Opinion

Good complaint handling drives loyalty for SMEs

4 min read

25 May 2016

Complaint handling is often a tricky area for businesses and can be the difference between a customer returning or not – a vital issue for SMEs.

Our “Consumer Action Monitor” (CAM) has highlighted the value good complaint handling can have on corporate reputation. With just one in ten consumers willing to “forgive and forget” a badly handled complaint, it is an issue that SMEs can’t afford to ignore. Now in its third year, the CAM report focuses on a wide range of areas around customer complaints and highlights how SMEs can improve their business prospects.

Realities of complaint handling

Something that stood out this year in particular was the level of mistrust that consumers have against businesses of all sizes. Of those surveyed, over a fifth of consumers didn’t have confidence that they would get the result they were looking for if they complained.

A further fifth also had no faith that businesses would look after them and worryingly, the same amount thought a companies default position was not to help the customer. These findings provide a stark warning; but they do offer opportunities to businesses that actively try to take care of their customers.

Something SME bosses should make the most of is their agility over larger companies. Our CAM data among consumers shows that some big businesses struggle with complaint handling. We know at least a third of consumers feel that big businesses are only interested in taking their money and that the legal system favours large firms over consumers. The good news is that SMEs can often operate without the bureaucracy that can hinder their larger counterparts, so this is an area where smaller firms can really stand out with complaint handling, speed and personal touch.

Read more about brand loyalty:

Love, not money

In terms of how to handle complaints, one common misconception is that a customer’s main motivation is financial recompense. We found that half of consumers simply want an apology and three quarters just want the problem to be put right. In fact, only a third expected financial compensation, indicating how SMEs can make their customer knowledge and personal touch work in their favour.

Social media

Social media is now a prevalent area for all customer interactions and this is no different with complaints, so SMEs should take complaints made on here seriously. Over a third of consumers use it to escalate issues however an interesting finding was that firms who offer a dispute resolution service saw less than a quarter of grievances against them aired online.

Driving up brand loyalty for SMEs

We know that consumers are more likely to buy a product from a company that offered Alternative Dispute Resolution over one that didn’t. Despite complaints often generating fear within SMEs, over half of consumers actually think more highly of a business that handles a complaint well. Furthermore, almost three times as many people said that they would be more likely to make a repeat purchase from a firm that handled their complaint well as opposed to not returning again.

These are strong reminders of how a customer issue or complaint should be viewed with a positive frame of mind as opposed to the traditional ‘fire fighting’ mentality, or worse, lethargy. Treat a problem as an opportunity to show off the hardworking, trustworthy and personal touch that makes SMEs so successful and complaints will be turned into an advert promoting great customer service.

Before you work to develop customer retention strategies and campaigns, you must evaluate the existing morale within the company, writes Richard Close.

Lewis Shand-Smith is chief ombudsman at Ombudsman Services.

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