Complaint Handling - An Advantage for Businesses

Austin, TX February 13, 2008 For many businesses, holidays like Valentine's Day provide a windfall of customers and profits, and in some cases account for a substantial portion of annual operating income. With seasonal customers comes an increase in complaints, and the simple fact is that some businesses drive profits right back out the door because they do not have an effective complaint handling system.

Industry estimates say that generally businesses receive complaints from only about five percent of dissatisfied customers. About 95 percent of customers simply will not complain, but more importantly, about 90 percent of this group will never use the business again. Equally alarming for businesses is that typical dissatisfied customers will mention the problem to about eight family, friends and acquaintances.

"Businesses operating in tough markets with small margins are constantly searching for points of competitive advantage and effective complaint handling can be a key differentiator" said Carrie A. Hurt, CEO of the BBB serving Central and South Central Texas. "A complaint offers a superb opportunity to transform an unhappy customer into a loyal customer, who may even help you win new business by word-of-mouth advertising."

The recent BBB/Gallup Trust in Business Index survey found that after prices, the most common factors affecting consumer's trust in businesses were principally service-related - the exact space where a well-managed complaint handling system can provide an edge over competition. Survey respondents were asked to consider what one company, large or small, that they regularly deal with in everyday life, do they trust the most - and what does that company do to earn their trust:

How a Company Earned Trust:

• 29% -competitive/low prices
  nice/friendly/helpful/polite
• 26%- good customer service
• 15% -quality product/service
• 12% - good return policy/good problem resolution
  have product/service available/good product
  knowledgeable/informative/can answer question
  be honest/truthful/ethical
• 10%-good reputation/long term customer/know staff
• 9%- available/accessible/always open/can always reach
• 6% -be reliable/dependable
• 5%- accurate/few mistakes
  looks after money/finances
  back their product/guranteed their product

Reasons Why a Company is Least Trusted:

• 30%-High Charge/fees
• 27%-Poor service
• 16%-Failed to meet promises/do work promised/unreliable
• 14%-Dishonesty/lies/not enough info
• 13%-Poor quality product
• 12%-Bad business practices/policies/procedures
• 8%-Errors/did work incorrectly
• 7%-Employees treated poorly/poor employees
• 5%-Billing issues/errors/hidden charges/false advertising
• 4%-Tried to sell items not needed/taken advantage of

BBB recommends businesses review customer relations policies on a regular basis, and advises that complaint handling processes must make it easy for customers to complain and empower employees to deal with complaints promptly. The following procedures are essential:

Screening and Logging - The date the problem occurred, a description of the problem, and any other pertinent information should be recorded.

Investigating - Along with information from the customer, gather more facts by researching in-house records, requesting receipts and inspecting the product.

Acknowledging - Let the customer know that the matter is receiving attention and provide a realistic estimate for how long it will take to resolve the issue.

Formulating a Solution - Important criteria to consider include warranty obligations; customer expectations; cost versus benefit of alternative solutions; fairness of your decision; and your ability to carry out the solution.

Responding - Any response should be clear, appropriate and specific to the customer's complaint. Avoid form letters and technical jargon. Explaining a decision can preserve a customer's goodwill, even if a different result was desired.

Following-up - Contact the customer following your response to verify whether or not the matter has been resolved satisfactorily. If the customer is unhappy, you can refer the matter for third party dispute resolution (to BBB for example).

Effective complaint handling is a value- added service that is appreciated, remembered and talked about by consumers. To turn this year's holiday season patrons into year-round customers, BBB strongly encourages businesses to develop a strong complaint handling process.

For more time-tested and trustworthy advice on business practices, visit www.bbb.org.