerns out by letting us know of the problem.

Rosendo, HOM Furniture is an example of how small businesses should and can operate. The tools are free and it does not take a lot of time. Every small business can improve by listening to the conversations taking place about their business and then taking proactive action.

I thank you on behalf of my family for taking care of our situation and personally for being a good example for the point I am making in my article.

My update regarding Procter & Gamble and their Tide Total Care laundry detergent:
No, they didn’t respond to my comment here. I actually called them again and had to fight my way through the first tier of their stonewalling “customer service”. I finally got bumped up to a “supervisor” who listened to me tell him that I didn’t agree with their findings and considered them a very dishonest company; I had given them the opportunity to do the right thing before I was going to involve a Consumer Advocate TV personality, but now I would. All of a sudden, he was willing to work with me on compensating us for all our ruined clothes. My next step is submitting $ values on everything. I’m so annoyed at how much time I have had to spend on this.

It’s not just the time and effort Kristin (although that is horrible enough). But if you have to bully Procter & Gamble to get results, it does very little positive for their brand or your loyalty (or the loyalty for those reading this or talking to you). It greatly diminishes your satisfaction level, does it not?

Compare that to how HOM Furniture handled our dissatisfaction. First, they were listening and reached out to me rather than me having to bully them. Second, they immediately (once they had the facts) solved the problem and made every feel good about the experience. Our satisfaction and loyalty levels are high. We are happy campers and will purchase from HOM Furniture in the future. How do you feel about P&G?

I hope small business owners are reading this and looking at how they are handling their customer complaints.

I want to share a frustrating experience I had recently as a customer and see if this organization is listening. Most of my banking is online. So, when my wife wrote me a small check, I decided to cash it at her bank because they have branches in grocery stores, one of which is close to our home. The bank is TCF which I believe stands for Twin Cities Federal.

Although I’ve banked with the same company for almost 30 years, I’ve been thinking of changing because my bank was acquired by a large national bank and they are getting too big for me. Since TCF is regional, they are one of the ones I was considering because a smaller bank can offer more personalized service.

However, when I tried to cash my wife’s check, they wanted to charge a service fee of $5 because I did not have an account with them. When I asked if my wife would have to pay the $5 fee since she had the account, they said no. Thankfully, my wife was still shopping in the store so I left the counter and went in search of her. Rather than being sensitive to the inconvenience this created for me and my wife, they just kept explaining that this was their policy. Obviously, their policy did nothing to inspire me to want to give them my banking business.

Although I would have felt better if the employees had demonstrated some empathy, I am not really upset at them because they were simply following policy .My complaint is with TCF because they should have thought through the implications of their policy and made an exception for spouses. Maybe if TCF is listening they will amend their policy. I will keep you posted.

Customer complaints are good when they are done in a constructive manner. Many times however, customers create their own problems and then want to blame the vendor.

[...] some customers may have problems processing their payments through e-commerce. Make sure you resolve issues like this immediately to prevent your prospective customers from turning to your [...]

[...] you read somewhere that the mere “act” of “complaining” on the part of the customer is [...]

Leave a response

Your response:

 

Categories