LEARN from your complaints – A framework for handling customer grievances profitably


Complaints are wonderful. They represent the most powerful form of market research there is, giving organisations an opportunity to build brand loyalty, generate enthusiastic word-of-mouth advertising, and improve products and services in ways that matter most to the customer.

This philosophy should be nothing new. Yet I remain frustrated by how astonishingly poor household names can be in handling customer feedback. And the increasing dominance of the web in so many markets has done nothing to improve matters, as anyone who has ever tried to complain to Ryanair can attest. Websites, and particularly FAQ sections and automated response, have become gatekeepers between the customer and the organisation. In a world where our relationship with customers should be more personalised – a personalisation enabled by technology – organisations are choosing to shield themselves from direct feedback.

This article advocates a back to basics approach: when the customer talks, we listen.

Complaints in context

A lot of the statistics quoted about complaints are misinterpretations of TARP’s excellent research in the 1970s and 1990s. Fortunately, TARP president John Goodman reiterated the real findings in 1999, (Basic facts on customer complaint behavior and the impact of service on the bottom line, Competitive Advantage – an ASQ Divisional Newsletter, June 1999) and these are used throughout this article. They are American, and we can probably assume they are higher than we might expect from countries like the UK.

Unsurprisingly, complaint rates vary according to the nature of the issue. Where the customer is left significantly out of pocket 50-75% of people will complain; but only 5 – 30% of customers will complain about poor quality, mistreatment or incompetence; and then only to front line staff. As an example, TARP found that only 3% of people complain about a poor quality airline meal, and all of those took their complaint no further than the steward. Yet it’s often the smaller complaints that offer the most cost-effective way to improve the customer experience.

On average, TARP found that 50% of customers who encountered a problem would not complain at all (increasing to 96% for low value items), and only 1 – 5% would take their complaint to management or head office. B2B customers are twice as likely to complain but also tend to take their complaint to their rep or agent and no further. Of those B2B customers who do not complain, up to 90% will simply go elsewhere next time.

Combine this with the knowledge that it can cost anything between 2 and 20 times as much to generate a new customer as it does to sell to an existing one, and the case for handling complaints effectively is self evident.

So encourage and reward complaints. A dedicated 0800 customer comments line will, roughly, double the number of customer contacts you receive. For goodness’ sake don’t use a premium rate line and if you must use an automated switchboard do not front end it with a 90 second recorded advert for other products (are you listening Fidelity?). If the customer is angry when he first calls he will be furious by the time he talks to a person.

Email complaint lines have their place, although it becomes difficult to build the rapport required for truly effective complaint handling, but there’s no excuse for relying on autoresponse.

How complaints escalate

Figure 1 provides an overview of the positive impact of a complaint well handled, and how complaints escalate out of control if they are not addressed effectively in the early stages.

Graph showing impact of complaint handling on loyalty

How complaints escalate (c) Trevor Lambert and Nigel James 2014. Click to expand.

The model, which builds on a framework I developed with Nigel James in the early 1990s, is conceptual but it seems to chime with customer service professionals and marketers alike as feeling instinctively ‘right’.

Stage 1 – Proactive Response – Expression of concern

Most complaints begin with a large element of goodwill. The customer wants to give you the opportunity to put things right. For this reason I call these ‘expressions of concern’.

Expressions of concern are perhaps the most powerful pieces of user research an organisation will ever receive, and for each one received there may be as many as nine other people who haven’t bothered. Organisations should actively encourage and reward such contacts, and act on them quickly. They present an excellent opportunity for product or service improvement and for increasing brand loyalty.

Responsiveness at this stage is essential. TARP’s research found that those complaints resolved on first contact generated 10% higher satisfaction and loyalty than those that required multiple contacts to resolve. Another reason to empower your front line staff.

Stage 2 – Reactive Stage 1 – Complaint handled well

TARP found that customers who complain and are satisfied with how the complaint is handled are up to 8% more loyal than those who had no problem at all. Research in the FMCG sector has found that people who have a complaint handled well will tell three people in their network. Perhaps unfairly, they will tell eleven others about a badly handled complaint.

