Complaints transition customers from being agnostic to opinionated. If you handle the complaint well they will be more loyal. If you don't they may well move on.
Yet organisations fail to recognise the value complaints can deliver. They need to look anew at the value of complaints and feedback and to view them as a key opportunity to develop more profitable and sustainable relationships with their customers.
It's not enough simply to process the complaint - companies need to leverage every opportunity to create value from it. Complaining customers offer an opportunity to recover the failure, to make restitution and then to continue with a mutually valuable relationship.
Complaining customers can become a company's most loyal customers. Industry research shows that customers who complain and are satisfied are up to 8% more loyal than those who did not have a problem. They are also more likely to tell family, close friends and work colleagues how pleased they are that their complaint was addressed.
Given this propensity to re-purchase and to recommend to others in their social and peer groups, customer complaints are a leading indicator of customer sentiment and future economic activity. 96% of people who have had a poor experience do not complain - they remain the silent majority. 55% of these non-complainers will simply defect to competitors, equating to millions in lost revenue.
But it does not stop there: past research shows that customers who have a poor experience with an organisation will tell an average of 20 people - in essence, for every dissatisfied customer, there are a further 20 people who now distrust the company and are unlikely to consider becoming a customer.
In today's world, however, the impact of social media makes that number exponentially higher. Unhappy customers will get onto sites like Facebook or Twitter and let hundreds - or even thousands - of their followers know how unhappy they are.
Encouraging customers to speak up, making the complaints process transparent and accessible and treating complaints seriously are key steps in driving up customer retention and, ultimately, profitability.
In the past, the majority of companies have focused on clearing complaints with minimum effort.
Today, smart companies are learning from the complaint through root cause analysis and applying that learning across the organisation.
The value of complaints data is that it enables an organisation to understand issues from the customers' perspective; directly monitor product and service performance; and drive improvements to the business by identifying the key product or service barriers to increased customer satisfaction and loyalty.
Adopting an approach to managing complaints which recognises the potential for delivering value to the business can be extremely worthwhile - both for the customer and the organisation. This approach reduces customer churn, improves customer retention, strengthens loyalty, increases customer value, and ultimately impacts the bottom line.
To achieve real competitive advantage, companies need to apply the following steps:
The companies that are ahead of the pack are the ones that understand that by seizing every complaint they receive and leveraging every opportunity to create value from it, not only will they succeed in earning the loyalty and advocacy of their customers, but they will also build a more customer-focused business that will enable them to achieve greater profitable growth.
