Psychologist?Author Guy Winch Ph.D.
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Customer relationship management as customer service dialogue

2nd Mar 2011
Psychologist?Author Guy Winch Ph.D.
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MyCustomer.com

Guy Winch explains how firms can optimise service recoveries and complaints as ways to establish a dialogue with customers.

Companies invest huge resources in customer relationship management as part of their efforts to optimise the customer experience, increase customer satisfaction and customer loyalty, and provide better customer service. Customer relationships, like any relationship, can only thrive if there is input from both parties. But customers’ contribution to this ‘dialogue’ is usually paltry and often limited to whatever companies glean from an analysis of their purchasing behaviours.

Ironically, customers today have more options for providing feedback to companies than ever. Contact numbers are prominently displayed on packaging and company websites provide contact links and live chat options. Customers can rate products and services on vendor websites, leave missives on message boards and provide reviews on portals like Trip-Advisor or Biz-Rate. Facebook, Twitter and other social media provide even more options for customers to communicate with companies about their services, products, and customer service.

Many companies attempt to foster a dialogue with their customers via outreach efforts. Contact centres frequently follow up calls from customers with automated telephone surveys, online retailers add links to customer satisfaction surveys to purchase confirmation emails, and some online pop-up surveys target consumers even before they’ve made a purchase.

Yet despite all these opportunities for customers to communicate with companies and the eagerness of many companies to listen - most customers aren’t talking.

Response rates for most outreach methods are abysmal, online customers ratings suffer from the barbell effect (sampling only from the extremes) and customer satisfaction surveys are about as popular as comment cards used to be - which is to say, they are overwhelmingly ignored.

The perfect opportunity

Providing feedback about their experiences and satisfaction and engaging in a customer service dialogue with companies simply has little immediate value to customers - most of the time. However, there is one occasion in which customers are positively eager to communicate with companies - when they encounter a problem.

When customers have a complaint they become extremely willing to talk with companies and their representatives. Therefore, complaints provide the perfect opportunity to engage customers in a dialogue and they are crucial to companies’ customer relationship management efforts. Complaints represent a crisis in the relationship between customer and company, a test of the relationship. How companies manage a customer’s complaint determines whether their bond with the customer will be deepened or severed as a result.

To conduct successful service recoveries, companies must make it easy for customers to reach live representatives. By doing so, companies can establish a dialogue with customers that can extend beyond the immediate customer service encounter. Engaging complaining customers in a direct ‘complaint handling’ dialogue has many advantages:

  1. Complaining customers who feel their complaints are well handled become up to 10% more loyal to the company than there were before they encountered a problem.
  2. Customers who experience successful complaint-handling spread powerful and valuable word of mouth to numerous friends and acquaintances.
  3. Complaining customers provide information about products, services, and procedures that can help companies fix problems and minimize customer attrition going forward.
  4. Dialogue with complaining customers provide representatives with opportunities to upsell.
  5. Service representatives can inform and educate complaining customers about products, as well as upcoming promotions and initiatives.
  6. Successful service recoveries often require the need for follow-up and thus, an opportunity to continue the dialogue between customer and company into the future.

Despite the many advantages of engaging complaining customers in a dialogue, many companies make it extremely difficult for customers to reach live representatives at these crucial times. Complicated menu trees, ‘planned inconvenience’, and poorly trained call-centre representatives squander precious opportunities to increase customer loyalty and are often a direct cause of customer attrition.

This shortsightedness is even more damaging to companies’ bottom lines because of the negative psychological and emotional mindset it creates in their customers. The more difficult it is for customers to get through to a company, the more hostility they then display toward front line call-center representatives. Unless representatives are exceptionally skilled at service recoveries, frustrated customers are likely to defect to the competition regardless of the outcome.

Indeed, companies that impose long hold times and unnecessary complications risk losing more than just customers by such practices. Call-centre representatives experience an average of 10 hostile calls a day and the stress of handling such calls is a leading cause of employee attrition. The resulting high turnover rates create huge staffing and training costs that diminish the company’s bottom line even further.

Customers for life

Excellent complaint handling and service recovery efforts provide huge returns on investment for companies by enhancing customer loyalty, creating positive word of mouth, and providing opportunities for educations and upselling. Yet despite these realities, many companies still view complaining customers as nuisances rather than as opportunities for creating a valuable dialogue that will only enrich their bottom line.

This kind of shortsightedness has a negative impact on consumer complaining psychology at large. Customers approach most customer service dialogues with anticipatory dread, fearing run-arounds, extended hold times and poorly trained, unhelpful representatives. Their resulting suspicion and hostility immediately places the representative on the defensive. This only further enrages the caller, making it even harder for the representative to salvage the call, thus creating a self-fulfilling prophecy of negative customer service experiences.

