Chapter 12

 Complain, Complain, Complain

The nerve of Mrs. Smith asking you for a refund. How dare she claim your product did not satisfy her needs. It must be her fault she didn’t get any good use out of it. If she wants her money back, she’s crazy. Once she bought it, she owns it.

Replies you might give Mrs. Smith:

What’s going on here? Well, clearly, Mrs. Smith is not having a good day. And there is a very good possibility that you’ve heard this story at least once in your life as a customer. How did you feel? Did you feel appreciated by the vendor? Or did you feel taken? After telling you to go and take a hike, did you feel an urge to be loyal to the vendor or did you feel the need for rapid and painful revenge?

Obviously, you want your customers thinking loyalty, not revenge. At the same time, you must be careful that in satisfying the customer you don’t go broke by giving away the business. In this chapter, we’re going to look at the value a complaining customer can bring to your organization. We’ll also show you the methods you can use to deal with the complainers and turn them into loyal and satisfied customers.

Complaining Customers Are the Best

Studies show that most dissatisfied customers don’t complain. They would rather stay silent and take their business elsewhere when there’s something they don’t like about your product or service. After all, there’s a great deal of effort required to lodge a complaint.

To complain is a hassle. You need to take the time to determine who should hear your complaint, and then you need to communicate the complaint by writing a letter or making a phone call. Most people feel it isn’t worth the trouble to go through this effort. After all, there are plenty of vendors out there who offer the same type of products and services. So most of your unhappy customers simply lodge their complaints by going to your competition.

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 Quote, Unquote
Some of our best service innovations evolved out of customer complaints. These innovations contributed to Hertz winning the J.D. Power Award for Car Rental Customer Satisfaction in 1997.
—Bob Bailey, Sr. VP Hertz

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This is why you must treat the people who do take the time and make the effort to complain as valuable customers. If one customer is complaining, there’s a strong possibility that at least 20 other customers feel the same way but didn’t bother to speak-up about it. It’s the complainers who provide you with tips about what problems are brewing out there in the land where your customers use your product.

Complaints provide the early warning signals that allow you to fix problems you may not even know existed, and prevent your competition from stealing your customers. At the same time, some complaints may have nothing to do with defects. They may relate to customer expectations of your product; the unhappy customer may be communicating what she really wants from your product. Those kinds of complaints can give your product development efforts—and then your sales—a real boost. When you think about complaining customers in this light, you tend to have a totally different image about them than a bunch of whining malcontents.

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 Watch It!
You may receive a small number of complaints about a given issue. But if the small number of complaints come from your largest, most important customers (remember the 80/20 rule from Chapter 5), you need to respond. Volume alone doesn’t always tell the whole story. Who’s complaining can be more important than the number of complaints.

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For example, when it came to providing shuttle bus service at the airports, Hertz’s focus was on driver training to deliver customer service: teaching drivers how to help with luggage, make correct announcements in sequence, and so on. The drivers were doing a good job. What Hertz wasn’t initially aware of was that the most important thing to customers in busing service was bus frequency.

The company received complaints from people who felt like they were waiting for 15 minutes, when in fact the average wait was no more than 7–10 minutes. From these complaints, Hertz set a standard of 5 minutes maximum wait, when in most cases the wait now is between 2 and 3 minutes. To deliver this service, Hertz had to first listen to its unhappy customers and then invest a huge sum of capital on additional buses and drivers to please them.

Profiting from Complaints

For Hertz, business people represent their biggest market for car rentals and their biggest priority is speed. What Hertz found out from customer complaints was that it excelled in speed of service in picking up the car, but failed in speed of service in dropping off the car. Business people didn’t have time to go inside to a counter and wait in line to turn in their cars. It would have been cost prohibitive for Hertz to staff the counters appropriately to limit the desired wait to less than a couple of minutes.

Hertz came up with their Instant Return solution. With Instant Return, the moment you pull into the Hertz lot, an attendant punches the vehicle identification number on the windshield into a hand held wireless computer hooked up to a mainframe computer. By the time the customer gets out of the car, to many people’s amazement, he or she is greeted by name. Only two questions need to be answered: how many miles did you drive? Did you buy any gas?

After the information is entered into the portable computer/transmitter, it prints out the receipt. The close-out transaction is complete in less than a minute, versus up to 10 minutes in line. The system ensures the customer does not miss his plane and provides Hertz with estimated labor savings of 20 percent. A classic win-win situation evolving from customer complaints.

