Archive for category: Customer Loyalty

Summary: Are customers always right? A Wall Street Journal article raises the question of whether the customer or the service agent was the disagreeable party.

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An article in the January 7, 2012 edition of the Wall Street Journal provoked a strong reaction among readers, including me. The title, “A Flight Attendant from Hell” was accompanied by a drawing showing a flight attendant with horns. Nothing subtle here. So what prompted this?

The author and novelist, Marisa Acocella Marchetto, was flying back to Rome from New York when her stomach turned into a knot. She acknowledged in her article, “Why did I have that spicy spaghetti dish the night before? More important, why didn’t I have Nexium with me in the first place.” And, she noted, she had had a hiatal hernia.

I can empathize with her to a point. I have an acid stomach that flares up occasionally but severely. When it does, I am in sheer pain. That’s why I am never more than 2 minutes from a Pepcid or equivalent. I keep a cache in my car, in my briefcase, and in my suitcase. I never want to be in Marisa’s position. If I were going on an overseas trip, you bet that I would travel with my prescription medications close at hand.

Ms. Marchetto’s mom and traveling companion called for the soon-to-be-demonized flight attendant, asking for a Nexium. The flight attendant said the only medication they had was aspirin. Now, Nexium is a prescription medication. Who would ever expect to get a prescription drug from a non-medical person operating in an official position?

Ms. Marchetto’s mother asked for a satellite phone so she could call her daughter’s doctor, but the flight attendant, now referred to as Annie Wilkes in “Misery,” said, “I’m calling our doctor,” meaning “the Good Samaritan Hospital… in Phoenix, Arizona.” The ellipsis Ms. Marchetto adds for emphasis indicates that she thinks the physical location of a call center matters. D’oh! Either that or she has a personal disdain for Phoenix.

In fact, the Journal had an article on July 11, 2002 about this very call center, MedAire, noting that the number of diverted flights for medical emergencies had declined. The particular requirements of medical problems in flight led to this entrepreneurial creation of a doctor-staffed call center for airlines. I wonder what Ms. Marchetto would have written had the airlines not established such a medical delivery system. Or does she think every flight should be staffed with a doctor and a complete pharmacy of prescription drugs? Would she be willing to pay the extra costs?

The flight attendant told a pilot from the airline who was dead-heading on the flight that he could not give her a Nexium and then told a nurse who was a passenger and took some vital statistics, “If you give her a Nexium, then you’re responsible if she has a heart attack.”

Ms. Marchetto expressed annoyance at the call center doctor asking basic information — and that they wouldn’t believe her self-diagnosis. The doctor determined from the symptom description that Ms. Marchetto was suffering from a heart attack. We never learn why the misdiagnosis, which apparently it was. Maybe that will come out. But what if it had been a heart attack and Ms Marchetto had been treated based on her requests. Who would she have blamed? Herself? I doubt it.

I fly a lot, and certainly some flight attendants leave a lot to be desired, particularly on US airlines, particularly on international flights. However, I have been on flights with medical emergencies, and the crew has acted in a professional, caring, speedy manner. (In fact, I no longer use my academic title, “Dr.” on flight itineraries to not delay medical care if they searched for a doctor in the flight manifest.)

Perhaps the flight attendant’s manner was improper, but I have a hard time buying the characterization by Ms. Marchetto, given the whiney, self-absorbed nature of the article. Remember how Alec Baldwin portrayed his nemesis flight attendant in the infamous phone-gate episode only to have contrary stories come out.

Ms. Marchetto’s flight was diverted to Shannon, Ireland to get Ms. Marchetto medical attention on the ground. She protested that she was feeling better, and they should continue to Rome. Again, procedures were followed. What if she’d had a recurrence? I suspect the crew enjoyed the trip from Shannon to Rome much more than the first part of the trip.

We live in a litigious society. I don’t like that fact, but it is a fact that we need to deal with. Renters of my Maine house get a House Guide, which includes — up front — information about smoke alarms, CO alarms, fire extinguishers, emergency numbers, hospitals, veterinarians, etc. It is truly well intended, but I also never want to be in the situation where a renter could say, “But we were never told…” My lawyer has taught me well.

