CX Science: beware the non-complaining customers
What:
Pay special attention to non-complaining unhappy customers - they come in high numbers and cause more damage than complaining ones.
Now what:
Voice is better than Exit: give customers an easier way to voice their concerns.
A known devil is better than an unknown angel: it is not good news that customers are complaining, but at least now you know and can act on the dissatisfaction.
Surveys help to some extent: while they can bring some discontent to light, they are no panacea, for you can't survey everyone every month.
Predict to achieve scale: instead of waiting for customers to complain or worse, to churn, you can predict customer satisfaction and which customers are likely to complain. Then you can address their concerns proactively and decrease your churn rate.
Companies often think that the lower the number of complaining customers, the better. That's not necessarily flawed thinking, but we should be careful. A low or decreasing number of complaints might mean that customers have nothing to complain about; yet, it could also mean that customer just don't complain and leave the company instead.
Over 50 years ago Albert Hirschman showed that customers have three choices in front of them: exit, voice, and loyalty. They are unhappy and just leave, are unhappy and raise their concerns, or are happy and stay. This is also, I believe, the order of preference any business should follow - ideally, you don't want people to just leave; if there is anything wrong you'd better know; and of course, the most preferred course of events is for customers to be happy and stick with you.
The thing is, much more customers prefer Exit over Voice. As John Goodman puts it in Customer Experience 3.0 (1), "No news is not necessarily good news"
"Companies are not aware of the number of customers who are dissatisfied because relatively few customers with problems complain. Instead of complaining, most people become less loyal and spread negative word of mouth. (Customer Experience 3.0, p. 21)
Truth being said, we know very little about the people who don't complain. Estimations about their number vary, there is little research on their psychological characteristics, and we know little about whether making them happy by taking proactive steps helps your business.
Here is what we do know.
The Customer Complaint Iceberg
This phenomenon - that only a few of the unhappy customers complain - is known as the Customer Complaint Iceberg.
According to Goodman's estimation, only up to a quarter of all complaints are logged in somewhere, most of them with the retailer or the channel. This means that out of all potentially dissatisfied customers, three quarters will not tell you about it or at best will tell the store they purchased the product from.
Adrian Swinscoe's estimation (2) is similar - that only about 4% of all unhappy customers will log in a complaint. Going further, he suggests that for every customer complaint that you receive, unhappy customers will spread word of mouth reaching 1.300 other people. He bases both of his estimates on a TARP study conducted in 1999.
Still other sources put the tip of the iceberg at about 6% (3).
All in all, it is likely that the share of unhappy customers who complain is quite low indeed, although it probably varies with the size of the purchase and the severity of the problem. Either way, I think we can accept with certainty that we are far off the 100% mark, which leaves us with a lot of unhappy customers on the loose.
Who doesn't complain, and why?
Unhappy customers won't complain for a variety of reasons, really: some of them boiling down to the specific circumstances, others having more to do with personality factors, and still others with the trust that the company will act upon the complaint.
John Goodman suggests there are four reasons people won't complain:
"1. Complaining is too much of a hassle. ... 2. Customers feel that complaining will do no good. ... 3. There is a fear of retribution from the company staff. ... 4. Customers do not know where to complain." (Customer Experience 3.0, p. 22.)
This study (4) to which we will return in the last part, offers a slightly different classification; here's a selection:
Lack of time or energy
"Service provider responsiveness" (or rather irresponsiveness, it seems): no one to complain to or lack of trust that something will come out of it.
Personality factors, such as empathy toward the frontline employees and lack of assertiveness
One has just got to love that: the fact that the company addressed the issue proactively.
"Late realization of the failure"
Outright brand switching
Along the same line of thinking, a research conducted by Marsha Richins and Bronislaw Verhage (5) showed situational factors play a significant role in customers' complaint behaviour. Filing of a complaint is higher when the retailer has a reputation for being responsive, when the purchase is expensive and when the problem is rather severe (related to the severity factor, in this article we discussed how minor product malfunctions can affect customer experience more than large ones, because customers tend not to report the small glitches.). On the other side, the major deterrent for filing a complaint is the inconvenience of doing so.
