How important is it for a business to react to customer complaints?

If you’re a business owner, unless you’ve only just started out, chances are you’ve been on the receiving end of a complaint from a customer. Whilst complaints are part and parcel of operating a business, we spoke to several business leaders to determine how important is to deal with them and what kind of impact a complaint can have on a business.

Customer experience expert and Founder of ThinkJar, Esteban Kolsky, says that only one in 26 dissatisfied customers will complain, with the other 25 no longer using your business. However, the one that stays will seek satisfaction in order to continue working with you. So, just how important is it to respond to complainers when they do arise?

According to Melanie Parker, Director of Operations Strategy at Stream Loyalty, complaints provide an important opportunity for your business.

She comments: “In any field of business, it is the quality of the experience that determines how your customers demonstrate their advocacy and loyalty. We can all recount a time where we have had bad service or a faulty product, and whilst we may have been upset, if the complaint handling procedure was good, then it is likely the business was able to turn your negative experience into a positive one.

“A Harvard Business Report demonstrated how dealing with customer complaints in a timely and effective manner often resulted in customers being more satisfied with the business than they were before their complaint. We know that customers rarely provide feedback. In fact, it is estimated that only 4% of customers who aren’t happy actually leave a formal complaint (the others are just silently walking away), so by responding to that one complaint, you are potentially reaching another 96% of customers who had the same issue.”

Grace Goupie, the Co-owner of Goupie, concurs.

She says: “If you successfully handle a complaint, it can sometimes be more powerful in maintaining that customer relationship than if you’d simply satisfied the customer in the first place. That’s obviously not to recommend messing up customer orders, or creating a bad experience on purpose, but we have found that when we have had an issue, handling it with as much care and attention as possible has been a real asset to us.”

Steve Leigh, the Managing Director of Sensu Insight, is wary of the impact negative complaints can have in our modern world.

He comments: “We live in an increasingly interconnected, reputation-led economy. One where negative reviews and comments travel further, last longer and have a significant potential impact on the perceptions of potential customers.

“It is important for businesses to respond appropriately to such complaints, but first and foremost it is important that they listen. For example, the digital signal of content and conversation around your business provides a free source of market research. One where you can see in real-time how you are delighting or disappointing your customers. You can learn the major frustrations and exactly how they make customers feel.

“Complaints present an opportunity to improve perceptions around your business’ ability to engage. Responding to comments shows that these views matter to you and demonstrates how hard you work to put them right.

“Alternatively, your tracking of customer comments may reveal that a complaint is an outlier. One that is not typical of the normal customer experience. In which case there is a judgement call to be made. Is this comment one that is best left alone (abiding by the social media mantra of “don’t feed the trolls”) or one that needs correction or clarification?

“The management of your online community and profile should be dealt with using the same level of care and skill that you would bring to any ‘real-life’ customer service issue. Bearing in mind that you may not want such an interaction to play out in a public, online forum where the reputation risks are even higher.”

Is it more important for bigger or small businesses to deal with complaints?

Whether responding to complaints is more important for larger or smaller companies is an area of debate. Larger companies might have the capacity to hire customer service staff to specifically deal with complaints. However, they are more in the public eye, so it might not take long for an unresolved complaint to become widespread knowledge and cause significant reputation damage.

For Charles Smee, the Managing Director of Transaction Focus, dealing with complaints is important for companies of every size. He comments: “Small businesses probably cannot survive or grow their customer service base without great customer care. However, larger companies tie their clients into longer-term contracts and sometimes hide behind automation. Well-managed CX and Customer Loyalty campaigns can also significantly boost revenue, so it is critical for larger businesses too.”

Leigh provides a similarly mixed response.

“Getting this approach right is important for all businesses, large or small,” continues Leigh. “In the short-term, it is probably more significant for a small business. In that people’s expectations of customer service are likely to be higher and a single complaint will represent a greater share of its overall customer base or profile (if it’s online).

“However, it is larger businesses that probably face the greater long-term risk if complaints are left unchecked. Large businesses can experience significant extra costs if the cumulative weight of complaints creates a poor reputation that becomes the consensus view. It can mean that it has to charge less for its products and services. It may become harder and more expensive to recruit staff. It can mean greater marketing costs to combat negative perceptions as well as becoming a drain on time and resources.

“Once formed, these views are hard to shift (especially for larger companies) and can place an unsustainable burden on a company.”

Dealing with customer complaints

So, if your business does happen to receive a complaint (it almost certainly will at some point), what is the best way to deal with it?

Goupie tends to opt for the personal approach. She comments: “In the modern world, everything is immediate. If a customer sends you a complaint on social media, they’ll expect an instant response, and if they don’t get it, they’ll likely publicly shame you. I don’t think that any business, especially a small business, can afford to not take customer complaints seriously. You can see this trend with businesses such as Deliveroo and Amazon who will pretty much instantly refund any order that doesn’t meet your expectations. Customers are used to this level of service, and as a small business, the only way you can improve on it is with a genuine, and personal approach.