Our lease even says tenants will not disable smoke detectors. Why? Common sense isn’t common. I’ve had renters take the batteries out of alarms — why I shudder to ask — and not replace them.

Given the constant fear of litigation, organizations are going to protect themselves, and employees are going to follow the prescribed procedures to protect themselves. Recognize it. Deal with it. And take your own common sense actions to avoid being in a situation where you are at the mercy of what society has done to our economic interactions.

Customers are not always right, and some — think Baldwin — are MTTTW (More Trouble Than They’re Worth). While I am all for good customer service, we in turn need to learn how to be good customers.

Perhaps most astounding is Ms. Marchetto’s belief that the article would elicit sympathy for her position. Apply common sense. Take personal responsibility. If you have a gastric condition, eat properly and keep your meds close by. And don’t try to blame others.

Summary: Good Customer Experience Design requires that we show respect for our customers. Lean Six Sigma systems bring out the best in their employees by applying a sociotechnical systems thinking perspective. When applied to service operations we must remember that customers are part of the production system. Incidents like the encounter between Steven Slater, Jet Blue flight attendant, and the passenger beg the question whether our service systems bring out the best or the worst in our customers.

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The incident with the Steven Slater, the likely soon-to-be-ex Jet Blue flight attendant who blew a gasket and slid to a new life, has brought up the topic of workplace rage, but this time with a twist. Normally, the rage is between an employee and the company or between a customer and the company. The service management literature emphasizes the need to manage the interactions in all three dyads of the Service Management Triangle of company, employee, and customer, along with the critical fourth component of customer-to-customer interactions. Here we see, in dramatic fashion, rage between an employee and a customer. The details certainly aren’t clear yet, but we don’t often see a service employee flip off a customer like that.

While the media will focus on the dramatic, much of the intelligent discussion that flows from this incident will focus on the work design that led a long-term employee to lose his composure — to say the least — but I want to take a different tact. What about the “work design” that led the customer to “lose it?” Don’t we who design service systems have a responsibility to design the systems to bring out the best in our customers — or at least, to not bring out the worst?

“Customer Experience Management” (CEM) is hugely hyped these days, but the emphasis is all wrong in my estimation. It’s putting the cart before the horse. Before we can manage a customer experience, we first must design it. “Customer Experience Design” (CED) should draw primary attention. We can then manage, refine, and fine tune it by capturing feedback from customers. But how much of our CED is done with little consideration of the customer, that is, with an inside-out perspective as opposed to an outside-in perspective?

Let me propose that a good perspective for Customer Experience Design can be found in Lean Six Sigma concepts. Applying Lean Six Sigma systems to service operations is a new rage in the service industry; it’s on every conference docket. Most people think the key objective of lean systems is the elimination of waste, such as inventory buffers or overproduction, which can be achieved by performing the work as close as possible to Just in Time. That’s true, but an equally important lesson from the Toyota Production System (TPS), which is a father of lean systems thinking, is its application of sociotechnical systems thinking.

The sociotechnical school emphasizes that both social and technical factors must be considered in work design. The technical events in a system exist within a social context that affects how employees act. The Toyota Way emphasizes respect for people and developing teamwork. Workers are not just flexible machines who can perform myriad assembly tasks but are also critical contributors to identifying quality problems, correcting them, and designing better production systems. This whole person concept maximizes the productive output of the workforce and a team focus.

Well designed systems reduce muri (overburdening) of employees and mura (inconsistency) in operational flow and output. These results support the reduction of muda (waste). TPS talks about seven types of waste to reduce or eliminate. A key one is the waste of inventories, which are used to buffer against the uncertainties of demand, process times, and quality. The result of a lean system is the need for less inventory.

Now let’s turn to service production systems. Customer interfaces must be designed for efficiency in resource utilization, but we should remember that customers are part of the production system. Their efficiency should matter too. Customers at minimum must provide information to service agents to execute tasks, but customers may also have tangible tasks to perform as part of the service process flow. However, many “advancements” in service delivery design offload work onto the customer and inconvenience the customer all in the name of increasing operational efficiency. But whose efficiency? Certainly not the customer’s.

In services we don’t have inventories of parts to be processed, but rather queues of customers to be processed. Having queues in service operations is viewed as a vital way to increase efficiency by eliminating the waste of having productive resources sitting idle while waiting for customers. But just as inventories are wasteful in manufacturing so are queues wasteful in services — but the waste is encountered by our customers.

