How to make your consumers 8 times more loyal

Do you recall the 1970’s Carlsberg ad in which an executive enters a dusty old office to answer a phone to find it’s a wrong number? The pay-off was the office sign “Carlsberg Complaints Department”. The implication being Carlsberg is so good it never gets a complaint.

In the real world, as opposed to the world of advertising, the notion of zero complaints is pretty silly. All products, even beers, have a service element and no-one, I repeat no-one, gets it right the whole time. In which case, zero complaints can mean either it’s so difficult to complain that people just don’t bother complaining or they got lost in the system.

So let’s go back to basics. What is a complaint? The Institute of Customer Service defines a complaint as an expression of dissatisfaction, whether justified or not. So a complaint is not something that has to be in writing or submitted through formal channels.

How common is complaining? The classic 1979 TARP study found only 1 in 25 customer problems, just 4%, resulted in a complaint. Having reviewed the literature the maximum complaint rate I found was 33%. The message here is that depending on how confident you are on the ease and likelihood of your customers complaining, multiply the number of complaints you receive by between three and 25 to get the true figure!

Why don’t customers complain? Often, it is simply not worthwhile. Customers do a quick cost benefit analysis of complaining and in many cases just move on to another supplier. One retail bank study found anger was the main motivator yet often providers are surprised and affronted when customers behave in an angry manner. Providers should train their people to expect and deal with anger rather than put up signs saying it won’t be tolerated.

In fact complaining when things go wrong should be promoted. So inform customers that complaints are welcome, the procedures are clear and simple, and you’ll even help them to complain.

If a complaint hits the MD’s desk it’s usually a complaint about a complaint. So called ‘double deviation’. The worst case is when the customer has gone to the trouble of complaining and the way it’s handled gives rise to a further complaint.

The four keys to success are a complaint-soliciting culture; simple and accessible procedures; fast and easy resolution; and systematic follow-up.

The business case for investing in this thorough approach to complaint management is sound. Consumers who are satisfied with how their complaint was handled are 8 times more loyal. Customers accept mistakes, what they don’t accept is companies who handle their mistakes badly. And there are two other major benefits, better staff engagement and free process improvement consultancy from those who know best – your customers. Research shows the ROI of investing in complaints ranges from 75% to 400%.

Do your complaints management processes satisfy customers who have experienced a failure? Do they retain those customers who have experienced a failure? Do they improve organisation-wide processes as a result of information from failures? Do they help retain employees?

#FridayThink

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