Little is know about the personality characteristics that make some people complain while others remain silent. Some studies I reviewed when writing this article even suggest situational factors loom larger than personality traits for predicting who will file a complaint.
Nevertheless, this study (6) provides some intriguing insights on the personality traits of complaining customers:
First, it establishes that the higher the dissatisfaction, the higher the chance of a complaint.
Second, the higher the customer's involvement with the product or service, the higher the chance of a complaint; in other words, more involved customers will complain at lower level of dissatisfaction.
And third, more impulsive customers are also more likely to complain more; again, they will complain at a lower level of dissatisfaction.
Why bother with non-complainers?
The straightforward answer is this: because there are a lot of them out there, they talk to other people, and they would rather not do business with you.
By now we know very well that unhappy customers share about their experiences with many other people. No business wants that. The solution is to provide a customer experience that makes people happy, of course. Failing that, the second line of defense is for you to talk to these unhappy customers and learn from them. If nothing else, it will probably dissipate the emotional charge and neutralize the urge to share the negative experience with others.
As to churn rates among non-complainers, I haven't come across a study that measures it, but what I do know this: there is a thing called The Service-Recovery Paradox. It posits that after a successful service recovery after a failure, satisfaction can go above the level prior to the failure. Well, here is one opportunity you are missing out on if you don't know who the unhappy customers are.
But don't just take my word for it, have a look at what Clay Voorhees, Michael Brady, and David M. Horowitz (4) found out over 15 years ago when they researched the topic:
Doing service recovery is a risky business - get it wrong, and you have an even unhappier customer. Just have a look at the difference between the red bars and the blue one.
Do it right though and customers' repeat purchase intentions increase and their desire to spread negative word-of-mouth decreases compared to all other cases.
Another, equally important, piece of evidence comes from research conducted by Prashanth Nyer and Mahesh Gopinath (8). Given that customers often complain and share negative word-of-mouth with venting purposes, could it be that one is a substitute for the other, i.e. if customers complain, would they be also less likely to spread negative word-of-mouth?
The answer is a resounding Yes: of the dissatisfied customers who logged in a complaint, about 16% also engaged in negative word-of-mouth actions; in contrast, fully 37% of those who didn't file a complaint spread negative word-of-mouth. Complaining was enough for customers to vent their emotions, and they didn't need to keep spreading the word.
What is more, the dissatisfaction of complaining customers was lower after the complaint. Not so with those customers who spread negative word-of-mouth - the public commitment which their actions represent bind them to their words, thus leaving no space for dissatisfaction decrease. So just by giving customers the chance to complain (or encouraging them to do so), companies can hit two targets: reduce negative word-of-mouth and decrease dissatisfaction.
Both studies show that accepting and even nudging customers to complain is beneficial. How can companies do that?
What can companies do about non-complainers?
There are, broadly, three distinctive modes of engagement with customers: Listening, Asking, and Predicting.
Listening
In the listening mode, companies rely on customer to tell them that something is wrong. This includes for example all company-owned channels of communication, such as the call center, their website, email addresses, and so on. In the recent years, companies can also listen much more effectively to what their customers are saying via external channels, such as social media and customer review websites. Having this information, companies can then go on and attempt to remedy the issues to save the customer from churning. These channels are typically always-on and open to all, which is of course the way they should be. They also allow companies to personalize their responses to the specific case, which is a benefit.
Nevertheless, this mode of engagement still relies too much on customers' proactivity in sending feedback. As we saw, very few of the unsatisfied customers will reach out to the company, which leads to a rather low number of interventions they can do (although I'm sure contact center managers will challenge my use of 'low' in the last sentence).
One thing companies can do is to nudge customers to share their concerns by making the channels of communication more visible or by offering channels customers prefer. Still, this is only a partial solution. What else can companies do?
Asking
Next to the Listening mode, many companies employ the Asking one to gather even more feedback from customers. Quantitative surveys are the prototypical example here - large scale company-initiated studies now abound and the market for self-serve CX measurement platforms is booming.