As we increase the burdens — muri in TPS lingo — on our customers, is it any wonder that customers get frustrated and angry and take it out on front-line employees? Personally, I like many self-service operations. I prefer to pump my own gas and to select my own groceries. But many times the customer is forced to perform mundane tasks and endure poorly designed systems that show disrespect for the customer to the point of bordering on being inhumane. We treat customers so badly that by the time the customer-employee encounter actually begins, customers are at a fever pitch.

Consider the flying experience. Customers are herded like cattle, searched like criminals, crammed into tight, uncomfortable seats, breathe unhealthy air, and must endure the idiosyncrasies of their neighbors. Customers fight for overhead storage space because a checked bag may get lost or damaged, and the customer will be forced to wait 30 to 60 minutes to claim the bag. I am not excusing loutish behavior by customers. Anyone who travels a lot has encountered inconsiderate, self-centered, brutish morons. But does the systems design ameliorate those effects or amplify them?

Consider mile-deep and mile-wide phone menus that can send you in circles. I basically yelled at a Metropolitan call center agent recently. I was calling about house insurance on a rental home I own in Maine, though I live in Massachusetts. I spent close to a half hour negotiating the multitude of 800 numbers, obtuse phone menus, and frustrating voice recognition systems that simply wasted my time. When I finally got an agent on the phone and said she would connect me to the right queue, I yelled, “Please don’t! Please first tell me the correct number I should be calling!” I then explained to her my issues and apologized for my quick outburst. By the way, every Metropolitan agent I speak with says they know how bad the phone menus are. Why doesn’t management? (Maybe they do and don’t care since it saves them money — at the expense of the customer.)

Last night my wife called Bank of America to cancel a credit card that they sent us unrequested. (Yes, I know that’s against the law, but it happened.) 10 minutes of her time were wasted going through phone menus to be greeted by an agent with, “How may I deliver world class service to you today?” Well, for starters, kill the phone menus. I was thrilled to see that Citi now has a “2” option “to” get connected directly to a service agent.  I may have trouble with the accent, but I’ll take that over time-wasting phone menus.

What other service systems offload work onto you, the customer, in a disrespectful way?

A lean systems design brings out the best in employees. When we apply lean systems thinking to services, we must remember that customers are part of the production system — and part of the team. We must consider all the costs in the system, including those costs incurred by the customer. Further, the sociotechnical analysis would examine the social context of the interaction between employees and customers. I don’t want a customer bill of rights. I want the respect due a valued part — arguably the most valuable part — of the production system.

We should practice Customer Experience Design to bring out the best in our employees and our customers. Does your design do that? Do your systems show respect for your customers? Please tell me if you’ve applied Lean Six Sigma to a service operation treating the customer as part of the system.

As a customer service consultant and teacher, it’s always fascinating to experience firsthand the very things we teach and preach, such as the companies that create long-term, loyal customer behavior. Of course, it’s better to experience this on the positive side, but a negative experience can sometimes be equally instructive. I recently had an experience with what Fred Reichheld would call “bad profits” — profits that fatten the bottom line now but destroy long term customer loyalty.

I’ve been delivering my Survey Design Workshops in various cities around the country for almost a decade.  Since I handle my own logistics, once I find a meeting location I like in a city, I stick with it — that is, until the venue drives me away. For a Chicago conference hotel, three times I’ve used the Hilton Indian Lakes Resort in Bloomingdale, Illinois.  It’s a very interesting hotel with nice architectural features, good restaurants, etc. within a half hour of O’Hare that just recently became affiliated with Hilton. I’d been pleased with it. But someone should tell their management there’s a recession hitting us here in late 2008.

Workshops like mine can be the canary in the economic mineshaft. They’re a pretty good leading indicator of companies retrenching. While I normally get a good headcount in my workshops, the Chicago class in October didn’t hit my targets. In fact, I had 2 cancellations in the weeks just prior due to companies putting holds on travel. I still held the class since I hate to disappoint my customers and I had a financial stake as you’ll see.

