Get serious about customer complaints

HOW DO YOU HANDLE customer complaints? Most contractors think they do a good job of resolving them. But when asked, "How do you know?" most owners/ CEOs respond, "I don't!" Research shows that if customer complaints are resolved quickly, fairly and with a win-win approach, customer loyalty actually increases. But how does one know how well the company is handling complaints? Some managers mistakenly

HOW DO YOU HANDLE customer complaints? Most contractors think they do a good job of resolving them. But when asked, "How do you know?" most owners/ CEOs respond, "I don't!"

Research shows that if customer complaints are resolved quickly, fairly and with a win-win approach, customer loyalty actually increases. But how does one know how well the company is handling complaints?

Some managers mistakenly feel that fewer or no complaints show they are doing great. No complaints may mean the customer's concerns are being resolved in ways not favorable to the company or are being blocked to avoid incurring the displeasure of senior management. It may also mean the customer is already actively looking elsewhere for a supplier.

With no defined system for handling and documenting complaints, employees are left to their own means for dealing with a complaint. Some may think they give good customer service by giving in to the customer. This may seem to be good service but may create an expectation that the company cannot always meet. It can also be very costly. One contractor lost more than $80,000 in change orders when a disgruntled project manager signed all outstanding change orders as "not relevant."

The complaint is not closed without closure with the customer.

More often than giving away the store, employees take the opposite approach and treat the complaint and customer with disdain and contempt. These employees feel they are protecting the company, but may, in fact, be creating very dissatisfied customers.

Three myths about complaints are:

  1. No news is good news. When customers complain it means they have some hope that the company will work with them to resolve their issue. When customers quit complaining, it usually means they have given up and are actively exploring alternative suppliers.
  2. Complaints are bad. Complaints are not evil but are opportunities for learning. When a customer complains, it gives insight into the customer's expectations. These may represent expectations that other leading suppliers have already provided, indicating that the bar has been raised. When one company provides goods or services that exceed customer expectations, it delights the customers. Over time this level of service becomes the customer's expected level, thus raising the bar of what customers expect of all suppliers. When this is the case and one fails to deliver the (now) higher expected level of service, the customer is disappointed. The customers may complain in hopes of bringing the supplier up to the expected level, or they may give up and go elsewhere. The complaint is an opportunity to see if the bar has risen and how far.

In some cases, the customers complain because they are expecting something that no one is providing. One can view this as a customer with wildly impossible expectations. Or one could see this as an opportunity to learn more about the customer and his ever-changing needs. If we can design a solution to the new expectations, we can raise the bar ourselves and gain a competitive advantage, not to mention a more loyal customer.

  1. Complaints can be ignored. Not responding to a complaint is like lighting dynamite with a very slow burning fuse. It takes time to burn to the core but when it does the relationship with the customers comes apart. Few companies actively ignore complaints, but with no systematic way in place to deal with complaints, the complaints die a slow death of random attention.

While working for a contractor a few years ago, I led a research effort to discover how best to handle complaints. The team developed a model of a world-class customer complaint system. It consists of the following:

  • The process steps are clear. Every employee needs to know how to handle a complaint. Few contractors have a documented complaint-handling process. What they do have is vague. The test is if all employees know and follow the same system. If it isn't clearly defined, it isn't clearly followed.
  • The complaint owner is identified. When a complaint is received, an "owner" is needed to follow the complaint to resolution. For some companies the complaint owner is the employee who first receives the complaint, be it the PM, foreman, sales rep or president. In others, the owner is assigned based on the nature of the complaint. In any case the complaint owner is responsible to listen to the customer to make sure the complaint is fully understood. The complaint owner then works with the functions of the company that can resolve the problem and checks back with the customer to confirm the complaint has been resolved.
  • A complaint log is kept. This is a simple record of when the complaint was received, the customer, a description of the complaint, the complaint owner, status through resolution and when it was resolved. A complaint log is valuable in making sure complaints are handled in a timely manner and do not slip through the cracks. The log provides a learning tool to discover trends and for teaching employees.
  • Management reviews complaints regularly. Management will review the status of all open complaints at least monthly to ensure prompt appropriate action. This gives senior managers the answers to the "how do you know" question. A big picture review usually takes place annually. This consists of a review of all complaints to see what trends or patterns exist and where countermeasures should be taken to prevent future complaints. New employee training, or a change in policy, may be needed.
  • Employees seek win-win solutions with the customer. The customer is not always right and his complaint may not be resolved in the way that he wants. World-class companies always offer the customer something so he feels he won part of the complaint.

    Granite Rock, a provider of rocks and concrete for roads, offers the ultimate complaint resolution answer — it says, "Don't pay us if you are dissatisfied with our service!" Of course, when a customer chooses this option, which is rare, Granite Rock spends time with the customer to learn what did happen, how it happened and how to prevent it from happening again. If Granite Rock can't resolve it to the customer's satisfaction, the customer does not pay. The customer is more likely to remain a customer if he feels the complaint ended in a positive way.

  • Feedback is given to the customer. A complaint may be resolved internally, but if the customer is not aware of it, the complaint is still a festering sore. World-class companies have a feedback step in their complaint system. The complaint is not closed without closure with the customer.

World-class companies did not reach that level by randomly handling of complaints. Being world-class does not mean they don't have complaints, though they tend to have far fewer than others in their industry. World-class companies have clearly defined their systems for capturing, addressing and resolving complaints. They learn from the complaints to put preventive countermeasures in place to reduce the possibility of reoccurring ones.

When a complaint comes to your company, it can be a great opportunity to gain and keep loyal customers.

Dennis Sowards is an industry consultant. His company is Quality Support Services; he can be reached at dennis@YourQSS.com or at 480/835-1185.

More management articles by Dennis Sowards