Third of three parts

When you’re dealing with complaints, it’s a good idea to bear in mind Al Capone’s motto: “Don’t take it personally, it’s just business.”

There’s a very positive side to complaints they tell you about problems you may not have been aware of. So they give you the chance to improve your products and services, your relationships with customers, and ultimately your profits.

Complaining customers are giving the company a second chance. And customers are more motivated to buy from you at the time you resolve their problem effectively, than at any other time.

Turn customer complaints into sales. All the evidence we have seen shows that retention rates are strongly linked to the way you handle complaints, and that if you handle the complaint well, this can lead to even stronger customer loyalty.

Whenever someone complains, the problem needs to be resolved satisfactorily and quickly. Here is a five-step approach to help you do this.

1. Apologize. Say you are sorry for the inconvenience caused. Accept responsibility for the problem and its resolution. Be sincere. Listen carefully, without interrupting. This will encourage an irate customer to get everything out of his/her system. Make sure you don’t act as if you’re bored, skeptical or distracted. Try to isolate the complaining customer from other customers with minimum fuss and maximum speed.

2. Restate the facts. Having noted all the details of the complaint, restate the problem to make sure you understand the situation and that both you and the customer are in agreement. Tell the customer that you will do everything in your power to resolve the situation immediately. Tell the customer what you’re doing and the time-scales involved. Even if you can’t resolve things to the customer’s full satisfaction, he/she will perceive that you are sincere and intend to help.

3. Be sympathetic. Never argue with the customer and make sure you do not appear hostile or defensive. Avoid patronizing phrases, such as, “Now what seems to be the problem?” Or, “Now let me see if I’ve got this right?” Just show them and tell them you understand how they feel.

4. Restitution is the name of the game. Do whatever it takes at this point to satisfy the customer. Give them a credit note. Or make an exchange. Tell them, or show them, that you will make it up to them in a special way.

5. Follow up. This is the point at which most programs fail. It’s also the point at which you can create a customer for life. Take the trouble to ask a simple question or two at the end of your conversation. “Have we resolved your complaint to your satisfaction?” “What else may we do for you?” If appropriate, after a couple of days, phone the customer to make sure he or she is still satisfied. In addition, you could send a letter, enclosing a coupon or gift voucher.

Don’t forget to keep a record of everything said and done, since this will be invaluable next time the customer does business with you. Finally, make absolutely sure you take all the necessary action to avoid the problem recurring.

Complaints provide an invaluable source of information about the state of your business. They reflect the views, aspirations and perceptions of your customers and should not be wasted. So start by introducing a structured system for assessing complaints.

Manage complaints data as you would financial information. Accurately record each complaint. Collate and analyze the information, looking for trends. Identify the type of complaint to assess whether it’s an isolated incident or a wider problem. Pinpoint the source of the problem. Use the information to rectify the problem, so that it does not recur.

Once you have assessed the information, feed it into the management system accompanied by the intended action, resolution times and the commercial impact.

Common traps to avoid when dealing with customer complaints:

Don’t look upon complaint management as external to “real business.” If handled correctly, it can generate revenue and improve customer loyalty.

Don’t assume that when a complaints procedure has been adopted, the task is over. It must be constantly monitored, refined and upgraded.

Don’t allow your advertising to raise customer expectations above your ability to satisfy them. This is a sure way to encourage resentment and increase complaints.

Don’t assume you know what customers want. Keep asking them regularly.

Don’t assume that because customers haven’t complained, they are satisfied.

Don’t become complacent even if you are alone in the marketplace or a market leader, things could change.

Don’t forget your reputation is hard to establish, but easy to lose. Complaints need to be resolved swiftly, or dissatisfaction can spread through your customer base.

Don’t view complaints as disasters, but as a way to improve your service.

Don’t assume the person complaining is trying to “con” you. They’re telling you clearly what they expected and their perception of what they received.

Above all, don’t forget the value of a complaint. It’s far better to hear something negative from a customer than to never hear from them again.

David Brown is managing director of Ogilvy & Mather Direct, Los Angeles, a 25-year-old international direct marketing agency.

Small Business is a regular column contributed by EC2, The Annenberg Incubator Project, a center for multimedia and electronic communications at the University of Southern California. Contact Dan Rabinovitch at (213) 743-2344 with feedback and topic suggestions.