I had had second thoughts about using Indian Lakes. In the two years since I was last there they had:

• Raised the meeting room rental price by 28%.
• Nearly tripled the cost of a projection screen rental. (No joke, they want $95 per day to rent a screen. You can buy the same size projection screen at Staples for $120. I borrowed one from a friend. Let me be fair. The $95 includes use of power cords. Now there’s a value proposition!)
• Most importantly, doubled the Food and Beverage (F&B) minimum purchase.

Clearly, when times were good in 2006 and 2007, they figured they could raise prices. Hello, Indian Lakes! Times aren’t good anymore!

What shocked me was that, despite my repeated use of the facility, Indian Lakes catering folks weren’t willing to work with me to reduce my financial exposure.

• Could I apply the unused F&B amount to another event? Yes, as long as I held it before the end of 2008. Big help there! You don’t hold the same class twice in the same city in two months. That showed how much they understood my business.
• Could I carry a credit forward to next year? No way!
• Would they move my event into one of the hotel’s hospitality suites to cut meeting room expense? No way! That’s money in the wrong pocket of the same pants.

Were they losing money since they could have rented my space to someone else with a bigger crowd? No, the meeting rooms were mostly empty. They should have been thrilled to have me there.

To be fair, they would let any food I bought in the resort’s restaurants be applied to my F&B minimum. But that appears to be their standard practice. I wound up drinking some expensive scotch and eating some expensive dinners.  But I still would up with almost $300 in “attrition” — that is, unused F&B charges.

I recognize fully they had the legal right to the charges; I did sign a contract. But there’s a world of difference between legal rights and good business practice whose goal is to create long-term, profitable customer relationships. Here’s the explanation I got:

I am sorry we were not able to do more for you but from our side with you signing a contract for $XXX. This is revenue we have reported on receiving for the month of October. We were only able to offer that credit for this year so it would stay in this years (sic) revenues. As a business we have budgets and goals to meet (sic) we need to stick to the dollar amounts that was agreed upon and contracted.

Let me phrase that differently. As a business, they have a short-term profit focus. Promises to the accountants are more important that long-term customer relationships and long-term profitability. Ya just gotta love those accountants and savvy business managers focused on quarterly profit performance!

Would I ever use Indian Lakes again for an event? Given the concern they showed for me as a customer and for the success of my business, of course not! Actually, I have to backtrack a bit. I would use the conference suites the hotel provides — they’re wonderful and the hotel personnel seem most accommodating — but I will never darken the door of the catering office again. Indian Lakes catering called the unused F&B “attrition”, and that is the right word since it led to the attrition of their customer base.

To add insult to injury, I didn’t even get Hilton Points for holding my meeting there — and I am a loyal Hilton customer. Then again, maybe I’m not any longer…

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Two other interesting points…

1. Two weeks after my event, I got their survey — remember, I do survey consulting for my living — which included a pitch for future events at Indian Lakes! It was the same very poorly designed survey I’d seen in the past (and I had given them gratis feedback on it in the past). The survey did not contain a question that really addressed the area that has destroyed my loyalty to the hotel. It had one general question for satisfaction with Management, but that was it. Just another good example of a survey designed with internal blinders. Management thinks customers can only get upset about the food or the catering service. They don’t measure their own service. Is that ignorance or arrogance?I did not get a survey about my hotel stay from Hilton corporate, which surprised me as I have some knowledge of their surveying practices.
2. My catering manager — a sales person — could not find time in the 3 days I was on-site conducting my workshop to walk a few feet and say hello. Amazingly, this is the third time this year I’ve had this experience in conference centers. Usually the sales person goes to the customer. In this case the customer traveled 1000 miles to the sales person.

This really makes me appreciate the fine, personalized service I have received at the Network Meeting Center in Santa Clara, Calif., Hilton Garden Inn in Scottsdale, Ariz., and at the Forefront Meeting Center in Waltham, Mass. They get it. And will continue to get my business.

“How are we doing?” It’s a natural question for an individual or an organization. In some cases the answer is easy because the objective criteria for success are simple, obvious, easy to collect, and easy to analyze. For example, a bricklayer is measured on the number of bricks laid in a day and the quality of the workmanship.

How to measure service organizations is not simple, obvious, or easy to evaluate. In good part this is due to a service organization’s multiple objectives — which often are in conflict. Service organizations need to be:

• Efficient in their use of resources
• Effective in the eyes of the customer. (And just to complicate matters, many service organizations have multiple customer constituencies, presenting more opportunities for conflicting effectiveness objectives!)