So powerful is the impact of a well-handled complaint on brand loyalty and word-of-mouth reputation that some marketers have even suggested built-in service lapses to create more complaints: not an approach I would recommend.

Stage 3 – Reactive Stage 2 – Complaint handled inadequately

According to one report from Trendlines Ltd, up to fourteen percent of people who switch brands do so because their complaint was handled unsatisfactorily, and it’s at this stage that things can start to go wrong.

Instilling a customer-focused complaints handling process in your organisation will minimise the chances of a complaint being handled badly. The LEARN mnemonic, presented below, provides a useful framework for such a process.

Stage 4 – Impotence Stage – Complaint goes to an independent body

Depending on industry or sector, and the determination of the person making the complaint, taking a complaint to an ombudsman, the media, or other independent body becomes the next step. At this stage your organisation loses its ability to control the situation, and the complaint becomes a public embarrassment. The resulting publicity brings ‘me too’ complaints out of the woodwork and the impact – and costs – increases exponentially.

It is often at this stage organisations realise resources used for complaint handling are an investment, not an expense; but it is too late and, whether or not the independent body finds in favour of the customer, credibility is already damaged.

Stage 5 – Litigation Stage – Legal action

Of course the disgruntled customer may choose to take you to court, which brings the complaint into a whole new dimension. The resulting costs, time investment and long-term damage to your brand equity can be disastrous – even terminal. The public tends to forget who wins and who loses. Allow a complaint to get to court and you’ve already lost.

LEARN – A framework for handling complaints effectively

If a complaint handled well increases customer loyalty, brand advocacy and profitability, how can organisations ensure that most concerns get no further than stages 1 or 2? Part of the answer is give responsibility and authority to an individual or team and to adopt a structured, consistent approach to complaint handling.

I recommend a simple but effective approach to dealing with individual complaints. Originally developed for telephone and face-to-face conversations, which I believe are the best way of dealing with such matters, it can work equally well for written complaints with some adaptation.

Share this simple approach with your front office staff and you can ensure the majority of your complaints lead to brand loyalty and increased profitability. The TARP research shows that 50% of customers will complain to front line staff (75% in B2B environments) and so in all likelihood head office remains oblivious until it is too late. So, if you use distributors and retailers, share this information with them too.

The LEARN mnemonic stands for:

  • Listen
  • Empathise
  • Ask Questions
  • Responsibility
  • Negotiate
  • Learn

Listen

Train your front line staff in the art of active listening and instil in them the philosophy of welcoming complaints. This demonstrates a real desire to put things right rather than adopting a defensive attitude.

Allow the customer to offload. The simple opportunity to air their grievances without interruption will take the sting out of many complaints. Most people have had negative experiences of complaining and there still appears to be a British reluctance to complain until it becomes really necessary. So when people get round to making a complaint they have bottled up their anger and rehearsed for the worst – an unhelpful and argumentative response.

Some customers will have prepared a script or bullet points to ensure they cover every aspect of their problem. Others will be less well organised and may require gentle prompting. Whichever type you encounter, the key is to give them the space they need to have their say.

This approach also provides the complaint handler with several benefits:

  • He gets the critical information about the complaint
  • He can focus his whole attention on the caller
  • The caller has the opportunity to dump the ‘emotional baggage’ associated with the complaint until all that is left is the factual content.

This is not to say that the complaint handler should remain silent. The occasional interjection of ‘I see’, ‘I understand’ or simply ‘mmmm’ makes the customer feel listened to. Summarising or repeating some of the customer’s phrases not only demonstrates that the complaint handler is listening, it can also help build rapport and trust.

And it goes without saying that a complaint handler must never enter an argument. Doesn’t it?

Empathise

No matter how we might feel about a complaint, if an issue matters enough to someone to go to the trouble of making contact it should matter to you. It’s essential your complaint handlers take the complaint as seriously as the customer.

