Turning bad to good

Complaints should not be discouraged, they should be sought out, because they can provide a utility with a good indication that there is an underlying problem that needs resolving, says Michael Hill.

As customers increasingly use self-service to purchase products, apply for services and manage account details, the only human interaction with a company is often when something has gone wrong. But the impact of satisfying the complaining customer can be positive for organisations. In stark contrast, companies that are bad at handling complaints, especially with the advent of social media, risk reputational damage and loss of customers. In the past few years regulated industries, including utilities, have also seen record fines for poor complaints handling.
A 2012 study of consumer attitudes towards retail customer service highlighted the positive impact that complaints handling has on customer loyalty. Seventy per cent of consumers that were highly satisfied with the resolution of a complaint remained loyal – and often went on to recommend the company’s services and products, compared with only 63 per cent remaining loyal despite no problem being encountered with the company.
So what should companies do when tackling complaints? Invest time and resources on designing strategies to prevent complaints or focus on preventing problems for customers while also maximising customer satisfaction? The problem with many complaint prevention strategies is that they too often focus on the wrong thing. For example, an organisation might:
•    restrict the channels that allow customers to contact them;
•    limit their definition of a complaint;
•    implement cumbersome, bureaucratic procedures for customers to follow (and get lost in the exhaustive paper trail);
•    ensure staff see complaints as a negative, so that they do all they can to not record complaints;
•    blame staff who cause complaints;
•    blame customers for having unrealistic expectations.
Effective complaints handling will often need to stimulate complaints rather than seeking to prevent them. If a company focuses on using complaints and customer feedback to identify both the problem and any root cause then they will most likely reduce levels of customer complaints overall.
Poorly designed products, processes and systems can and will cause problems and may cause affected customers to complain. Poor communication, misleading advertising or unfair treatment will also cause problems, as will poorly trained, overworked and demotivated staff members.
These problems do not always cause customers to complain. If the problem has a significant impact on a customer, they are likely to complain. However, if the problem has a minimal impact upon them, they may not be bothered to go to the time and trouble of complaining. However, another factor that must not be overlooked is trust.
If a customer does not trust a company, then do not expect them to complain unless they have suffered considerable inconvenience and are left with no option. However, if a customer trusts a company and knows it is ready to listen and correct things for them, they are more likely to let it know when something has gone wrong.
Studies in the UK, commissioned by the Institute of Customer Service (ICS), have shown that the most reputable companies will tend to cause fewer problems for their customers but will also be more likely to hear from a customer when a problem is experienced. The European Consumer Scorecard (a European Union initiative) periodically reviews the level of problems, complaints, trust and satisfaction across different markets in Europe and also highlights a strong correlation between trust and problem-to-complaint ratios.
The goal of effective complaints handling should not be to prevent complaints from occurring but to minimise the number of problems experienced by customers and to minimise escalations.
We live in a diverse world where different people will have differing perceptions of the same experience. To really understand the extent and nature of a problem, greater visibility of problems is required. Formal and official complaint procedures tend to result in many expressions of dissatisfaction being left unrecorded and invisible to an organisation. They also struggle to deal effectively with the growing number of negative comments that are scattered across social media platforms. But those companies that have implemented strategies to identify and address dissatisfaction as soon as it is raised find that not only does this have the greatest impact in increasing satisfaction and customer advocacy, but provides some of the best opportunities for learning.
If a company does not have true visibility of the levels of customer dissatisfaction, it should not design a strategy to prevent complaints. Complaints are indications of problems – therefore, a company should encourage them and learn from them.
A customer will remember excellent experiences (and poor experiences) but they quickly forget mediocre experiences. Effective complaint handling and the use of guidance standards such as BSI ISO 10002 should enable a company to turn poor experiences into excellent ones that also provide useful feedback for improving the business.
Michael Hill is a member of BSI’s customer service committee and founder of complaintsrgreat.com

Calling complaints champions
BSI is looking to bring together experts and practitioners from across the public, private and third sectors to capture best practice in a new British standard for complaints handling. If you’re interested in contributing to the development of the standard, contact: [email protected]
BSI develops standards by committee following an open, consensus-based approach. This helps to ensure all the relevant stakeholders have their say. This typically includes representatives from industry and professional associations, practitioners, research bodies, academics and consumers organisations.