Why are these service measurements in conflict? Typically, to be more effective means having a buffer of resources to deal with unexpected demand. To make a rational trade-off decision requires good measurement of both service efficiency and effectiveness. Yet, efficiency metrics typically win out. Why? Because efficiency is easy to define and measure with the operational systems we have in place to manage the service process.  For example,

• Efficiency: Calls per day per service agent. Piece of cake to measure
• Effectiveness: Quality of the service delivered. Hmmm… how do we even define quality?

The Balanced Scorecard concept drives home this need for internal measures of service efficiency balanced with external measures of service effectiveness to keep the service organization aligned with corporate goals. But what are good service measurements? How do we measure service effectiveness? How do we measure how good we are in the eyes of the customer?

Two broad approaches exist, internal and external service measurement techniques. We’ll address each below with their respective approaches.

Internal Service Measurement Techniques. By “internal” measurement techniques, we mean that we don’t involve the customer directly in the measurement process. Rather, employees or contractors put themselves in the shoes of the customer. Two internal measurement techniques can be applied.

• Call Monitoring. This technique is used in call centers. Someone listens in on the service interactions and judges the quality of the service delivered along a pre-established score sheet. The monitor might do more than listen in; they may also be “shadow monitoring” by watching the agents computer screens remotely.The advantages of the technique are several fold.  First, it is unobtrusive.  We don’t burden the customer, and the service agents do not know when they are being monitored.  Second, evaluation can be done in real time.  Thus, identified process issues can be addressed and remedied quickly before more customers become dissatisfied.  Third, every service agent is measured against established criteria.The technique also has shortcomings.  First, the monitors are applying their own qualitative assessments of the agents’ words and deeds.  Multiple monitors are needed to ensure fairness.  Second, the monitors must be trained and calibrated to be sure they are all measuring the same way.  Most importantly, the criteria on the score sheet must reflect what is truly of concern to the customer.  Some score sheets have arbitrary requirements that may not be important to customers, such as greeting the customer by name at least three times.  Also, the score sheets typically derive an overall score by applying weights to the different sections.  How were these weights derived?  Typically, they are a managerial judgment, perhaps driven by short-term hot buttons, and not derived statistically.This technique, implemented differently, could be done in service settings other than call centers, though it may be more difficult to be unobtrusive and anonymous.  For example, a field technician monitored during a visit to a customer site has obvious shortcomings.
• Mystery Shopping. Most of us have heard of this technique since it’s used heavily in consumer industries and search engine ads barrage us to “get paid while you shop or eat.” However, the concept is applicable in most any service environment. (I conducted one of these studies for a technology vendor to see how their warranty processes performed in comparison to chief competitors. It was perhaps my most fun project I have ever done.) With mystery shopping a contracted person pretends to be a customer, and tries to “exercise” the various paths possible in a service interaction. The “shopper” has a score sheet similar in concept to call monitoring score sheet.The primary advantage of this measurement approach lies in the ability to explicitly test service scenarios to see how the agents — and the system as a whole — perform. In other measurement techniques, you take what you get. Also, while a shopper does waste a service agent’s time, no real customers are directly affected.The shortcomings start with the cost. Clearly, this process is labor intensive. It would be prohibitively expensive to generate several “shopping” experiences with each service agent. Thus, this technique is not suitable for quality control monitoring. And just as with the call monitors above, the shoppers need to be trained and calibrated, the score sheet needs rigorous development, and summaries must be legitimate.

External Service Measurement Techniques. In contrast to the internal techniques where we simulate being a customer, with external measurement processes we capture feedback directly from the consumers of the service.

• Unsolicited Comments. Our first external measurement technique is one that just appears. Complaints or compliments where the customer took the initiative to tell us about their feelings. Few customers will take the time to send feedback (except people like me). So, it behooves an organization to make it easy to deliver comments. Toll-free hot lines and survey forms off the company’s internet home page are ways to promote this free research.The key advantage is cost. The book, A Complaint is a Gift, makes the argument that a complaint is free market research. It’s not free if we create systems to encourage comments, but it’s still very inexpensive for the value received. If someone took the time to complain, it probably has a germ of truth to it. They are telling us where our system failed or supported them.  And some people will expound in great detail (like me).The shortcomings are high. Clearly, these comments represent extreme positions. They are not typical and need to be interpreted as such. Many companies post survey forms on their web sites and believe the results can be generalized to all customers. That is wrong.

