Is your complaints procedure stuck in the past?
Author: William Archer
As the folk musician Bob Dylan once famously said: “The times they are a-changing”. Nowhere is this sentiment truer than in the realm of customer services. The modern customer now has different wants, needs, and desires. They are more knowledgeable, better connected and are not afraid of making their voice heard. The change is sufficient enough that old methods of customer dispute resolution rarely apply.
This new reality was highlighted in a presentation by Professor Moira Clark of the Henley Centre for Customer Management at the recent Resolution Forum hosted by Resolver. The customer of the 21st Century is getting older. According to the Office for National Statistics, by 2040 nearly a quarter of the UK population will be over 65, compared to around 18% today. Things like social media and mobile technology have also made customers more empowered. Customer values are also changing.
The modern consumer is more “experience orientated” than ever before. Professor Clark explains that individuals do not just judge the quality of a product or service directly, but do so in relation to how the product or service helps the consumer achieve their goals. A customer wants to feel a company is easy to deal with, this means not spending a significant amount of time and energy dealing with issues when things go wrong.
This is an area where a lot of companies are failing. According to Ombudsman Services’ Consumer Action Monitor, there were 47 million active complaints in 2017, down 14% from the previous year (55 million). On the face of it that looks like an improvement. The reality, however, is far more disappointing. The same report reveals consumers had 173 million issues with products and services in 2017, but only 27% took these complaints to the service provider or vendor. This reveals a long-term frustration among consumers, with 69% saying they were resigned to poor service in one or more sectors.
This is an expensive mistake. Last year’s Consumer Action report estimated that the cost of poor customer service cost an estimated £37 billion in 2016. The worst hit sector was retail which accounted for 24% of complaints, costing the industry an estimated £10 billion in revenue.
Customer retention pivots on how customer complaints are handled, explains Professor Clark: “[Customer retention] demands proactive customer support and the ability to identify issues before they become problems.” This means gaining a better understanding of the customer. Professor Clark adds: “Companies are good at collecting data, lots of data, but we don’t get insight from that data and we don’t action that data.”
Understanding and then harnessing the power of this data is an essential tool to pre-empting problems and better dealing with issues when they arise. An example is in how the Henley Centre for Customer Management, using Resolver data, found that case duration (how many days a complaint took to be resolved) had a bigger impact on customer satisfaction, and likelihood to recommend, than the number of interactions (emails back and forth).
This insight is integral to ensuring your business is easy to work with, because if you can make it easy for your customers, that drives customer retention, which in turn drives advocacy and business performance. By finding out what the customers want, one is better equipped to challenge the practices and procedures that make it difficult for customers to complain. The solution is having the right platform that gives your organisation the insight and tools it needs to disrupt old models of dispute resolutions and adapt to the modern consumer. If we are not innovating now, then we are already slipping behind, and our potential revenues are blowing in the wind.