Complaint Management Systems

As any sales training support course will tell you, good complaint management can actually enhance sales. If complaints are dealt with satisfactorily by sales support, then these customers will have more loyalty to your company than those who do not complain.

Therefore, it is essential to have a good system for complaint management.  Without such a system a substantial amount of business could be lost. In addition to increased trust, the way complaints are dealt with in your company has another positive effect: word of mouth propaganda.

People who have complained tell a great many others about their positive as well as their negative experiences.  For example, in insurance, satisfied customers who have complained tell, on average, 6 people about their experiences whereas unsatisfied customers tell about 12 others.

These estimations show, by way of example, how potential market damage can be traced both to unhappy clients who have complained and those who have not.

Customer satisfaction surveys will give you data on the numbers of customers who complain, the rate of loss of customers etc. Surveys on the handling of complaints will give you information on the number of people whose complaints were dealt with satisfactorily, the number of customers who could be appeased etc.

Let us use an example to illustrate the effect of good complaint management. Let us assume that 30,000 customers of a very large company experienced problems with one particular product. Surveys in this company showed that 50% of complaints led to customers going elseqhere. So if there were no complaint management system 50% of the company’s customers may have left. If average sales were £2,000 per customer and average profit 6%, this would amount to losses of £30 million in turnover and £1.8 million in profit.

As customers are often very loyal to brands and companies (for example studies show that manufacturers of tyres and cosmetics have a loyalty rate of 5 years, car manufacturers 20 years) the economic loss of a customer over the entire business relationship must be added to annual calculations.

These calculations can be further expanded by the additional negative propaganda factor, which increases the damage.

In our example, The data obtained from the customer satisfaction survey showed that those who do not complain tell on average 15 others about the problem and in 70% of cases, caused them to change supplier.

The effect these concrete indications have on actual sales behaviour can of course be determind with accuracy.  In this case, we can say that one client will be lost from every 50 who hear about problems (=2%).

The column on the right of table 1 also shows that introducing a complaints management system gives a totally new situation.  Almost half of customers who complain now use complaining as an opportunity to negotiate.

The percentage of customers lost varies according to the degree of satisfaction with the outcome of the complaint.

Only 5% of customers who are happy change supplier.Taken together with the loss of customers who do not complain (7,500 customers), this means an annual loss of 11,025 customers.Summarised, the damage caused by the loss of customers and any subsequent negative publicity, where no customer complaints system is in place, around £43 million is lost.  Where there is a complaint management system in place, the estimated economic damage caused by customer dissatisfaction is the reduced figure of £30.5 million.

An efficient customer complaints system is certainly not a means of compensating for poor product or sales.  No company – even with good products and effective salespeople – will satisfy all its customers.  However, a complaints management system minimises the negative effects of customer dissatisfaction.

Table 1: The Benefits of Customer Complaint Management

Testimonials