So much can go wrong when interacting with customers. See famous examples like the recent raise of an anti-aids drug by 5000% by Martin Shkreli and his rude attitude towards the customers and press? Or how badly Firestone dealt with its possible deadly tire failures in 2000?
Especially when customers show their dissatisfaction by complaining about your product or service you are faced with a big challenge. Depending on your overall reaction the customers sentiment can go in two directions: You again have a satisfied customer who maybe even repurchases your product or a customer that is even more dissatisfied, tells his friends how bad your service is or cancels his subscription.
As worn out as this sentence sounds it is still true that a complaint always comes with a chance to change your customer´s attitude and perception towards your company, depending on your reaction on the voiced complaint. In this article we will have a look at the different angels and dimensions that the complaint process has and try to use empirical research studies as our basis to discover patterns and mechanisms that will make your complaint process exactly how your customers want it.
According to Davidow (2000) there are six different dimensions of organizational responses to customer complaints:
- Timeliness – The perceived speed with which a company responds to or handles a complaint by its customer
- Facilitation – The policies, procedures and structure that a company has in place to support customer complaints and questions.
- Redress – The benefits or outcome that a customer receives from the company in response to the complaint.
- Apology – An acknowledgement by the organization of the customers dissatisfaction.
- Credibility – The organization’s willingness to present an explanation or account for the problem.
- Attentiveness – The interpersonal communication and interaction between the organizational representative and the customer.
Additionally justice/fairness was identified as a seventh dimension but excluded from the research because of the lack of a proper data analysis. Customers perceive this dimension only after the complaint has been handled by a company. Since fairness is a subjective feeling, perceived different by every person it is hard to measure and even harder to quantify. Research has shown though, that the perceived fairness is a big part of customer satisfaction or dissatisfaction. Therefore always keep this dimensions in mind.
In the following article we will look at the six identified dimension with focus on three end goals that were identified as general goals for all companies:
- Customer satisfaction
- The customer to talk about a company (we will call this goal word-of-mouth intensity and word-of-mouth valence)
- The customers likeliness to repurchase from a company in the future.
Timeliness – are you sure you should reply to a complaint as fast as possible?
You might think this one is quite obvious, people do not like to wait. They are impatient, even angry with the company and that’s why they want answers fast. But the intuitive answer “as fast as possible” is not so clear and is only valid if other dimensions like redress are included for our end goals: customer satisfaction, word-of-mouth (wom) and repurchase intentions.
Research has gone in many different directions on this topic, but one can clearly see that timeliness depends on your product. If a customer is making a complaint for a hotel or restaurant stay, they want fast answers if on the other hand someone is filing a complaint for a complex financial product they expect more time for the response since it takes some time to make yourself familiar with the problem and give a correct response (Gurney 1990). Additionally the response speed does not have any effect on customer satisfaction and our other two goals when a monetary compensation was awarded at the end.
The fastest response is not always the best response
Gilly and Gelb (1982) found out that when a financial loss was involved, satisfaction with the company was not significantly related to the length of time required to resolve the complaint. Only when the complaint issue was non-monetary the response speed was a significant factor. These findings are attributed to different customer expectations: When the customer expects a financial compensation, this is their goal, whereas for a non-monetary complaint the customer simply expects the company to listen and to apologize to the customer. When money is involved, the customer wants to be reimbursed—that takes precedence over a speedy response.
In conclusion we note that the fastest response is not always the best response but rather there are two scenarios:
- Response speed is more important in non-financial loss-related complaints. Money talks, if a financial compensation is involved the response time is not as important as with a non-monetary compensation through an apology
- Acceptable response time is context and mode specific. Depending on the product the customer wants an answer right away (for example at a restaurant) whereas in other situation the customer expects a slight delay in the answer (complaints made by email) and might perceive an immediate answer as a sign that the company did not look into the problem thoroughly which might leave the customer even more frustrated (for example with complaints for complex financial products).
Facilitation – How easy does a company make it for a customer to file and resolve a complaint?
Facilitation is the one dimension that can be prepared for before the actual complaint happens. It is also one of the most important aspects of a company’s reaction to a complaint. Great care should be taken to allow customers hassle-free complaint resolution because an easy complaint process has two effects on our company’s goals:
It has a significant impact on reducing negative word of mouth. It does not impact positive world of mouth (buzz) but reduces customers who complain about your company or service to their friends and colleagues.
Facilitation also has a significant impact on the repurchase likelihood of your customers. Thinking about it this seems logical. When a company makes sure that it`s customers are aware of the willingness of the organization to handle complaints and the employees have the authority to resolve complains quickly, customers are more satisfied with the complaint process and overall image of the company. Consequently they are more willing to give business to the company in the future.
Redress – is it really just about the monetary compensation for the complaint?
Even a full re-compensation does not make the customer satisfied if other dimensions were not being recognized
The short answer is: YES!
Research shows that redress has a positive effect on all three goals we defined for a company’s success. Generally speaking, the customer expects the company to re-compensate him to the point where he was before the claim, but even partial redress is better than no re-compensation.
Redress has a positive effect on all our goals for monetary or non-monetary losses. As an example Godwinn and Ross (1992) found out that even for a service delay (no monetary loss) a 10% discount on the next purchase had a strong positive effect on both satisfaction and perceived fairness of the customer.
