Complaints welcome here

by Rick Phillips

Most managers view complaints from customers as annoying headaches, so they avoid facing dissatisfied customers.

The customer service-driven manager, however, welcomes complaints. These managers know that complaints represent the opportunity to excel and become even more profitable.

Marshall Fields, the great Chicago retailer, once said, Those who buy, support me. Those who come to flatter, please me. Those who complain teach me how I may please others so they will buy. The only ones that hurt me are those who are displeased but do not complain. They refuse me permission to correct my errors and thus improve my service.

Dozens of studies conducted by government, universities and industries prove that a customer whose complaint has been resolved will create much more revenue than they ever cost. The satisfied customer returns to buy more, and refers more new customers than a customer who never gave a manager the opportunity to resolve a complaint.

A study by the Technical Assistance Research Programs Institute pinpoints three findings about customer complaints:

1) The average customer with an unresolved complaint will tell nine to 10 people; 13 percent tell more than 20 people.

2) Up to 70 percent of complainers will return to your business if the complaint is resolved. Up to 95 percent return if the problem is resolved quickly.

3) For every complaint received, the average company has 26 unhappy customers it never hears from; six of these customers have problems that are considered serious.

Lets examine that last point. For every customer who bothers to complain, there are 26 who remain silent. If we get five complaints a week, that means there are as many as 130 dissatisfied former customers out there with unresolved problems.

Can I afford to satisfy complaints?
The real question is can you afford not to satisfy customer complaints?

The unhappy customer quickly becomes someone elses customer. In fact, another study showed that 91 percent of unhappy customers will never purchase goods or services from a company with which it has an unresolved complaint.

What does that mean to your business? The automobile industry says the brand-loyal customer spends $140,000 over a lifetime. Appliance manufacturers figure the loyal customer is worth $2,800 in profit over a 20-year period. The local supermarket depends on each customer to spend $22,000 over a five-year period.

I recall a conversation I had with the manager of a Washington, D.C. restaurant. The waitress serving the table behind me had just told the customer there was no charge for the meal since the restaurant did not have the wine he had ordered. The manager told me the waitress made the decision on her own because the customer was a regular. He ordered the wine at least once a month to impress his clients. The manager also told me that every time a business diner leaves his restaurant disappointed, he risks losing up to $3,000 per year.

I am a small businessman, he said. I cant afford that.

This businessman recognized that, not only should he resolve customer complaints, he also knows his staff can be trusted with the authority to resolve them.

Do you think his customers are loyal to him? You bet.

The customer service manager for Quill Corporation, an independent office products dealer, has a simple motto: A customer who is willing to complain is at least twice as loyal as one who remains silent.

Sit down one day and take an hour to figure out what your customers are worth. You will begin to look at them differently when they come to you with a complaint.

Heres a simple formula to figure the bottom-line difference between resolving and ignoring customer complaints.

Resolving customer complaints
One system for resolving customer complaints is explained below. All your employees should be familiar with this formula, or a better one youve developed to suit your specific needs.

1) Youre the one.

One of the last things a person wants to hear is, Thats not my department. If you are the person this customer has chosen, youre the one; you are the organizations representative. Its up to you to listen to and understand the problem and then take the customer to the person who can ultimately solve the problem. At that point, you are the customers advocate. Stay with the customer until you are sure the problem is resolved.

2) Show you are concerned.

The primary way to show you are concerned about the customers problem is to listen with empathy. Ask yourself how you would like to be treated if you were in the same situation. Never interrupt or assume you know what the problem is before the customer is through explaining. You may have heard the same complaint a hundred times before, but this is probably the first time the customer has experienced it. The customer may have even rehearsed the story and will resent you for not listening to the whole story.

3) Stay calm.

Sometimes a person with a complaint gets excited, even angry. Occasionally he or she will take out their frustration on you. The key is to try to understand the situation from their point of view and dont get pulled into a shouting match. Reassure the customer that you are concerned and will try to get the problem resolved.

4) Be sure you understand the complaint.

One of the keys to successfully handling a complaint is to be sure you know exactly what the problem is. Put it into your own words and ask the customer if you understand it correctly. Customers will then be reassured that you understand. If the customer has not completely explained the resolution he or she is looking for, ask. This assures the customer that you care enough to see the problem resolved to his or her satisfaction.

5) Solve the problem.

Either take the problem to whoever can solve it, or solve it yourself. In either case, it is up to you to stay with the customer until it is resolved. Remember, you are the one the customer has chosen.

Management should keep a record of all complaints. Develop a system that tracks problems, including their causes, through to conclusion. This is the first step toward avoiding recurring problems in the future.

Remember, only about 10 percent of unhappy customers will complain. Complainers are crucial to the ultimate success of your business. But you will learn and improve only if you deal with complainers successfully.

There is another bright spot to resolving customer complaints. In most industries, customer service is generally poor. Customer expectations are low, therefore the company that distinguishes itself by welcoming complaints will gain plenty of positive public relations. A little effort goes a long way at a time when so few are willing to take the time to develop quality customer service. 

Rick Phillips is president of Phillips Sales and Staff Development, P.O. Box 29615, New Orleans, LA 70189. (800) 525-PSSD.

This article originally appeared in the March/April 2000 issue of Progressive Distributor. Copyright 2000.

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