Complaint Management defensive or offensive strategy

1
Complaint Managementdefensive or offensive
strategy

• Less expensive to keep an existing customer
  than to capture a new one..
• 80 of all complaining customers will return if
  complaint handling is fair and effective
• Word-of-mouth (Richins, 1983)
• A dissatisfied customer tells gt 10 friends,
  family members about the episode
• User-based innovation

2
Managing complaints to get more loyalty
Customer loyalty
Result of effective complaint handling
Permanently increased customer loyalty
Critical incident leading to complaint
Customer loyalty before critical incident
Result of ineffective complaint handling
Permanently reduced customer loyalty
Time
3
Why many companies are not investing in complaint
management

• Half of all customers are dissatisfied with
  complaint handling!
• (e.g. Estelami 2000 Gariner 2003)
• Companies are not well informed how to deal with
  failures
• (Tax, Brown and Chandrashekaran, 1998)
• Many Companies do not believe that they have a
  lot of dissatisfied customers

4
The dynamics of satisfaction / dissatisfaction
Performance/expected performance
Customers expected performance
increasing customer fluctuation
Companys actual performance
(The customer satisfaction trap, Homburg 2007)
Time
5

• Problems of ex-post satisfaction analysis
• Have already changed supplier... bias
• The recollection of emotions... bias

6

• How to define complaints!?
• Written complaints send directly to
• HQ ?!...

7
Lack of Complaint Management

• Psychological barriers
• Employees conceal complaints
• Employees drive complaining customers away
• No physical access for dissatisfied customers
• ..........

8
Necessity of complaint stimulationThe iceberg
phenomenon
Only about 15 of all dissatisfied customers
complain
About 85 of all dissatisfied customers do not
complain
9
Why dont some consumers complain?

• time and mental costs
• Power-relation
• Bad access
• Lack of competencies
• Expected results
• Personal factors

10
Complaint Handling procedural justice

• Interaction (invitation, processing, ex post)
• Compensation
• Complaint based improvements

11
Interaction

• Invite customers to complaint
• Make them express dissatisfaction
• A complaint bar (discreet)
• Express your interests in brochures leaflets
• Show earlier cases of complaint handlings (and
  improvements)
• Attitude we are interested in complaints
• Be informative and effective when processing the
  complaint
• Facial expression, gesticulations (body
  language), formulations (rhetoric)
• Current information
• Rapid decision making
• Few people involved
• Follow up after finishing complaint handling
• Explain outcome
• Explain how this gift will influence your
  business in the future

12
Complaint Management System

• Top-Management commitment
• Allocation of resources (investment)
• Goals, policies and procedures
• Data, analysis and control
• Complaint-oriented culture
• Education and competencies (HR)

13
HOW OFTEN ARE CONSUMERS DISSATISFIED

• 75 of all consumers (18-69 y.o.) experience
  dissatisfaction with purchases
• on average 2-3 times a year
• younger generations are more frequently
  dissatisfied than the older generation (50-69
  y.o.)
• especially dissatisfaction with electrical
  products, and telephone or internet services

14
How they react to dissatisfaction?

• On average 1-2 complaints a year - verbal or
  written
• 2 large groups Those who almost never complain
  (45) and those who almost always complain
  (30-40)
• Those, who change supplier (in worst case 48)
• Those, who always tell friends and family (tell
  tales) (22-35)

15
Why dont some customers complaint

• They do not like to complain (mentally)
• It is time-consuming to complain
• Consumers do not believe that anything positive
  will happen if they complain
• Consumers expect firms to have negative attitudes
  towards complaints

16
How is complaint handling experienced by
consumers in Denmark and Sweden?

• 20 of consumers felt, that the firm was
  downright impolite and disrespectful last time
  they filed a complaint
• Less than 50 felt, that the firm was
  co-operative last time they filed a complaint
  (only 33 of consumers in service markets)
• Ca. 50 of consumers believe, that firms in
  general regard complaining consumers as a
  time-consuming and inconvenient problem

17
What would make consumers complain?

• Appropriate interaction
• Verbal, written
• Attitude (gestures ..)
• Companies attitude towards complainers is
  positive and respectful
• Complaints are regarded as user-based innovation
  (e.g. product development)
• Companies signal that they know how important
  complaints are
• Companies compensate for loss and inconvenience

18
How are complaint handling in Denmark and Sweden?

• Only 18-31 believe that firms regard complaints
  as a help
• 70 do not feel they get sufficient information
  about the complaint handling process
• Often negative emotional reactions are a result
  of bad complaint handling more than a result of
  the original dissatisfaction (negative emotional
  enforcement during the complaint handling)
• No best case could be identified!........

19
Sweden versus Denmark

• Swedes are less willing to complaint than Danes
• More Danes than Swedes will change supplier,
  following bad complaint handling
• Complaint handling is better in Sweden than in
  Denmark

20
Products vs. Services

• 80 of all complaints are compensated
• Only 40 are compensated in service markets
• Consumers feel, that they are under-compensated
  in service markets
• 60 feel, that they are satisfied with
  compensation in product markets
• In service markets, the use of telling tales is
  highest

21
What is good complaint handling?

• Interaction is most important !!
• The attitude of the firm is important the more
  the firm is interested in using complaints to
  innovate, the better and this should be
  signalled to the customers!
• Relevant compensation is less important but is
  prior to satisfaction
• The fewer people that are involved in the
  process, the better
• The speed of the complaint handling process

22
Results of good complaint handling

• Higher degree of customer loyalty than before
  getting dissatisfied!