So do you need to sell all company assets in order to re-compensate your customers everytime they file a complaint? No, of course there are different types of redress options that in some cases might even positively impact future purchases (like a coupon on the customers next order) or on word-of-mouth (coupon to give to a friend). Also the way how the redress was given to the customer can affect our three goals. In a study by Blodgett, Hill, and Tax (1997) customers who bought tennis shoes that wore out to quickly were given different re-compensations (full, 50% and 15%). Depending on the way the redress was given, paired with a sincere apology or in a rude manner the post complaint behavior was very different:
When the re-compensation was given in a rude manner without any apologies, negative word-of-mouth by the customer was very likely. They also proved that the attractiveness of the re-compensation of all three sizes (full, 50% and 15%) only mattered when paired with a high attentiveness through a sincere apology by the company to show that the customer was valued and cared about.
Overall research shows that customers expect not be worse off after the complaint process than before. Companies tend to think of redress solely in monetary re-compensations but overall the customers have different expectations that do not only need to be of monetary value. Remember that redress is not always the first thing on a customer’s mind but rather the complaint process itself. Additionally the manner in which a redress is given plays an important role.
Apology – is it so hard to say sorry?
As seen in the previous dimension apology is a big part of your complaint compensation and can partially be seen as a physiological re-compensation. But an apology mixed with the other dimensions we are discussing can have mixed effects that are not so obvious at first sight. As said, customers only acknowledge redress with a sincere apology. But an apology alone does not seem to have any positive effects on post complaint behavior without a re-compensation (monetary or non-monetary). When an apology and redress are given together, they show a positive effect on satisfaction (Boshoff and Leong 1998) and word-of-mouth (Davidow 2000). The only thing an apology did not propagate are the future purchase intentions (Davidow (2000) found negative effects and Martin and Smart (1994) did not find any effects).
The implications are the same as for the redress dimension. If you believe a complaint is legitimate, give a sincere apology with some kind of re-compensation, your customers are expecting it and it shows your gratefulness and respect. It shows your understanding of the customer´s dissatisfaction without admitting any guilt.
Credibility – is this really a company I can trust?
Customers want to be appreciated and in many cases expect some kind of compensation when they file a complaint with a company. In order to feel appreciated a customer usually also wants to know what the company will do to prevent this problem coming up for the customers in the future. This is a tricky dimension to cover as it is a subjective feeling perceived differently by each customer. Also this dimension is an important one. Davidow (2000) showed that out of our six dimensions, credibility is the second strongest one regarding our three goals (satisfaction, word-of-mouth and repurchase intentions).
Research has shown that usually how the response was given and explained, is usually more important than the response itself (SOCAP 1994). Give short and clear explanations and do not try to make any excuses as it reduces the customers believe that the company had control over the problem and could have avoided the problem which contributes to increased dissatisfaction (Baer and Hill 1994).
To raise your credibility in a complaint response:
- Give short and clear explanation (SOCAP 1994)
- Acknowledge the problem, it raises customer satisfaction (Baer and Hill 1994)
- Take the blame, never blame the customer or another third party (Boshoff and Leong 1990)
- Do not present any excuses (Baer and Hill 1994)
- Give a full explanation of why the problem arose and what is being done to prevent it in the future (Lewis 1983)
It is important to always give your customer transparency and information regarding the problem they are having. Giving only a redress without any explanation of the problem is judged by the customer as the admission of guilt and as a result reduced the likelihood of future purchases and customer satisfaction (Sparks and Callan 1995). So with acting right in this dimension you get the chance to explain yourself and regain a lot of trust by your customers. As always, regaining credibility works best when some kind of redress is involved (coupon, re-compensation etc.).
Attentiveness – do they really care about me?
A customer wants to feel important and he really is, that’s why you should also give him this feeling. Based on all the empirical research we have analyzed it is clear that attentiveness has a major aspect on all three goals: customer satisfaction, word-of-mouth and repurchase intentions.
You can make your customer feel important by keeping the right tone in your complaint response and try to address their feelings, not only the complaint itself.
To raise perceived attentiveness:
- Always have a personalized complaint response (SOCAP 1994)
- Have a positive attitude in your answer, the content of your response “makes” or “breaks” customers satisfaction (Bitner, Booms and Tetreault 1990)
- Address the feelings and not only the reason of the complaint (Morris 1988)
You can only achieve the right attitude and tone by selecting the right employees, training them thoroughly and giving them a lot of responsibilities, but that’s a whole different topic we are not covering in this post.
It is clear that all six dimensions are interconnected and cannot be looked at separately. In some cases, we have shown the effects between certain dimensions, like how a high re-compensation did not have any significant effects on our goals when given without any information or in a rude attitude. This article just illustrates what significance certain dimensions have on our three goals and how different products, scenarios and problems affect them. After giving this overview it is up to you to pick the parts that apply to your business or product and apply them in your complaint process.
Here are our key takeaways:
- Re-compensate your customers when necessary and in a way that supports post-complaint behavior (wom or purchase intentions), but always make sure to make the customer feel valued and appreciated, this is far more important than the size of your re-compensation
- Make it easy to file a complaint, give the customer a lot of information and transparency because the complaint process can sometimes be more important than the complaint itself
- Always keep a good attitude and never blame the customer or another third party