The examples in the Hertz story did not come about by accident. Hertz had to do more than just answer the phone when the complaints came in. It had to truly hear the customer and turn those complaints into profitable value-added services guaranteed to make its customers happy. Let’s take a look at the steps you can take to turn your customer complaints into profits.

Beyond Listening

Besides listening to a complaint, it’s imperative that you ask the customer what the expectations are for an “acceptable level of service.” Without this information, you won’t be in a position to adequately solve your customers’ complaints.

Determine the Scope of the Problem

Using the general rule that about 1 out of 20 unhappy customers will complain, keep track of all complaints. If 100 people make the same complaint, there is a good possibility that 2,000 people feel the same way.

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 Watch It!
Dealing with complaints on a piecemeal basis and not on a cumulative basis is a recipe for disaster. One complaint on an issue is an inconvenience. Several complaints on the same issue are the tell-tale signs of a major problem. Don’t mistake a major problem for being an inconvenience. Keep a record of the number of complaints you receive on a particular issue. The numbers can only tell you a story when you’re collecting them and paying attention to them.

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If the number of complaints on a single issue represents a sizeable portion of your market, you need to take action. If an insignificant percentage of the market complains about something, then you may decide not to take any action at all. It could be that the complaints came from a section of the market that you aren’t capable of or looking to service.

Developing Actions

When the number of complaints about some aspect of your product or service is significant, you need to identify actions to address the issue. The simple process to follow is:

1. Identify the desired results.
2. Evaluate your current results. (The difference between 1 and 2 represents the ground you need to make up in providing a solution.)
3. Create a plan to improve performance to satisfy and delight your customers.

Utilize All of Your Resources

Solving complaints doesn’t always center on throwing more bodies and money into the battle. As Hertz found out in its close-out transaction procedures, that would have been too cost prohibitive, and perhaps even less desirable than the technology-based solution it created.

Your goal is to achieve maximum customer satisfaction and profitability. Evaluate every resource in your arsenal and at your disposal. Today, technology is an excellent source of achieving efficiencies with good returns on investment. Keep in mind that technology still requires an appropriate balance of high tech and high touch. World Class Service will always involve the appropriate touch of human interaction. Hand-held computers in a parking lot are useless without the right people implementing the transaction between the customer and the computer.

Turn Your Solution into a Sales and Marketing Tool

Now that you have increased your level of customer satisfaction, why not shout it out to the rest of the world? Don’t be shy. Turn your great customer service into a tremendous marketing tool. Tell the public how you satisfy your customers and what they can expect from doing business with you. Your customers want to hear this information. In many cases, it can represent a value-added benefit that separates you from the competition. Excellent customer service really does play a vital role in the marketing approach of a company. It’s no longer a departmental issue. It’s a company issue.

Guarantees and Warranties

Remember watching those commercials on TV that proclaimed “Money Back Guarantee”? You might have thought there was something wrong with the vendor. After all, who would be so foolish as to put themselves at risk and offer a money back guarantee?

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 At Your Service
Guarantees eliminate customer risk, which can be a barrier to customers trying your product. Guarantees also can help distinguish your company’s claims of quality from other competitors. Plus, they provide you with an opportunity to identify your weak links: a product that fails to deliver as expected is more likely to come to your attention when the customer seeks warranty service than if the customer simply replaces your product with one from a competitor.

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Well, companies that offer a money back guarantee tend to be some of the most successful companies out there. And it’s not because their products are so superior. Don’t get us wrong. Most of them have quality products! But what’s important here is not only their quality, but also their willingness to stand behind their quality. These companies have figured out that a very small percentage of people really do ask for their money back (unless the product is truly not working as promised). So their perceived risk in offering this guarantee is far outweighed by the extra business it brings into the house.

Think about when you purchase something. Do you feel a little bit more secure if the product you are purchasing is backed by a money back guarantee? You bet you do!

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 Tales from the Real World
A few years ago, Don bought a Compaq personal computer because of its reputation for reliability—backed by a three-year warranty. Two years and nine months into the warranty, the computer’s motherboard—the real brains in the box—failed. A call to a toll-free 800 number found a helpful technician who recommended taking the computer to any one of several local authorized service centers for an immediate, free replacement of this very expensive part. The computer went into the service center at Office Depot at 10:30 on a Sunday morning and was back in operation, good as new, Wednesday afternoon. No hassles. No fits. No charge. Cool!

