The Need for Effective Customer Complaint Handling Initiatives

Benefits of Effective Customer Complaint Management Initiatives

The Guide has thus far discussed what Customer Complaint Management initiatives are, the business case for Customer Complaint Management initiatives, examples of preventive, internal complaints handling, external private dispute resolution, and comprehensive complaints management initiatives, and the distinctive situation of Customer Complaint Management initiatives in the context of electronic commerce. With this background, the Guide now examines the benefits of effective Customer Complaint Management initiatives and, in the next section, the drawbacks of poorly designed Customer Complaint Management initiatives.

For customers, effective Customer Complaint Management initiatives offer a number of benefits.

Preventive measures help assure customers that a company is meeting customer service and reliability standards, and that when it does not customers will be compensated in some way.
Information is available up front about how a business responds to customer problems.
The number of problems with the products or services of a particular merchant or group of merchants likely decreases.
When compared with using the courts to complain, Customer Complaint Management initiatives allow comparatively quick, fair and inexpensive solutions to customer problems. For businesses, Customer Complaint Management initiatives can be advantageous in a number of ways.
They can stimulate more efficient, fair and effective operations that minimize customer problems. This puts firms in a more favourable light with the public, customers, government and others, and may have the added benefit of reducing the pressure for new laws or regulations.
Significant customer feedback can be used to devise better products and services.
There is a likely reduction in costly and acrimonious legal disputes.
They complement existing laws, thereby improving relations with government agencies and regulatory bodies.

For governments, the use of Customer Complaint Management initiatives by firms can have several advantages.

Public policy objectives can be furthered through non-regulatory means.
They may complement or expand traditional regulatory regimes.
They can go beyond the minimum standards and criteria set in law.
The need for government intervention may be decreased.
Standards and criteria may be set or adjusted more quickly and less expensively than by using laws and regulations.

Drawbacks of Poorly Designed Customer Complaint Management Initiatives

While Customer Complaint Management initiatives can have significant benefits for all parties, they can also have harmful effects when not properly developed and administered.

They can frustrate or mislead customers. As well, Customer Complaint Management initiatives not backed by action can have legal consequences under deceptive advertising laws.
When there is inadequate disclosure about the operation of a Customer Complaint Management initiative, it can be difficult for customers, governments and businesses to tell whether the initiative is working. It can also make it difficult for customers to be treated fairly. For example, when customers cannot find out about previous redress actions, it is difficult for them to decide which redress option to use. This may bring a seemingly well-intentioned and effective Customer Complaint Management initiative into disrepute.
Poorly designed or implemented Customer Complaint Management initiatives bring negative publicity and lead to loss of trust or business.
Customer Complaint Management initiatives that attempt to restrict the ability of customers to use other techniques (i.e. resort to the courts) or impose hidden costs on customers are likely to provoke significant negative reaction.
Customer Complaint Management initiatives that raise expectations but do not deliver can slow or prevent the introduction of needed laws. In the short term, this harms the parties or interests that should have been protected. In the long term, it can cause customers or governments to mobilize against the organization or sector.
Multifirm Customer Complaint Management initiatives that restrict merchant access to the market, decrease choice or increase price may have anti-competitive effects. Under the provisions of the Competition Act, Customer Complaint Management initiatives may not be used to substantially reduce competition, prevent non-participating firms from entering the market or negatively affect customers by significantly raising prices, reducing service or limiting product or service choice.
Customer Complaint Management initiatives should not create barriers to interprovincial or international trade. A Customer Complaint Management initiative that prevents firms from entering and competing in a market may attract the attention of national or international trade authorities.
Customer Complaint Management initiatives can create an “uneven playing field,” since not all merchants may choose to participate. This is not necessarily bad. A firm or group of firms can develop a Customer Complaint Management initiative to show leadership and gain a competitive advantage in a particular area or activity. However, from a customer perspective, this means that there is no assurance that all firms offer the same protections and redress services. Customers might develop a false sense of security about products, services or firms not actually the subject of a Customer Complaint Management initiative. As well, firms that do conform may be penalized: they may have to bear unrecoverable costs associated with adhering to Customer Complaint Management initiatives and could be tainted by the non-compliance of others (so called “free riders”).
Customer Complaint Management initiatives that are not adequately funded may frustrate both industry and customers.
Fees can frustrate and discourage customers from using Customer Complaint Management initiatives, thus negatively affecting the image of the firm and decreasing the likelihood that it will receive feedback concerning areas for improvement.
Disciplinary actions by Customer Complaint Management administrators that do not provide participating firms with a real opportunity for notice and comment prior to action may be negatively perceived and lead to legal action. Lax or inadequate disciplinary actions can reduce credibility and fail to stimulate appropriate corrective action.
Customer Complaint Management initiatives on their own may be insufficient to respond to particularly serious customer problems. For example, when a customer has been physically harmed or has suffered large financial losses as a result of using a product or service, going to court may be necessary.

As this list suggests, the potential drawbacks of poorly designed or implemented Customer Complaint Management initiatives can be significant, so the decision to develop a Customer Complaint Management initiative should not be taken lightly. It takes considerable time, energy and resources to successfully develop and implement a Customer Complaint Management initiative, and even then it may not achieve the hoped-for results.

The Need for Effective Customer Complaint Handling Initiatives

Benefits of Effective Customer Complaint Management Initiatives

Drawbacks of Poorly Designed Customer Complaint Management Initiatives

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