The Four Percent Solution: Using Complaints to Further Loyalty
by N. Ramasubramani

Published in The CEO Refresher

Research shows that only 4% of dissatisfied customers ever bother to complain. Others just keep quiet .They may be putting up with an inferior product experience or silently shift to some other brand without a warning. What does this mean to the marketing manager?

There are at least two important implications besides the obvious loss of business:

The volume of dissatisfied customers is much more than what you have on your registers. And that means that you need to recalibrate your loyalty indices carefully. Consider this: If you have a 2% complaint rate on a customer base of 10000, one would have assumed that the number of dissatisfied customers was around 200, which is fine, because, after all, you can't satisfy every one. But if recent research is to be believed, then this volume is not 200, but 25 times that or 5000 customers! In other words 50% of your customers are dissatisfied with you. That is a pretty disturbing picture.

Secondly, because a large portion of dissatisfied customers do not complain, you are losing out on important feedback. Remember, these are customers who trusted the brand enough to try it and were perhaps even long term users of the brand. If these 'trusting devotees' of the brand start deserting it, obviously there is something about the product experience which has changed in a way that these customers don't find palatable. And by not being aware of this disconnect, the marketing manager has lost a valuable source of 'brand intelligence'

Customer Dissatisfaction: Fall Outs
What are the fall outs of not being able to address a customer complaint? While a customer may not tell the organisation about his dissatisfaction, he or she definitely speaks; and speaks with a vehemence. It has been estimated that while a satisfied customer may speak about his brand experience to about 10 to 15 people, a dissatisfied customer speaks to at least double that number. So the 'word-of-mouth' channel starts working against the brand.

The second common phenomenon , thanks to the internet, is the online brand bashing that the customers start indulging in. Thanks to the widespread nature of the net, the voice of dissent now spreads much faster and travels farther. The multiplier effect is manifold.

Why do dissatisfied customers keep quiet?
The single most important reason for customers not voicing their dissatisfaction is their past experience with a brand. If a customer had lodged a complaint and did not receive a positive feedback from the company, then the customer decides that it is a waste of time to keep raising his voice. And the organisation is to be blamed for responses ranging from polite tolerance to downright denial of a problem. An inappropriate response to the customer is the surest way of burying customer loyalty. If you are serious about building customer loyalty, listen to your complaining customers and make sure that their grievances are addressed properly.

Why do organisations respond the way they do?
The main reason for the knee jerk manner in which organisations respond to customer complaints has to do with the perceptions associated with complaints. It is assumed, not without some justification, that a customer complaint register is an indicator of the product quality. Most definitely there is a definite correlation between the volume of customer complaints and the product quality. But denying the existence of customer complaints only paints a wrong picture of product quality.

The second reason that customer complaints are viewed akin to an unmentionable disease is the fact that a larger number of customer complaints will scare away prospective customers. Therefore, the argument goes, if we restrict the number of complaining customers, then we can prevent the spreading of bad news. Sure this will alter the perception within the organisation, but will it reflect reality? The reality is that there are dissatisfied customers and these customers have friends with whom they will talk.

Therefore by turning a blind eye to customer dissatisfaction, you are only aiding the process of disintegration of customer loyalty. So how should an organisation react to the angry voice of a dissatisfied customer?

Organising for Complaint Handling
The first and foremost step in handling complaints is to change the mindset. The organisation as a whole should start looking at complaints, not as something that the cat brought from outside, but as a symptom indicating a possible malady. So train your sales people to listen to a customer complaint with as much attention as they will lavish on a high value customer.

Make it easy for your customers to raise their voice of protest: Create a customer complaint cell, give them a complaints hotline or better still give them the name of a senior executive of the company whom they can approach with their grievances.

Be prepared for the volume of complaints to go up. Quite naturally, customers will voice their complaints once they know that you are listening. The worst mistake you can commit at this stage is to cut back on the efforts or to start believing that the increase indicates a decline in product quality. It is not: You have just unearthed a large and silent disaster that has been brewing for some time.

Set up policy guidelines for complaint handling or better still develop a detailed complaints handling manual for the organisation. Go through the past complaints to understand the main instances of dissatisfaction and develop a comprehensive list of complaints that are likely to come up. Classify the complaints into various categories based on their seriousness and specify the complaint resolution time line.

Empower customer care executives to resolve complaints quickly. Define the escalation path for complex and difficult-to-resolve complaints. And finally, encourage complaints closures by incentivising satisfactory resolution of complaints.

All these steps will not reduce the complaint rate. On the contrary, the complaints rate may actually go up. But then, you will not be under the mistaken impression that everything is hunky-dory between the customer and the brand. Because if only a small fraction of your disgruntled customers are going to complain, you would better listen to them seriously. For behind that small fraction of customers is a large mass of potential defectors. And proper complaint handling could be the four per cent solution that will cure the malady and pave the way for stronger customer loyalty.