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New Research Says Companies Are Failing to Turn Customer Complaints Into Business Opportunities

Originally published - 20 March 2000

Few organizations pass 4 key tests of complaint management according to a new large-scale study by Warwick Business School, at the University of Warwick, into complaint management in service organizations.

The "Complaint Management Excellence Study", led by Professor Robert Johnston at Warwick Business School and Bruce Rance, of the Customer Service Network, (and sponsored by Respond plc), revealed that 53per cent of examples of outstanding service experienced by customers were the result of a failure which was then well 'recovered' by a business following a complaint. Professor Johnston believes companies should see complaints as opportunities to turn angry customers into champions for the organization. Despite the strong correlation between service reputation and the success of a company's complaints handling procedures. Professor Johnston notes that:

"It is still surprising that the approach to complaint management in many service organizations is typified by "pat them on the head, give them ?5 and get rid of them" thus missing out on the major business benefits to be gained by good complaint management."

He believes that a company's complaint management service recovery process should:
  • Result in satisfied customers
  • Not just satisfy complainants but also encourage them to continue to use the organization
  • Lead to improvements in the organization's operations and processes
  • Improve financial performance; by retaining customers, increasing revenues from word of mouth by delighted customers, and cutting costs by improvements from customer feedback

The most frequently failed test is the use of customer feedback to drive organizational change. The research indicates that the best performing organizations are those which make a point of ensuring that feedback is used systematically to improve service. For example, Mr B K Ong, Singapore Airlines Senior Manager for Customer Service Affairs, explained:

"We do get some complaints and pride ourselves in being able to resolve them quickly. We analyze them and try to improve what we do and feed the informa-tion back to the people who can make it happen. We really value complaints and see them as opportunities to improve what we do and how we do it. We put a strong emphasis on service recovery, not damage control."
Organizations who fail to find business opportunities in complaints tend to fail in four main ways. A slightly tongue in cheek summary of the four main types of failure follows:

  • Make it difficult for the customer to get in touch ("This is the customer service 24 hour help line, please press one if this is the first time you have rung us, press two if you have tried for three weeks and still not got an answer
  • Don't believe the customer ("I will check the file later to see what the facts are.")
  • Assume the problem is solved and don't check to see if it is satisfactory ("I know you wanted a no-smoking room sir, and I will be able to move you to one tomorrow.")
  • Ensure there is little contact between the customer service department and the rest of the organization. ("The role of customer service is to ensure that the rest of the organization is not troubled with having to deal with aggrieved customers.")

One high priority for customers is that their complaint, or feedback, should help improve the service. Indeed an earlier survey for the Citizen's Charter Unit found that 50 per cent of people complain solely in order to help the organization improve its service. Sadly only 1 in 10 felt that the service had improved as a result of their intervention. Many organizations still have a long way to go to derive real business benefits from customer feedback and complaints.

For further information please contact:

Professor Robert Johnston,
Warwick Business School,
University of Warwick
Tel: 024 76 524218 office 01629 812575 home

Further information about the above press release and all other media services at the University of Warwick can be obtained from:

Peter Dunn, Press Officer
Public Affairs Office
Senate House
University of Warwick
Coventry, CV4 7AL
West Midlands
Tel: 024 76 523708