What are Customer Complaints Management Initiatives?
Businesses know that customers expect prompt, courteous attention
and accurate information when conducting a transaction. They want
the goods and services they buy to be of acceptable quality, and for the
merchant to act quickly and appropriately when problems arise.
Customer complaint management (Customer Compliant Management) initiatives are mechanisms,
approaches and techniques merchants use to increase customer satisfaction
with their products and services. These initiatives attempt to anticipate
and prevent problems and complaints from arising, promptly and appropriately
address complaints through internal processes, and, when internal
complaints-handling processes prove insufficient, resolve disputes fairly,
effectively and efficiently through external private dispute resolution
approaches. Below, we explore these three aspects of Customer Compliant Management individually, and conclude by noting that some initiatives take a comprehensive
approach to Customer Compliant Management. The expenses associated with developing and implementing
effective customer complaints management could be considered
a cost of maintaining good customer relations.
As described in this Guide, Customer Compliant Management initiatives are:
- voluntary (i.e. not expressly required by law)
- developed and implemented by individual firms or industry associations,
governments, or customer or standards organizations
- applicable to a single store or company, several firms or organizations,
an entire sector or many sectors
- usually initiated in response to, or anticipation of, customer or competitive
pressures, the real or perceived threat of government action, or
a combination of these
- operated within a legal framework that includes customer protection,
competition and contract law components.
Effectively preventing and resolving complaints can be rewarding for
businesses. Research suggests, and the examples in this Guide show, that
businesses can promote customer loyalty, enhance their reputation and
gather valuable market intelligence by developing and adhering to service
standards, policies and guarantees that signal honesty and integrity to
customers, and decrease the likelihood of problems occurring.
The Business Case for Customer Compliant Management Initiatives
Using Customer Complaints as Market Intelligence
Research reveals that complaints are one of the most important types
of communication customers have with businesses, and constructive
responses to complaints can help retain customers who would otherwise
take their business elsewhere.
Through the implementation of effective complaints management initiatives,
businesses can detect and resolve customer service problems that,
until that point, they didn’t even know they had.
Customer Loyalty and Effective Complaints Management:
The Competitive Edge
In a vibrant marketplace, in which firms match each other on products
and services and price, how does one firm gain a competitive advantage?
Research suggests that building customer loyalty is key, and that customer
complaints management is an effective way to do so.
Customers show their loyalty by repeatedly shopping at a store and
recommending a store, product or service to friends and relatives. A recent
Canadian survey found that, depending on the retail category, between
40 and 70 percent of customers could name a company to which they
consider themselves loyal. One of the best ways of building customer
loyalty, the survey suggested, is to build a long-term relationship of trust.
Customers consider a favourable return policy to be the number one way
for a company to earn their loyalty. Trust is also built when the company
shows that it understands its customers’ needs, values customers as
individuals, delivers on promises, and is responsive and accessible.
Positive staff attitude, shown by honesty, helpfulness and cheerfulness,
also plays a large role in building a trust relationship. In contrast, being
rude to customers, acting as if it didn’t matter whether or not customers
were there, or ignoring customers leads to customer desertion.
Consequences to Business of Dissatisfied Customers
The results of a U.S. survey showed that unhappy customers, even when
they don’t complain, have a negative effect on a business.
- About half the time, customers who have a problem with a product or
service are not likely to tell the company about it.
- Nine out of ten of these “silent critics” will probably take their future
business to a competitor.
- One out of every two customers who complain are not thoroughly
satisfied with the company’s efforts to solve the problem.
- Dissatisfied customers typically tell between seven to nine other
people about an unsatisfactory experience with a company.
- Negative information has twice the impact of positive information on
purchasing decisions.
- Word-of-mouth is one of the most important factors influencing a
customer’s decision to buy from a company.
Summary
Introduction
Market-based Customer Complaints Handling Initiatives
Preventive Customer Complaint Handling Initiatives
Internal Complaints Handling Initiatives
External Private Dispute Resolution Initiatives
Comprehensive Complaints Handling Systems
Characteristics of Effective Online Trustmark Programs
Online Redress
The Need for Effective Customer Complaint Handling Initiatives
Customer Complaint Handling Initiatives and the Law
Developing and Implementing Complaint Handling Initiatives
Elements of Successful Customer Complaint Handling Initiatives
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