Satisfying Customer Complaints

Studies of customer dissatisfaction show that although customers are dissatisfied with their purchases about 25 percent of the time, only about 5 percent complain. The other 95 percent either feel that complaining is not worth the effort, or that they don't know how or to whom to complain. Of the 5 percent who complain, only about half report a satisfactory problem resolution. Yet the need to resolve a customer problem in a satisfactory manner is critical. On average, a satisfied customer tells three people about a good product experience, but the average dissatisfied customer gripes to 11 people. If each of them tells still other people, the number of people exposed to bad word of mouth may grow exponentially.

Toys 'R' Us found this out recently when it failed to deliver toys ordered through its Web site (www.toysrus.com) in time for Christmas. Even though the retailer offered $100 gift certificates to make up for the inconvenience, so many customers were outraged by the delivery problems that the situation made national news and led to a class-action lawsuit.25

Nonetheless, customers whose complaints are satisfactorily resolved often become more company-loyal than customers who were never dissatisfied. About 34 percent of customers who register major complaints will buy again from the company if their complaint is resolved, and this number rises to 52 percent for minor complaints. If the complaint is resolved quickly, between 52 percent (major complaints) and 95 percent (minor complaints) will buy again from the company.26

Tax and Brown have found that companies that encourage disappointed customers to complain—and also empower employees to remedy the situation on the spot—achieve higher revenues and greater profits than companies that do not have a systematic approach for addressing service failures.27 They also found that companies that are effective at resolving complaints:

^ Develop hiring criteria and training programs that take into account employees' service-recovery role.

^ Develop guidelines for service recovery that focus on achieving fairness and customer satisfaction.

^ Remove barriers that make it difficult for customers to complain, while developing effective response systems. Pizza Hut prints its toll-free number on all pizza boxes. When a customer complains, Pizza Hut sends voice mail to the store manager, who must call the customer within 48 hours and resolve the complaint.

^ Maintain customer and product databases that let the company analyze types and sources of complaints and adjust its policies accordingly.

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