The remainder of our external measurement techniques are where we actively solicit feedback from our customers.

• Personal Interviews. A structured interview is perhaps the simplest way to gather information from customers. These could be done through email exchanges, by phone, or preferably in person. Richer contact media allow us to sense feelings beyond just the words. With phone we get intonation. In person, we get body language.The key advantage of interviews is the richness of detail they provide. We learn not just the type of issue – positive or negative — but also the detail behind it. Thus, we can better develop corrective action plans. If we use a purposeful selection process to identify people for interviewing, then we are capturing feedback not just on the extremes, but covering the spectrum of customer feelings. However, the number of interviews will not likely lead to statistically significant findings. That’s not the goal.Interviews have their challenging requirements. Note the term “structured interview.” For the data to have meaning we must collect it in at least a semi-structured approach. This means developed a set of questions to guide the interview. Good interviewing skills are needed and coordination among multiple interviews. Clearly, this is a labor intensive process, especially for in-person interviews.
• Focus Groups. Also, known as “small group interviews”, focus groups share most of the strengths and weaknesses of personal interviews. Rather than interviewing each person individually, we interview them as a group over the course of an hour or two.The key advantage focus groups provide is the interaction among the participants, making for even richer detailed feedback than with individual interviews. We really get the “why behind the what” of customer issues. We also have some efficiency since we’re gathering feedback from a dozen or so people at once.The key challenges are logistical. Planning and execution are vital. The customers must be clustered geographically, unless you use an online discussion group to serve as a web-based focus group. The moderator’s ability to facilitate a good discussion is absolutely critical.
• User Group Feedback. User group meetings provide an opportunity for a wealth of information collection. Gathering feedback at user group meetings through interviews or focus groups is just plain common sense. We have a group of people who have a strong commitment to our products. And they are likely to be very willing to tell you what they feel and what they’d like to see.That strength is also the weakness of the approach. They are current customers and will drive product ideas toward improving their own use of the product rather than product ideas that will appeal to an expanded market. These customers may also now feel ownership for product direction and be disappointed if they don’t see what they proposed. Positioning is critical with user groups.
• Mass Administered Surveys. I suspect that most of you reading this article expected it to focus on customer surveys.  Surveys are great at telling us how our customer base as a whole feels — if done properly. We gather structured data (hopefully) from a sample of our “population” and can then generalize the results from the sample to the population.The key benefit of the survey technique is that it provides an efficient means of generating a broad overview of how our customers feel, identifying strong and weak points in the service system. Incident surveys (also known as event or transactional survey) can flag customers in need of a service recovery. Surveys are not good at generating the detail behind the feelings. (Hold that question…)To generate meaningful data, surveys have strong requirements. The survey questionnaire must avoid introducing bias, the questions must reflect the true issues of concern to customers, and the resulting data must support the desired analysis. The survey administration has to avoid biasing results and we must get enough responses for statistically significant findings. Finally, the survey data analysis has to be executed correctly to give voice to the message buried in the numbers.

Learn how to develop meaningful surveys through our Survey Workshop series.

We’ve covered a lot of ground here. Your question may well be, “So, which measurement process is best?” The answer is: All of them and none of them.

Every research technique has strengths and every research technique has weaknesses. 

Re-read the above descriptions and you’ll see that some techniques (e.g., focus groups and interviews) are good at generating detail-rich findings while others (e.g., surveys) are good at getting summary findings that represent our customer base as a whole. What’s needed is a portfolio approach. Just as your financial portfolio should have a balance of investment instruments, so too should your service measurement approach.

The nearby chart makes this point. Proper interpretation and use of the findings from a research technique means understanding its place in the research spectrum. Rigorous application of a portfolio of complementary service effectiveness measurement techniques helps ensure we truly understand how our customers view us and how to address those issues. In short, our Balanced Scorecard becomes balanced properly.

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 Overstock.com. 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 Overstock.com 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!