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Other traditional guarantees and warranties include:

Limited Time Refunds—Some companies will provide you with a full refund if the product is returned in a specified period of time with a receipt. Some companies, like Nordstrom, will not let a lost receipt interfere with providing satisfaction to a customer.

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 Watch It!
Whatever your policies are on guarantees and warranties, make sure they’re clearly spelled out in legible print. Put them in your instruction manuals, on receipts, etc. Don’t leave any room for confusion, which can lead to disputes and negative impressions.

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Exchanges and Credits—Some vendors will offer additional guarantees after the initial period for refunds has expired. These guarantees are in the form of exchanges or credit for an extended period of time. L.L. Bean offers guaranteed satisfaction without regard for how long you owned the product.

Limited Warranties—Some companies provide extended warranties for defects over a period or lifetime of a product. Usually, these warranties aren’t valid for damage caused by wear and tear beyond “normal” circumstances (such as using your passenger car as a delivery vehicle). Other limited warranties will provide protection for certain parts and services, but not for day-to-day service. An example is in the car industry. Major repairs like transmission work may be covered in the first three years, whereas oil changes and other routine maintenance are considered normal operating expenses and are the responsibilities of the customer.

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 Word to the Wise
According to our friends at Oxford University Press, a guaranty is a formal promise or assurance that a promise will be fulfilled or that something is of a special quality and durability. A warranty often involves accepting responsibility for defects or liability for repairs needed over a specified period of time.

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But even here, some dealers are expanding warranty coverage to include routine maintenance (Don’s Toyota Camry came with a free oil change every 7,000 miles from the dealer). And some car manufacturers are trying to eliminate routine maintenance all together. Some Chevrolet models go 100,000 miles without a tune-up. And virtually all car batteries no longer require frequent checks on the water level. The goal: create customer satisfaction and loyalty.

Unlimited Warranties—Some companies, like Hammacher Schlemmer, a retailer “offering the best, the only, and the unexpected for over 149 years,” value relationships with their customers too much to argue with them about whether or not the problem was related to normal wear and tear. They will provide refunds and exchanges with no questions asked at any time. They feel the costs involved in this strategy are far outweighed by the loyalty developed with their customers.

Transform Your Complainers into Referral Champions

You can view your customers who complain as being a nuisance, or you can view them as potential champions of your long-term success. Turning complaints into positive experiences is a sure-fire way of developing loyal customers who are guaranteed to spread the word. Studies show that customers who complain and receive fast, satisfactory resolution to their complaint are actually more likely to be repeat buyers than customers who had no problem with the product in the first place!

When you offend a customer, you need to implement a turn-around experience. One way is through giving something beyond a strict one-for-one exchange of products. The giveaways you’re willing to part with in order to promote goodwill with your customers in times of conflict might be called Turn-Around Promotions.

In addition to Turn-Around Promotions—which always take place after you’ve disappointed a customer, you can generate Goodwill Promotions with your customers by using a variety of promotions to show appreciation for your customers’ business on an on-going basis. This helps foster a general sense of appreciation for your customer’s business and makes it much easier for her to forgive you when you do occasionally disappoint (as you inevitably will).

Let’s take a look at some examples of both types of goodwill-generating promotional gestures:

• Volume Rebates—You can offer customers rebates or price discounts in exchange for certain amounts of business. Examples include Preferred Customer discount cards, frequent flyer bonus miles, the cash-back feature of the Discover credit card.

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   Word to the Wise
  Goodwill Promotions involve gestures on your part— rewarding customers for their patronage, like offering 6 shirts for the price of 5 shirts. Turn-Around Promotions involve giving a peace offering to help make up and compensate for any inconvenience.

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• Goodwill Freebies—This is all the free stuff you offer customers in return for their patronage. A free after dinner drink at your favorite restaurant is an example.
• Recovery Freebies—Offering services or products for free in addition to replacing those that were damaged to begin with.
• Recovery Interaction Personally—Calling someone to handle and solve a complaint.
• Goodwill Interaction—Writing or calling your customers to tell them how much you appreciate their business—not because they have a problem, but because you really do appreciate their business.
• Goodwill Follow-up—Regularly scheduled calls to make sure your customer is satisfied with his purchase.