These studies no doubt add a lot of value to what companies already know from the Listening mode. If done well and acted upon, they also allow for personalized and timely replies to customers, which is beneficial for the relationship.
But all of these studies, because of their very nature, are not a silver-bullet. On one hand, you can really survey all of your customers every month for example. It's just not practical to bombard people with questionnaires. And even if you do it, far from all would reply. Response rates vary significantly between audience types and study design, but wouldn't typically exceed 30-40% and more often than not about 20% of all customers would fill in the survey. Again, that's not bad per se, but it still leaves a large gap in your understanding of non-complainers.
Predicting
Enter the Predicting mode of engagement. While the previous two modes require an interaction between the company and the customers, be it customer- or company-initiated, in the Predicting mode you do all the work in the background. With the amount of data available for customers in most businesses, and with the state of the data analytics know-how, it is now possible to predict which customers are unhappy with your service, even though they might not have filed a complaint. Just like the Listening mode, it is always-on, and like both Listening and Asking, it allows for a personalization of the response. The major difference, and the tremendous benefit, of the predicting path is that it offers the only way to cover your full customer base.
The downsides of it are both manageable and, in the opinion of yours truly, will become less and less relevant in the future. On one hand, building a predictive algorithm requires a rather large amount of data. There are major differences between industries as to the level of data availability, and even between companies within the same industry. But both gaps are closing down as more and more businesses become data-driven ones.
The second downside of the predictive algorithms concerns their accuracy. Chances are, no predictive algorithm will ever be 100% correct. The social world is just too complex and complicated for this level of certainty. Most algorithms in the customer experience domain I'm aware of operate at 75-85% accuracy and I have to say, this is an excellent result compared to the scale benefit they provide. And algorithms' accuracy is likely to increase in the future, as we gather more and more data.
All in all, while not ideal, predictive algorithm offer unprecedented scale up opportunities for companies looking to engage with more of their customers.
Oh, and one last point. Remember the chart from the study by Clay Voorhees, Michael Brady, and David M. Horowitz we had a look at above? There is something I didn't tell you back then.
The group with the highest repurchase and the lowest word-of-mouth intention is not the one that complained and received a satisfactory recovery. It is the customers that did not complain but received a company-driven recovery that have the highest repeat purchase and the lowest negative word-of-mouth intention. In other words, if a company addresses a possible dissatisfaction proactively, it will boost these crucial customer metrics to new heights. Have a look at the dark blue bar on this chart.
Going back to the ways of connecting with customers, only one of them gives you the opportunity to do this kind of proactive complaint management - the predictive mode of engagement. This is the only mode that allows you to act and bridge a satisfaction gap before it escalates.
I hope this inspires you to learn more about your customers who don't complain and about predicting customers' behaviour to address any discontents proactively.
My best wishes for a great day ahead!
Sources:
Goodman, J., 2014, Customer Experience 3.0: High-Profit Strategies in the Age of Techno Service
https://www.adrianswinscoe.com/2010/05/not-many-complaints-but-still-losing-customers/, retrieved on 21/11/2020
https://knowledge.wharton.upenn.edu/article/beware-of-dissatisfied-consumers-they-like-to-blab/, retrieved on 21/11/2020
Voorhees, C.M., Brady, M.K. & Horowitz, D.M. A voice from the silent masses: An exploratory and comparative analysis of noncomplainers. JAMS 34, 514 (2006). https://doi.org/10.1177/0092070306288762
Richins, M.L., Verhage, B.J. Seeking redress for consumer dissatisfaction: The role of attitudes and situational factors. J Consum Policy 8, 29–44 (1985). https://doi.org/10.1007/BF00380281
Piyush Sharma, Roger Marshall, Peter Alan Reday & Woonbong Na (2010) Complainers versus non-complainers: a multi-national investigation of individual and situational influences on customer complaint behaviour, Journal of Marketing Management, 26:1-2, 163-180, DOI: 10.1080/02672570903512502
Nyer, P.U. and Gopinath, M. (2005), Effects of complaining versus negative word of mouth on subsequent changes in satisfaction: The role of public commitment. Psychology & Marketing, 22: 937-953. https://doi.org/10.1002/mar.20092