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Business Advice: how to handle customer complaints


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Although prevention is better than cure, it is almost inevitable that, at some stage, you will receive a customer complaint.

Don’t assume that a customer complaint is a negative experience because, if handled well, it can be a valuable asset.

A customer complaint is one of the best opportunities you have for turning an unhappy customer into a loyal customer. Even the most dissatisfied customer can become an ambassador, winning new customers for your business by word-of-mouth advertising.

Whether you win or lose customers can depend on the way you handle their complaints.

Try putting the following points into practice:

  • train your staff to handle complaints well
  • make it easy for customers to complain
  • welcome customer complaints
  • deal with complaints promptly.
  • The facts about complaintsSome businesses believe that if they don’t receive many complaints, their customers must be satisfied. Wrong! Only a few customers will complain to you. The majority will not return to your business and will tell others of their bad experience.

    The simple fact is that you may be pushing profits out the door if you do not have an effective complaints handling policy.

    Welcome complaints

    • A typical business hears from only 4% of its dissatisfied customers; the other 96% just go quietly away and 91% of them will never go back.
    • A typical dissatisfied customer tells more than eight people about his or her problem.
    • Seven out of ten complaining customers will do business with you again if you resolve the complaint in their favour and, if it is resolved on the spot, 95% will do business with you again.

    So, through resolving a complaint efficiently and fairly, you can retain the customer’s loyalty and potentially gain new customers through good feedback.

    More good news

    Think of the benefits an efficient complaints handling system can bring you, including

    • fewer mistakes and less time spent fixing them
    • improved product quality
    • better understanding of customers’ needs
    • happier customers
    • greater customer loyalty
    • more customers through word-of-mouth advertising
    • less time and money spent attracting customers
    • improving business reputation
    • a healthier bottom line.

    Complaint handling system

    The major cause of a breakdown in communication when handling complaints is misunderstanding, so it’s wise to keep a record of all promises, agreements and undertakings.

    If you are a small business with few or no staff, it is still worthwhile to use the following steps as a checklist so you are well-prepared to deal with complaints. All businesses can benefit from a clear system for handling complaints.

    Decide how you should handle complaints

    • Obtain a copy of Australian Standard AS4269-1995 ‘Complaints Handling’ from Standards Australia. It provides an excellent guide for developing an effective policy.
    • Involve your staff in developing the policy.
    • Decide who will handle complaints, while remembering that handling complaints well is ultimately everyone’s job.

    Anticipate potential problems or mistakes
    Then work out possible solutions with your staff. For example, what do we do if:

    • we’re short staffed?
    • the customer is angry after we’ve apologised?
    • we didn’t deliver on time?
    • the computer ‘goes down’?
    • the order went missing?

    Write down your new policy and how it will work
    Consider what you are required to do under the law. If you are uncertain about which laws apply to you, contact the Office of Consumer and Business Affairs.

    It may also be useful to consult the Retail Traders Association, your own trade association, The Business Centre or Business SA.

    Some industry groups have developed their own codes of conduct.

    Spread the word
    Make sure all staff understand the new policy, why it was introduced, how it will work and what they should do. Be aware that some staff training will be necessary.

    Make it worthwhile
    Encourage and even reward your employees for finding disgruntled customers and handling their complaints well. Remember, complaints are a great opportunity for improving your business and for impressing and keeping even the most dissatisfied customer.

    Make it easy for your customers to complain
    Publicise your system – let your customers know that your business welcomes complaints. Invite your customers to let you know if they were satisfied with the way their complaint was handled.

    Test It
    Trial the system for a set period of time; for example, two to three months.

    Monitor it

    • Assess how well the new system is working and make any necessary changes.
    • Discuss any problems that occurred with your staff and work out possible solutions.
    • Use customer feedback to highlight any problems. This methodology will help you to work out why you keep getting the same complaints and will allow you to prevent them from happening again.
    • Use complaint records to check how well and how quickly your staff are handling complaints.

    Effective results

    Take time to handle complaints when they are first made. Prompt action will be more likely to satisfy the customer. The faster a complaint is resolved, the less time you’ll need to spend on it.

    Be sympathetic and calm
    Acknowledge there is a problem and that it may be annoying, inconvenient or unfortunate.

    • You may not believe the customer’s complaint is justified but remember that, although they may not be ‘right’ in your opinion, they are telling you because they are unhappy. Their complaint is an opportunity to retain their custom.
    • Stay calm. This attitude may be difficult if the customer is angry or has an irritating manner, or if their complaint seems trivial to you, but getting angry yourself will only make it worse.

    Identify the problem
    Find out the exact problem. Listen carefully to what the customer is saying, empathise with them and make sure you understand by checking it out with them.

    • Ask what they want you to do for them. Don’t assume.
    • Write it down.

    Decide what can be done

    • Even in situations where the complaint may be unjustified, you still need to make the customer happy again to keep their business. A simple explanation may be all that is needed.
    • Sometimes, even if you are not legally required to do anything about the complaint, it may be worth doing more to keep the customer. For example, if a customer is entitled only to a repair or replacement, you may be willing to offer a refund if that is what the customer wants.
    • Consider how important these problems are to customers. Try putting yourself in your customers’ place and imagine how you would feel if you were in their situation.

    Keep a record

    • Keep a written record of the complaint and what you have agreed to do.
    • Record all contact about complaints, including whether they were face-to-face, by telephone or in writing.
    • Remember that simply filling out a complaint record form does not solve the problem.

    Fix the problem
    Once you have decided on your complaint policy, you will be able to resolve most complaints quickly and efficiently.

    • Tell customers what solution you can offer and make sure they understand.
    • If customers accept your proposed solution, act straight away if possible; for example, do the repair or replace the goods.
    • Make sure there is always someone available to speak to customers about their complaints. If a customer is promised a return phone call, make sure it happens.
    • If it is not possible to do anything immediately, tell the customer when it will happen and keep a record of your commitment.
    • If customers want more than that to which they’re legally entitled, or if their solutions are outside your company policy and you feel they are making an unrealistic demand try to explain their legal rights or refer them to us.
      You can check your rights and obligations with us and ask for an independent third option.
    • Do what was agreed and finalise the matter with the customer.
    • Never make promises you won’t be able to keep.

    Customer service guidelines

    The Office of Consumer and Business Affairs produces a set of Customer Service Guidelines for businesses that include useful information about ten key service attributes:

    Source: The Government of South Australia http://www.ocba.sa.gov.au/businessadvice/customers/complaints.html

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