Give your customer loyalty bounce by managing customer complaints better

I was preparing recently for an upcoming client seminar on how their service strategy and how they manage complaints should be an essential part of their growth strategy.

We all know about complaints that we actually get and I have shared a few thoughts on how we handle complaints before: How you think about complaints will determine how you deal with them and Leadership: When it comes to customer complaints are you setting the right example? are a couple of examples.

I’ve also written about the complaints that we don’t get in: Are You Not Getting Many Customer Complaints But Are Still Losing Customers? which features the ‘Complaints Iceberg’.

But, what was concerning me was how to quantify the effect of being better at managing AND going out and looking for the unspoken complaints that are mentioned in the ‘Complaints Iceberg’.

Then, I came across an idea called the Service recovery paradox, which (according to Wikipedia) states that:

“a good recovery can turn angry and frustrated customers into loyal customers. In fact it can create even more goodwill than if things had gone smoothly in the first place.”

The research on this that I can find (here and here) shows somewhat mixed results but that the service recovery paradox is most likely to occur when:

• The cause of a complaint is not considered to be severe
• The customer has no history of complaining; and
• The customer does not think that the company had much control over the cause of the complaint.

For my client, in a typical year approximately 10% of all of their customer revenue does not renew and I am now wondering how much they could boost loyalty and retain those clients by looking for and handling complaints better.

A lot, I would guess. It’s all about managing the bounce, right?

What do you think of this Service recovery paradox? Do you think it exists in your experience?

Thanks to jonhefel for the image.

Originally posted on www.adrianswinscoe.com.