It’s a fact of running a business: From time to time, mistakes happen, and clients complain.
These days, intense competition for customers is driving renewed interest in satisfying customers and ensuring their loyalty. But despite best efforts and customer-friendly programs, mistakes will happen – and clients will complain. Companies that mishandle complaints over service failures risk driving customers away and damaging their reputations.
According to a recent study in the Journal of Applied Psychology, Hui Liao, a researcher in the Department of Human Resource Management at Rutgers University in New Jersey, observed that service failures such as delayed online orders, over-charged accounts and bad repair jobs can do harm to companies’ bottom lines.
In deciding to do business with a company, customers rank handling of complaints as second to the quality of their products or services. And disgruntled customers don’t keep their bad experience to themselves: the researchers report that upset customers tend to tell between 10 and 20 people about their bad experience. However, if a company satisfies the customer with its efforts to make amends, it can actually increase customer loyalty, according Liao.
However, mishandling a complaint after making a mistake only increases customer distrust and dissatisfaction.
Liao’s research indicates that there are five ways that employees on the front lines dealing with customers and customer complaints can reinstate customer trust and loyalty, and above all, ensure the consumer comes back:
1. Make an Apology
An adequate apology includes acknowledging a mistake or a misunderstanding, accepting responsibility and showing remorse. Research shows that when a mistake is made, it is important to apologize because customers are more likely to forgive the company and report higher satisfaction. If you think about the complaint situation from the customer’s viewpoint, he or she has spent money and been let down, so the individual’s trust in the exchange has been violated. Not only have the customers received nothing for their money, they have lowered self esteem at having been party to an unfair exchange. “I gave you my money and I got shafted” is the humiliating customer perception of a service failure.
2. Solve The Problem
If measures are taken to solve the problem, customer satisfaction will result. This means listening intently to the complaint and identifying what went wrong – then seeking to rectify it. Businesses that do not recover well from mistakes have often failed because they didn’t listen early on to how the customer identified the issue. Taking the time to hear the customer out is important. Granted, this can be difficult if the customer’s anger makes the service provider feel defensive. Nevertheless, once the problem has been identified, it can be remedied. So, ensuring the company provides staff with the means and autonomy to work things out with a customer is key. Customers become enraged when a service provider cannot reverse a wrongfully made charge, refund money or re-do a job because he is too “junior” to handle customer issues.
Solving the problem promptly is important in making the customer feel that the company is fair. Giving staff the authority to fix problems means the customer matters and isn’t perceived as a nuisance.
3. Be Courteous
If staff can be patient and polite when dealing with customer complaints, it goes a long way to re-instating customer satisfaction. Yet, it is hard to remain courteous with an irate customer, but conveying respect for the person’s dignity is important. Remembering that the customer feels let down by false promises is key. Remaining friendly and polite will reduce defensiveness and increase the likelihood of a positive resolution. However, false friendliness and a “canned” approach will backfire when the customer feels patronized. Expressing appropriate concern helps retain customers in the face of an error.
4. Give An Explanation
People sometimes want to know why their book order went missing, why their brakes weren’t fixed by 4 pm and why they were over-charged for a haircut. The bad news is more easily accepted when it is accompanied by an explanation. However, be sure that the explanation is true and plausible. Being caught in a lie exacerbates the trust problem. If there was an error, admit it. Open communication can reduce the customer’s negative feelings about the mistake and help her see that the problem may be due to the situation staff found themselves in rather than due to a less-than-honest organization.
However, the researchers caution in their study that offering explanations can back fire and that utilizing the other methods of retaining an unhappy customer is best. For example, explanations that seek to justify the mistake or blame the customer won’t be helpful – they’ll just sound like excuses. In some cases, customers may not be interested why the mistake was made. If the customer does not seem to need or want an explanation, don’t give one. They just want the problem fixed. Remember when giving an explanation, the goal is to increase the customer’s sense that the company is treating them fairly.
5. Handle the Complaint Promptly
If the complaint is handled in a timely fashion, the company is perceived as taking the matter and the customer seriously. Making a decision quickly about a customer’s concern is seen as fair by consumers. If the company takes too long, it appears to be hiding something or trying to escape taking responsibility. Either way, taking too long to resolve a problem reduces the chance of a positive outcome with the customer.
It costs more to find new customers than to retain current ones. That’s why handling customer complaints well is so important. Retaining a loyal customer while avoiding developing a bad reputation is key when dealing with complaints. And remember – there will always be complaints, no matter what business you’re in.
Dr. Jennifer Newman and Dr. Darryl Grigg are registered psychologists and directors of Newman & Grigg Psychological and Consulting Services Ltd., a Vancouver-based corporate training and development partnership. They can be contacted at email@example.com
Identifying information in cases cited has been changed to protect confidentiality.