How to deal with customer complaints

It makes good business sense to care for your customers well. It costs an average of five times as much to attract a new customer as to retain an existing one. i Not only that, but increasing customer retention rates by 5% can increase profits by anywhere between 25-95%.

An important part of customer care is responding to and resolving customer complaints quickly and effectively. Failure to manage complaints leads to lost customers. But great customer service can actually create advocates for your business. A recent analysis of Twitter found that customers who had a complained on the platform, and received a response from the brand’s customer service representative, were willing to pay more for that brand’s services. ii Yes, that’s right, customers who had a complaint successfully resolved were more likely to pay extra for a company’s services than those who hadn’t complained at all!

Here’s six tips on how to handle customer complaints:

  1. Listen to your customers
    Make sure you fully understand your customer’s problem. Ask clarifying questions as needed.

  2. Stay calm and friendly
    Don’t get frustrated with your customer, and don’t take accusations personally. Be aware that the customer is not attacking you personally, but rather, is upset about the situation.

  3. Act Quickly
    Respond to customer complaints quickly, and resolve them on the spot if you are able. If you’re not able to resolve a complaint straight away, it’s important to follow up in a timely manner.

  4. Keep Track of Complaints
    If one complaint comes up repeatedly this should be a red flag for you to take action. Address the problem at its source and prevent the same mistakes from happening again in order to achieve continuous improvement.

  5. Inform Customers about Relevant Changes and Improvements
    Once you have implemented changes based on repeated customer complaints, let them know about it. It shows them you are taking their complaint seriously and may even help you bring back lost customers.

  6. Train Customer Facing Staff Members
    Your staff members represent your business and have to know how to deal with customer complaints. Explain to staff the best way to address complaints, which kind of complaints require the manager to get involved, and when to report a complaint for further follow up.

The Value of Recommendations and Reviews

A personal recommendation can be valuable to your business, but a bad review can be damaging - especially since searching for online reviews has become an important step in many people's decision-making process over the past years. According to Nielsen’s Global Trust in Advertising (2015) report, recommendations are the most powerful form of advertising, with 83% of survey respondents trusting recommendations from people they know. iii Online reviews and opinions are also important, with 66% rating such comments as trustworthy. These results represent the power of reviews and ratings to influence your business, and the value that great complaints management can add.

Knowing how to deal with customer complaints can help you reduce the risk of losing existing customers. To protect your business from other risks, consider Small Business Insurance from Allianz. Get a quote online today.

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i MyCustomer, 2017, Infographic: Customer Acquisition vs Retention Costs

ii Harvard Business Review, 2018, How Customer Service Can Turn Angry Customers into Loyal Ones

iii Nielsen, 2015, Global Trust in Advertising