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   Quote, Unquote
  We don’t feel we’re particularly good at or are experts in customer service. We’d rather practice it than talk about it. We know that good customer service is a fluid situation and that it can change the moment a customer has a negative experience. We are vigilant in doing what it takes to avoid this from happening.
  —Nordstrom Spokesperson

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• Recovery Follow-up—Calling a customer to see if the solution provided to a previous complaint is satisfactory to the customer.
• Goodwill Inclusions—Including, at no charge, extra costs such as shipping and handling when the customer places a large order.
• Recovery Inclusions—Paying the costs of overnight delivery when the product didn’t arrive on-time as promised.

As you can see, Goodwill Promotions are good marketing tools. The Turn-Around Promotions transform your complaining customers into champions who will freely promote your business and excellent service to their colleagues, friends, and family. While both of these types of promotions are important, which one do you think carries greater impact?

The True Cost of Service

You have a great product. You’ve trained your personnel to be warm and cordial. You’ve given them all the systems and processes to use to help satisfy customers. With all of this support, why is it that some customers are still not satisfied?

Well, some people are never satisfied. But if you’re failing to please many of your unhappy customers, it likely has to do with the limitations of your support system. In order to satisfy a disgruntled customer, does your staff have to get approval on every action that would please a customer?

It’s very clear that some of the best service companies create a responsive, customer-pleasing system by empowering their line employees to satisfactorily resolve customer issues. From the bellhop at a Marriott hotel to the sales clerk at a Nordstrom store to the salesperson at an industrial equipment company: responsive service comes from responsible service people.

The Cost of Responsibility

There’s a legitimate question about how much authority you should give employees in making final decisions on service. After all, you don’t want to give away the store, do you?

The idea is to construct a system that doesn’t restrain or discourage employees from handling situations immediately. The trick is designing a system that empowers employees to do what they feel is right at the time while being held accountable for their actions.

Some organizations authorize their employees to exercise their judgment up to a certain dollar limit. For example, giving a customer a refund or credit up to, say, $500 or $1,500 without another approval.

Some retail stores pay their sales clerks commissions and/or bonuses. This type of pay motivates the sales clerks to do whatever they can to make a customer happy and want to come back. While at the beginning they may sacrifice some commissions by incurring a charge back for returns, they ultimately will receive far greater commissions from the future business a satisfied customer is likely to bring both directly and indirectly through referrals.

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 Quote, Unquote
We empower employees to do what it takes to satisfy their customers without management approval. It’s important that the customer is happy. Only then will the customer keep coming back and continue to buy more from us. Returns do alter department sales revenues and commissions, but salespeople look at the total picture vs. the short-sighted viewpoint for maximum return. As for training our employees on how to satisfy our customers, we concentrate more on hiring nice people and getting out of their way.
—Nordstrom’s Spokesperson

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Both of us believe there needs to be some fiscal restraint and responsibility in an organization. You need to place reasonable fiscal limits on your trust. The fine balance is between your cost and the risk of having a customer feel they were improperly treated—never to spend another cent with you.

To determine whether or not your current system of empowering employees to handle complaints is adequate for your business, please take a moment to answer the questions that follow.

Are You Worthy?

Ask yourself the following questions to determine the worthiness of your current service process:

1. To handle complaints and make exceptions, do your service personnel need management approval? ___ Yes ____ No
2. If you answered yes to Question 1, does the process for management approval slow down the process for satisfying your customers? ___ Yes ____ No

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    At Your Service
   You can tell customers anything you want to. You can tell them how much you appreciate their business. How their time is valuable and how your intention is to do whatever you can to make them happy. Say whatever you want. But it’s your actions that count. Your customers will only hear and believe what you have to say through your actions. Make sure your actions support your mission and promise to the customer.

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3. If you answered yes to Question 2, then the most important question of all is: Does your service process of gaining management approval negatively affect your overall mission and promise to your customers? ___ Yes ____ No

If you answered yes to Question 3, then you must reevaluate your current system and make appropriate changes. You’ll find some helpful ideas in Chapters 15 and 19.

You can be bold and rely on human nature to make the right calls in resolving customer conflicts. You can also help by educating your employees in how to respond and the various ways they can respond to create a PPMI without giving away the company. Only you can decide how much freedom you want to give your employees to make things right for the customers. Just make sure your process doesn’t restrain your employees from carrying out your overall mission and promise to the marketplace.