Three ways to increase customer retention using complaints

1st Dec 2008

In times of economic uncertainty, customer retention is the biggest challenge facing firms. Matthew Hendy outlines the three step process that has been adopted by leading companies to successfully increase customer retention, whilst allowing them to transform their company into one that is led and informed by their customers’ voices.

By Matthew Hendy, Charter UK

The single biggest challenge facing organisations in times of economic uncertainty is undoubtedly how to increase customer retention. Independent research conducted on behalf of Charter UK, found that 78% of organisations believed that managing complaints will help to retain customers yet most businesses were unsure of how to achieve this.

It is well regarded that companies can grow profitably by focusing on their customers and that customer retention is a key business strategy for a competitive advantage. However, it seems that organisations are increasingly investing more time and money in attracting new customers at the expense of their most important source of profitable growth and income – their current customers.

But there are solutions to this problem, the key of which is listening to and interacting with existing customers, and encouraging and utilising feedback. Here is a three step process that has been adopted by leading companies to successfully increase customer retention, whilst allowing them to transform their company into one that is led and informed by their customers’ voices.

  1. Interact with your customers – post complaint feedback

    It is a fact that less than 5% of customers who have experienced a problem with a business will ever actually make that complaint to the company. However, if you can encourage your customers to voice their complaints, you have a chance to resolve the problem and to turn them into an advocate.

    Assessing your current service capability will allow you to target customers who have already complained to you to ask them about their experiences of customer interaction. This will also make it clear whether individual customer issues have been dealt with to the customer’s satisfaction, and most importantly provide the ability to assess your business’s retention potential.

  2. Identify, Evaluate and improve on weak points

    It is vitally important that you internally assess the customer service culture of your organisation. This can easily be done by measuring and monitoring the level of service that you give to your customers in all areas of your operations, such as call centres.

    Ongoing feedback will enable you to identify and instantly improve weak points in real time. These areas include monitoring the quality of your representatives’ service at call centres, the level of customer care by technicians and service representatives during field service and internet eserivce. Proactive ongoing customer feedback is vital in providing an organisation with accurate information regarding their customers’ experiences.

    Continually listening to your customers’ thoughts and feelings will allow your business to discover if your customers are satisfied with the products and services they receive. Analysing your customers feedback will help you understand the organisation and will allow your business to truly understand its current position and most importantly identify areas for customer service improvement.

  3. Identify and understand your weak points whilst completing the complaint cycle

    With the information gathered from customers, businesses must use this important data to proactively contact customers at risk and close the cycle by proactively managing customer retention. Remember proactivity is known to improve customer satisfaction. Treat any customer negativity as a possible loyalty leak. This loyalty leak should be passed on the dedicated complaint team for handling as soon as possible.

    It is vital that when responding to customers who have complained that your company does so in the same detail that your customer did and do so quickly. As soon as a complaint is logged, a consumer can instantly be informed who is taking care of complaint, what process will be taken and how long it’ll take - music to the consumer’s ears.

  4. Ensuring that the company has closed the cycle, your business will now have a new and valuable source of information from a customer that you had never heard from before. There are many benefits to your business which include that your customer loyalty potential is vastly improved and a positive word of mouth recommendation is viable. With this new found knowledge of customer information, your customer base will be vastly improved. This will allow you to report how important your customers are to your business and to make sure that they are being treated fairly.

    It is essential that you produce a customer retention report that records all the steps you have taken to fix individual customer problems and to fix the root causes of those problems. This report should provide a detailed analysis of the efforts of a customer service team and actual figures for the customer satisfaction and retention rates that these efforts have generated.

    Producing this report will ensure senior executive buy-in to the process. Once the benefits are well documented and supported by evidence, the leading companies have experienced greater levels of investment in, and executive support for the customer service function. This has, in turn, increased customer focus and had a further positive impact on customer satisfaction and retention. It is an upward spiral that starts with a desire and ability to demonstrate how you have made a difference.

    Matthew Hendy is head of product development at Charter UK.


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