Capturing the Value of Customer Complaints

Who are your best customers? I’ll argue they’re your lost customers. No, the winter cold hasn’t frozen my brain; I left out a key phrase. Who are your best customers — to help you with business process and product improvement?

Every business loses customers. It’s a fact of business life. And the tendency may be, especially for the small businessperson, to shy away from communicating with customers who have walked away. Yet, consider what a treasure chest of information those lost customers hold. There’s a reason those customers aren’t buying from you. The reason may be benign. For example, they’ve moved or their needs have changed. But the reasons may be due to shortcomings in the way you do business or in the product or service they were buying from you. Wouldn’t you like to know? Perhaps a minor correction would regain the customer.  Surprisingly, a lot of companies act as if they couldn’t care less why customers are defecting.

Let me give you a personal example. Almost two years ago I purchased an espresso maker for my wife for Christmas.  Being tight with a buck, I bought a refurbished unit from That winter, we did a kitchen renovation so certain less critical items got boxed away, including the espresso maker. After resurfacing, we used it for another month, until the pump failed. Technically, it was out of warranty, but I felt it was reasonable to at least ask for special consideration. I wrote to the customer service manager. No response. I wrote to the Director of Customer Satisfaction directly and through the web site “contact us” feature — they would not give me the name of any senior officer. No response. I tried to fax the German headquarters’ customer service operation. The fax number on the web site didn’t work. I posted the letter. No response. (I should add that did respond with a $20 credit although they had no compunction to do so.)

When my wife asked me last month why I hadn’t just thrown out the now dust-covered espresso maker, I opted for one last shot. A reference librarian friend got me the name and address of the company president. I created a succinct “Customer Facing Audit” pretending my experiences were part of an audit to measure how responsive Krups was to customers. (I explained the real situation in the Epilogue.) I printed it as a professional consultant’s report and sent it Priority Mail.

About two weeks later, I received a call from the customer service manager I first tried to contact. She has offered to fix or replace the machine. More interestingly, she thanked me for the feedback. She could not find my original letter and was surprised at the trouble I had just getting some type of response. I intend to pursue those conversations later. Last week we received the repaired machine.

How many of your customers would go this far to voice a complaint? Not many! (I justify this tenacity in the name of research, which has a germ of truth due to my business practice and academic research.) Research has shown that customers are twice as likely to voice a complaint when provided a toll free number, and, of course, customer are most likely to complain if asked if there’s a problem. Most important, customers who have had a complaint resolved effectively are more loyal than customers who have never had a complaint. That’s the reason for creating service recovery programs.

Look at your own business and ask how easy you make it for customers to complain and what you do with complaint data. In other words, pretend you are a customer and do your own “customer-facing audit.” Your company will fall into one of five distinct levels in complaint handling progression.

  1. No response to complaints
  2. Reactive response to complaints
  3. Systematic response to complaints
  4. Proactive complaint solicitation
  5. Feedback to process or product owners for root cause correction

Note that these are cumulative. As you move through the successive stages the customer receives some attempt at recovery, at first reactively and proactively, the company makes it easier to hear about complaints, and finally the full value of the complaint is leveraged through operational improvement.

It’s seems counter intuitive to want to hear more complaints, but we should! We can get more complaints by letting the customer know how to voice them. Toll free numbers and point-of-contact comment cards can work, but they’re passive. Active solicitation of comments can best be done by contacting customers directly. Surveys after a completed transaction or scheduled meetings work best, depending upon the nature of your business.

The key is to let the customer know that you want their feedback — and that you will act upon it. That last point is key.  If you don’t provide service recovery and fix the underlying problem, the customer will be less likely to voice issues in the future. Also, remember to fix the problem and fix the customer. Included with our fixed espresso maker was a packing slip — no card or note. A small gesture can remedy an upset customer’s attitude.

A business of any size can do this. While there are technology tools, for example, Customer Expressions, that can assist moving to stage 5, the heart of this program is simply executing a well-defined and well-conceived process. Get those complaints rolling in! You may be amazed at what you learn.

Epilogue. A colleague from my days at Digital, Ed Sander, read my article in the Boston Business Journal and provided an additional perspective. How well complaints are handled tells a lot about your management team. Those managers who handle complaints with a positive attitude are likely to be the most successful managers in the long run because they recognize there are always opportunities to improve. Those who balk at addressing complaints typically prove to be more myopic, focusing on internal measures of efficiency and not external measures of effectiveness. Thanks, Ed!