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How to deal with customer complaints and profit

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A business ignores customer complaints at its peril. It is tempting to bury your head in the sand, particularly if yours is a new business – receiving your first complaint can be a daunting experience. But, by engaging with dissatisfied customers and exceeding their expectations, you can frequently derive a positive business outcome from a potentially damaging situation.

Complaining customers = loyal customers

Customers that complain and are happy with the company’s response are, according to recent research, almost ten per cent more likely to do business with the company again than a customer that did not complain in the first place.

The average customer is probably not as fickle or as hard-hearted as many might imagine. On the contrary, it would seem that most customers recognise that mistakes sometimes happen, and are willing to give companies a second chance – provided that they show contrition and deal with their concerns efficiently. This is easy to understand; the act of complaining results in personal contact with the company. Human nature dictates that a customer is more likely to do business with your company again if they feel that they have a personal "history".

Perhaps more important, though, is the fact that it is your most loyal customers that are most likely to take the time to complain. Those with whom you have already done business on a number of occasions are statistically more likely to tell you when something goes wrong, either because they feel personally slighted or because they wish to remain loyal to your company but feel entitled to better service. Repeat custom is the most profitable kind, and it is vital that you hold onto your existing customer base wherever possible.

Deal with the complaint

Having received a complaint, your first priority should be to address the customer’s concerns. You are faced with a choice at this point: some suggest that you should give the customer exactly what they want, while others insist you should fight to ensure that rectifying the problem is as cheap as possible.

It is worth remembering, though, that the benefits of maintaining a customer are likely to be significantly higher than the costs of dealing with their complaint. As a result, it is generally thought to be better to give the customer what they want – which is frequently a full refund.

Your interaction should not necessarily end here, though. Take control of the situation by considering some follow-up action where appropriate. This might involve a letter of apology, a credit note or a similar gesture, and will help to solidify a positive impression of your company in the customer’s eyes.

Listen and learn

As well as helping you build a relationship with a customer, complaints also provide a valuable opportunity to gather information about the way in which your company is perceived by clients. You should use complaints as a springboard for improvement – particularly as a failure to change the practices that had irked your customers will soon dissipate any goodwill built up through your prompt reaction to their complaint.

The way in which you record and act on the information received will be determined by the nature of your company. For example, if you are a manufacturer and you receive a complaint about a general fault in your product, acting on such a complaint is likely to be a lengthy process. You should also consider the costs of changing your business practices; if the complaint relates only to a very small proportion of your customers, you may find that it is not cost effective to change. These decisions should be arrived at cautiously, and backed up with a proper cost-benefit analysis.

Efficient complaints management can therefore do more than assuage an irritated customer. By properly considering and acting upon complaints you can develop personal and lasting relationships that will ultimately result in more repeat custom, while gathering information that can help improve potential customers’ perceptions of your business. Engage with complaining customers and you can profit in the long term.Josh Hall is business correspondent at business insurance comparator SimplyBusiness.co.ukRelated articles Beating the downturn with public-sector contracts Dave Carroll gets his revenge on United Airlines EDF energy fined: justice for poor customer service 

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