Why Complaint - Importance of Complaint
What is Complaint?
Many companies still regard customers’ complaints as unpleasant and as a waste of time and money they install barriers to the customer’s decision to complain and some (frontline) employees even make their customers believe that they would not have the right to complain at all.
Customer Complaints are indicators that something is not working as it should.
Complaints reflect “real life” situations to the customers, and should not be neglected or ignored.
The way a company manages complaints is a reflection of the quality of its product or services, and of its desire to retain and satisfy its customers. Most traders want the goodwill of their customers and will sort the problem out. Some traders may be more difficult to deal with.
As desirable as complaints can be, they are a crucial communication tool between the buyer and the seller.
Complaints offer businesses an opportunity to correct immediate problems.
They indicate long range opportunities for product innovation and problem prevention.
They frequently provide constructive ideas for improving products, adapting marketing practices, upgrading services, or modifying promotional material and product information.
Research into complaint behavior reveals that only a fraction of dissatisfied consumers complains to business and, thereby, gives the company an opportunity to correct the problem.
Why do people complain?
Generally speaking most customers “complain” in an effort to get answers.
Research indicates that only a small portion of dissatisfied customers register complaints. This is due in part to the perception that companies are unwilling or unable to make the corrections or resolve the problem.
When customers believe they have not received their money’s worth, consumers give businesses an opportunity to correct the immediate problem and restore goodwill.
Experience show that consumers who complain about products and services continue to frequent the businesses and buy the products they complain about if they believe the complaint was resolved fairly.
There is evidence that some consumers do not complain because they are skeptical about business’s willingness or ability to resolve disputes fairly. Consumers simply withdraw their patronage and criticize the company or the product to others. Such findings underscore the importance to business of a complaint management system that is well-publicized and easily accessible.
According to Tax and Brown (1998: 76), only 5-10% of dissatisfied customers decide to complain to the company and most of them “are dissatisfied with the way companies resolve their complaints” and “have more negative feelings about an organization after they go through the service-recovery process”.
If a response to a complaint is timely and accurately addresses the concern, the issue can be resolved before it develops into a more serious action: namely, a product liability claim or lawsuit.
All complaints do not result in legal action.
To ignore the danger signals that “complaints” represent can subject a company’s profits to an undue exposure to loss.
The complaint that goes unreported can be as costly as the one that is mismanaged or unresolved.
Negative word-of-mouth publicity from dissatisfied consumers means lost revenue & market share and necessitates additional investment in advertising to attract replacement customers.
In addition to lost revenue, this will usually also result in additional advertising cost to attract new customers, or revision of current publications to correct misconceptions
Dissatisfied customers almost always get stuck with certain costs: the money they spend for phone calls, the time they spend making their cases, and the aggravation they must endure throughout.
Dissatisfied customers will switch to competitors if alternatives are available and if the company does not apply a number of mechanisms to prevent customers from switching
Customer engage in negative word-of-mouth communication to warn friends and relative (Blodgett et al. 1995)
On average one dissatisfied customer will tell 11 others who on average will tell five others. That's 55 pieces of negative advertising from one disgruntled customer. (Business Centre's Information Resource Centre)
Benefit of complaint
A good recovery can turn angry frustrated customers into loyal ones.
Companies can learn to recover from mistakes.
· Corrective of immediate problems
· Constructive ideas to improve products
· Adapting marketing practices
· Improving services
· Modifying promotional material and product information
Companies should try to prevent these negative consequences and the high costs of acquiring new customers by strengthening the endangered relationship with the customer.
Exposure of loss can be reduced and controlled with proper attention to complaint management.
Proponents of third-party systems point out that their use can help make manufacturers and retailers more responsive to consumer problems.
· It costs between six and ten times as much to gain a new customer as it does to keep an existing one.
· On average one dissatisfied customer will tell 11 others who on average will tell five others. That's 55 pieces of negative advertising from one disgruntled customer.
· Often the business's lowest-paid people are the ones who actually meet the customers? They are the business in the eyes of the customer. Make sure they are well trained.
· 96 percent of customers don't complain when they have a problem; they just don't come back.
· Because less than 4 percent of unhappy customers complain, management are lulled into thinking all is well.
· Half the customers who tell the business they are "fairly satisfied" won't be repeat buyers.
· The average business will lose 10 percent to 30 percent of its existing customers this year? Mostly because of poor service.
· Of those customers whose complaints are resolved, 83 percent will remain loyal and each will recommend you to five others.
· 68 percent of customers who stop dealing with a particular organization do so because of some indifference on the part of the organization.
· Businesses which have a reputation for excellent customer relations and quality service charge up to 9 percent more, grow twice as fast, and pick up market share three times quicker than their under-performing competitors.
· Increases of just a few percentage points in customer retention have resulted in significant increases in sales and profits. One customer retained means repeat business and its all cream. You don't have the extra cost of signing up and establishing the account, customer details, etc? The repeat business becomes a bonus.
· Quality, value and reliability are the most popular reasons given by most business patrons who describe themselves as regular and loyal customers.
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