• Ivaylo Yorgov

CX Science: complaint-handling initiatives that work


What:

  • The complaint-handling solutions that work best are those that deliver on the benefits customers desire.

  • When mitigating service failures, match the harm the failure has done to your recovery strategy.


Now what:

  • Aim to restore the relationship and the trust with customers you have a strong relationship with by acting quickly and provide appropriate communication

  • For customers you have a weaker relationship with, compensation is key.



In a previous post we discussed how important it is for companies to pay attention non-complaining customers; they come in high numbers and often cause more damage than complaining ones.


Still, what is a company to do when customers complain? This is, perhaps, a rather straightforward question: it can provide compensation, it can deliver an apology or at the very least - an explanation, and it can do all of that in a timely fashion.


But what, Jesus Cambra-Fierroa, Iguacel Melerob, and F. Javier Sese wondered, is the right mix between these? Do all customers react positively to such initiatives? And if not, how is a company to decide what to offer each customer?


They embarked on an investigation program to analyze 24 months of data from an European bank to understand which initiatives work and which have less impact.



The building blocks


First off, Cambra-Fierroa, Melerob, and Sese made a very reasonable suggestion. Which company responses to complaints work is contingent on two things: the strength of the relationship between the customer and the company, and the failure type.


Relationship strength:

Simply put, relationship strength shows how firm is the connection between the customer and the company, and how much would the customer desire to keep it alive even in the face of adverse events.


Failure type can be:

  • economic, "...such as defective and malfunctioning products or mistakenly charging a superior price for a product or service, and they produce financial or material losses for the customer." *

  • or non-economic, i.e. "...long waiting times, rude treatment by the personnel, or lack of attention..." *


This gives us a neat 2x2 matrix, in which you have four types of customers: strong relationship who experienced economic (1) or non-economic loss (2); and weak relationship who experienced economic (3) or non-economic loss (4).


The last piece of the puzzle: what can companies potentially do? Three things as the authors suggest: provide compensation, communication, i.e. apologies/explanation, and timeliness of response.


What they hypothesize (and find) is that different customer types react positively to different approaches. Read on.


So what is a company to do?


Although many companies provide compensation for flawed service or product, this might not always be needed. Consider this: there is powerful evidence that customers who have a strong relationship with companies are more interested in the symbolic side of things; they want to recover the relationship more than they want to gain financial benefits. This is exactly what the authors found in the study:

  • For strong relationship customers, compensation was actually the least important of the three recovery initiatives.

  • Timeliness and communication are paramount to customers who have firm ties with the company, especially to those who experienced an economic loss

  • Those who encountered a non-economic loss were most happy with proper communication.


Au contraire, for customers who didn't have a strong relationship with the company, compensation was the number 1 driver of positive reaction to complaint-handling.


In a nutshell, there is a reserve of trust and patience that you build as you develop your relationship with customers. It pays off in situations like service failure, in which those you have a strong relationship with will be happy with a timely response and good communication. As for customers that don't hold a strong positive sentiment towards, well, you'd better compensate for their inconvenience financially.



I hope this inspires you to explore on an even deeper level how can you make the most of your complaint-handling initiatives. My best wishes for a great day ahead!


CX Inspirations - card 27
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