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David Baker www.davidbakeronline.com Another satisfied customer Behind every complaint is a unique opportunity to enhance the corporate reputation Financial Times, August 2, 2000 The woman at the counter is shouting. She has made a special journey from the suburbs to buy something from your store. But the item she wants is out of stock. You have a headache, two of your staff have not turned up for work and the customer is accusing you of wasting her time. Any reasonable person would have telephoned first, but this is not a reasonable person. What do you say to her? According to Richard Brennan, managing director of TMI (UK), the training company, the right words are "thank you". Handling complaints is an area in which managers feel particularly exposed. Common sense dictates that no one should have to put up with unreasonable customers who are trying to shift the blame for their own mistakes on to others. But economics suggest the opposite. The government, for instance, may not welcome the campaign to boycott petrol pumps over the price of fuel, but this is a clear indication the British public is less afraid than ever to speak out when dissatisfied. For the likes of Mr Brennan, complaints are among the best things that can happen to a company. They give managers the chance to rectify the situation over and above customer expectations; they give low-cost feedback on how your products and services are perceived and, handled properly, they create what he calls "goodwill ambassadors" for your brand. In June, TMI, along with the Institute of Customer Service, the trade body, published research* into how and why people in the UK complain and how they are dealt with. Among other findings, it confirmed the old management cliche that people tend not to complain - they simply walk away. It is the expense of replacing customers that makes handling complaints well so cost-effective. "We estimate that it costs five times as much to recruit a new customer as it does to keep an existing one," says Julie Robinson, director of service delivery at Virgin Atlantic, the airline. "As part of out staff training we need to show people that giving compensation when something goes wrong is not giving away the company's profits. Quite the opposite." So what is the "right" way to handle a complaint? Almost everyone agrees on step one: listen. "You must listen to the customer," says Ms Robinson, "and not interrupt until you have understood the problem." But what then? Mr Brennan's company advocates an eight-step process. After saying "thank you" comes explaining why you appreciate the complaint; apologising; promising you will do something about it straight away; asking for more information; correcting the mistake; checking customer satisfaction and, finally, preventing future mistakes. Mr Brennan is quick to point out the order of these steps. "Many people ask for information first, such as name and address, making the customer feel as if they are are somehow under suspicion. A complaint is a gift from the customer." This unexpected generosity from the woman at the counter is confirmed by Stephen Walker, head of customer service at Marks and Spencer, the retailer, a UK company that is almost synonymous with handling complaints effectively. "The information people give you when they complain," he says, "is invaluable to the organisation. We run a central database where complaints are logged, from which we can feed information back to the relevant buyer and suppliers, often on the same day. Customers are looking for a quick resolution of the problem and an assurance that we will do what we can to ensure it doesn't happen again." Managers of big companies can also use complaints to develop one-to-one relationships with customers. "Complaints offer an excellent chance to deal with customers face to face," says Mr Walker. "If you take a complaint seriously, and deal with it in a generous way, you can buy them for life." Such "generosity" seems to be the key to handling a complaint well. How many of us have taken back a faulty item only to be greeted with sourness, suspicion and a begrudging refund? Marks and Spencer customers often find themselves leaving the store with two punnets of strawberries for the one they returned. Compensation above the expected level can turn a dissatisfied customer into a "goodwill ambassador" who will tell all their friends about the surprisingly pleasant way you handled the problem, and word of mouth, as any marketer will confirm, is worth a thousand newspaper advertisements. For all this to happen, though, some fundamental changes need to take place within an organisation. At Orange, the mobile telecommunications company, the key word is "empowerment". "Our intention is that whoever the customer is speaking to should be able to solve their problem," says Jonathan Evans, UK group director, human resources. "It is very important that we have good one-to-one relationships with our customers, as service is becoming almost the only differentiator in our business. We train our frontline people so they are empowered to authorise credits on a customer's bill, swap a phone or do anything else that will mean the complaint has been dealt with in a satisfactory way." This means managers placing more trust in junior staff, something not every senior executive is comfortable with. But, as Mr Walker says, "the customer is king". "We have to make it as easy as possible to complain. This is a significant challenge for an organisation." "Organisations are getting better at handling complaints," says Mr Brennan, "but are still not good at internal systems that stop complaints recurring. Wouldn't it be good to go back to customers and say 'thank-you, we have changed our way of doing things and here is the result?' " Of course, complaining is a dance for two. So how could the woman at the counter be a better complainer? "Be assertive," says Mr Brennan. "And be realistic in what you want from the situation. Good companies will certainly go that extra mile for you, but they won't send you on a round-the-world cruise if there are one or two broken biscuits in the tin you bought." * National Complaints Culture Survey 2000. Price £120. TMI, 50 High Street, Henley-in-Arden, Solihull B95 5AN. Tel: 01564 796000 www.tmi.co.uk

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