Recognising the caller’s right to feel angry or upset about a situation is essential. This does not necessarily mean accepting liability at this stage. One phrase which can show empathy without admitting responsibility is: “I’m sure if I were you I’d also feel just as angry.”

This can be said without compromising anyone’s personal integrity. If you were that person then naturally you would feel exactly the same.

Empathising can help to defuse the complaint still further as the customer realises he is not talking to a faceless corporation or bureaucracy, but to another human being. He may even become embarrassed about expressing so much anger or emotion at the start of the exchange when he finds his complaint handled so reasonably and even-handedly.

Ask questions

Asking questions of the customer about their complaint has the following immediate benefits for the complaint handler:

  • He can fill in the gaps in the evidence to get a complete picture of the complaint
  • He demonstrates to the caller that the complaint is being taken seriously rather than being fobbed off as quickly as possible.
  • It acts as the start of a negotiation process to find out exactly what outcome the caller is expecting from his complaint.
  • It signals and enables the essential transition of control from the caller to the complaint handler. From here the complaint handler can talk a little more in the search for a resolution.

The benefits of open questioning are well understood and require no repetition here. Instead, a plea for the occasional use of closed questioning. Closed questions have their place in controlling a complaint and helping the customer to become more specific about his complaint and his preferred resolution.

Responsibility

How often do we make a complaint only to be told we need to be speaking to another person or department? It’s almost as if organisations go out of their way to annoy the customer.

Complaint handlers should take personal responsibility for resolving the complaint even if this means liaising with other departments. It’s important that the customer knows the name of the person dealing with his issue and when he can expect a response. Marketing guru David Oliver emphases that, in setting timescales for response, always under promise and over deliver; and if you are going to miss an agreed deadline, contact the customer and explain what is happening.

However, people can only take responsibility if they have authority. A complaint handler who has to check everything with a higher authority is exposed and vulnerable. If you feel you cannot trust your team with that level of authority, you’ve either got the wrong people in the team or haven’t given them enough training.

Negotiate an agreement

The issue of authority becomes particularly important when it comes to agreeing an outcome with the customer. More and more customers are becoming savvy about how to make complaints and will make contact with an idea of what they want to get out of the conversation – perhaps a refund, repair or replacement, or simply an apology; others will need prompting.

This stage is a negotiation because you will get some outrageous demands. I would suggest, however, that the majority will be reasonable and the negotiation may be about how quickly or conveniently the agreement is implemented.

If the solution involves a visit or delivery to the customer’s home or office, do not undo all the good done so far by insisting that this happens at a time convenient to you rather than the customer. This should be obvious but personal experience suggests it is not.

Where possible, provide some sort of reward for complaints in the form of vouchers, gifts, a discount or whatever feels appropriate. Always say thank you and always say sorry – even if your legal team advises that it needs to be a qualified apology.

LEARN

The LEARN mnemonic acts as a ‘meta mnemonic, because the acronym itself is an essential stage in this recommended approach. Organisations must learn from the complaints received. This means using a robust complaints recording and tracking system to identify trends and areas of concern.

All complaints should be categorised and recorded as they come in and the system used to ensure they are all dealt with satisfactorily. Senior management should review the system and identify what actions should be taken to prevent these complaints arising again. Looked at positively, this data is an immensely powerful driver of product or service improvements.

It would be a mistake to focus on trends alone. Individual complaints are always important and periodically directors should choose a sample of complaints to follow up personally to ensure that the customer was truly satisfied with the way his complaint was handled.

Conclusion

This article has aimed to make the case for a positive approach to complaints and has introduced the LEARN framework for the effective handling of them. The article’s aim, however, is not to reduce the number of complaints. Indeed, I would encourage organisations to actively seek out and reward complaints. Instead, I suggest that an organisation which demonstrates an innovative, positive and constructive approach will be in a powerful position to improve services and products in the ways that matter most to customers, and in the process build unrivalled brand loyalty and advocacy.