“We like to personally respond to every message, taking care to fully understand the issue before taking action. We have a customer I can think of now who had an issue with her first order with us (in 2017), and so we hand-delivered a second order to her to make sure it got there in time for the birthday it was intended for.

“To this day, I can see that customer order at least once every other month. This is a fairly extreme example, but it shows you the power of positive customer complaint care. A few replacement boxes of chocolate and 10 minutes of our time will ultimately cost us a lot less as a business, than spending months repairing a trashed reputation on social media!”

Or don’t deal with them…

If for whatever reason you’re not particularly interested in dealing with customer complaints, you might be pleased to learn that you are not legally obligated to.

Clive Rich, CEO of LawBite, comments: “There is no specific law that requires companies to deal with complaints. However, there are various regulations in place to protect consumers in their dealings with businesses that do require information about “post-sales support” to be provided before a contract is made and once provided, that information becomes a term of that contract.

“In addition to this requirement from consumer regulations, companies may have included terms in their contracts about handling complaints which would create a contractual obligation to deal with complaints and certain businesses are also governed by professional regulations in relation to dealing with complaints (such as law firms). Each company should consider its own position along these lines.”

However, your legal obligations do vary in accordance with the complaint.

“The legal obligations of a company will vary depending on the nature of the complaint,” continues Rich. “There will be the contractual position with the person making the complaint to consider, any relevant professional and consumer regulations and also specific laws which may be relevant depending on the nature of the complaint.

“As suggested, there are laws which protect individuals against discrimination set down in the Equality Act 2010 which would need to be considered by a company if the complaint raised discrimination as a concern.”

Steve Bolt, Director at BCR Associates, also points out a key upcoming change that businesses operating in the energy sector should be aware of.

He comments: “As a procurement consultant in the energy sector, we are aware of Ofgem’s microbusiness review which will go live on 1st October 2022. The main purpose of the regulation is to protect microbusinesses from misselling and the main element is around disclosure of commission earnt from energy contracts, but another key part is that suppliers and third-party intermediaries will need to follow strict Alternative Dispute Resolution (ADR) protocol around how customers complain in instances of poor/unsatisfactory service and companies will need to register with the Ombudsmen in order to be able to continue to do business with microbusinesses.

“For many players in the marketplace who charge inflated commission and where customer service is not such a priority, this will be cause for concern and will also force a number of organisations out of business or to review their internal processes closely.

“Having such regulation in the energy market will be really useful for businesses who are already struggling with the astronomical energy prices at present, they will be able to use it as a means to check that they are dealing with a reputable company and avoid working with those companies that are not registered with the Ombusdmen.”

“As an ISO 9001 certified business, we have a robust complaints procedure which means that issues are highlighted early and gives scope as part of annual audits to continuously improve processes and provide a better service to the client.”

Should businesses alter their products/services/business model to accommodate a wider range of customer needs?

Earlier this month, US singer Lizzo changed the lyrics in her song ‘Grrls’ after it was criticised for the use of an ableist slur. Lizzo has gone on to receive widespread praise for making her song more inclusive. So, if businesses find themselves in a similar situation, should they also alter the way operate?

Leigh says companies should not necessarily accommodate all needs, but they should never sacrifice inclusivity.

He comments: “Businesses should aim to deliver a consistent level of quality and service that meets with their customer expectations. This doesn’t necessarily mean accommodating all needs. In fact, delivering a specialist, narrow service to a high quality can be that business’ brand identity.

“However, this should not be at the expense of inclusion. Business should endeavour as far as possible to allow customers to engage with them on their own terms. Our expectations as customers have changed and we expect companies to be able to listen and engage in a way that suits our personal preferences and needs.”

Parker provides a similarly mixed message.

She comments: “Businesses today have so much more information available about their customers behaviours, motivations and wants and needs but can this wealth of information lead to solutions becoming diluted?

“As your business develops, there will always be some growth that comes from adapting to changing customers’ needs.  This could be in response to changing economic or political circumstances or a new customer dynamic. Listening to your customer and providing a forum for them to give feedback and express their requirements will enable your business to adapt to the right trends using insights backed up by data.

“Although change is inevitable during the lifetime of a business, it is important to remain committed to your values, your reason for starting the business and the business you want to run. It is all too easy, particularly as a small or medium business, to try and be all things to everybody but this tends to not only dilute your messaging, but it also means that you are competing in a much larger pool of companies for customer attention. The more unique your business, the better your positioning and messaging and the less likely you are to have to compete. Become an expert in your arena.”