Companies with outstanding customer service practices are those that offer easy-to-reach-representatives who are trained to dismantle customer hostility and to offer sincere empathy and authentic apologies. In addition, taking responsibility for timely management of problems and offering follow-up are crucial both to successful service recoveries and to extending the customer service dialogue beyond the complaint handling encounter.

Customer complaints are not the only way to establish a dialogue with customers.

Notifications about upgrades and new models, yearly emails that inquire how the customer’s purchase is holding up and whether they need to replace old product with new, or phone calls to inactive customers to check in or express concern represent additional entry points for maintaining or creating a dialogue with customers. Further, most such initiatives are relatively cost effective.

However, complaint handling and service recoveries remain the most efficient way to engage customers. Complaining customers might be frustrated and upset, but as in any relationship, that is when they most need to talk and when they most need someone to listen. Companies that respond well to these basic human needs provide truly effective customer relationship management by doing so, the kind that turns frustrated people into customers for life.

Guy Winch Ph.D. is a psychologist and author of The Squeaky Wheel: Complaining the Right Way to Get Results, Improve Your Relationships and Enhance Self-Esteem (January 2011, Walker & Company). He can be reached through his website at http://guywinch.com.

Replies (3)

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Jack Springman
By Jack Springman
02nd Mar 2011 10:51

Completely agree with this piece and would like to emphasise the implicit point that truly valuable feedback is qualitative rather than quantitative - dialogue involves words rather than numbers.  The problem is that too often companies are focused on getting customers to score them - this enables a business to know how well it is doing, but without any qualitative feedback (e.g. what specifically it is doing wrong), it will not provide the insights to help it improve.  I think tha this obsession with scorekeeping contributes to customers not wishing to give feedback - there is nothing really in it for the customer if they just provide a score.  This compounds the asymmetry of the company typically wanting a stronger relationship than the customer does - hence the customer's reluctance to engage in dialogue.  This is compounded by the fear that dialogue is really a code word for monologue - if I try to have a conversation with the business I will just be sold to.  Also confirmation bias means businesses really only want to hear positive feedback - that is why, perhaps unconsciously, they make it difficult for people to complain.     

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By mjhill1967
02nd Mar 2011 16:46

Some great points made here. Another issue that I often encounter is the way that too many companies create silos of complaint data - first contact resolutions (often the most important for generating loyalty) are often stored in a text field in a CRM system somewhere if at all, escalated complaints are stored in another field, database or spreadsheet(s), website feedback go to IT/web development and now social media is managed by PR...! And of course, getting an overview of what customers are saying across all these channels is very difficult - but there are solutions that work of course.

CRM systems too often fail to deliver the functionality that is required to effectively manage complaints - especially in regulated service sectors - because they are developed to provide a platform for sales, accounts, first line support etc. However, often someone in IT will say "here are a few fields for you to store your complaint info" and that's that.

Great complaint management in my view is something that is seamless - as a consumer I report a problem and someone takes ownership and gets me an effective remedy and explanation about what is being done or even simply a good explanation that provides some reassurance that I have been listened to. I don't want to have to say I'm making a complaint - if I need to then it is likely that noone has been listening. And yes, I would like to know from time to time how a company I deal with regularly takes on board feedback and makes positive changes.

Internally, systems and processes should be seamless (integrated where necessary) and provide the evidence for sound decision making - and the people involved engaged and empowered to take action promptly but also to highlight those daft processes and get them changed where necessary.

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By Guy Winch
12th Mar 2011 21:06

Michael Hill's comment about CRM needing to make complaint handling seamless is very important. Shunting complaints to data silos without immediate mechanisms for assigning ownership and responsibility to specific complaint-handling individuals in the company is wasting golden opportunities. As Michael says, having those people not only handle the procedural fixes from within but then communicate them to customers is essential.

Just imagine how empowering it would be for customers to hear their complaints contributed to the company implementing some kind of change--they would feel valued, listened to and empowered as well as eager to tell everyone they knew about their achievement ("I complained about the situation and they not only listened, they changed things!").

These are exactly the opportunities that long term dialogue with customers can provide. In such a scenario, the company's procedural change would occur long after the complaints that led to it were resolved. However, contacting the customers who complained to inform them of these changes is just one more way to extend the dialogue with customers and increase their emotional investment in the company--something that increases their customer loyalty directly. Simple announcements such as "Thanks for being such a great customer and communicating with us. We're happy to let you know that your complaint was so valuable, we've been working on ways to fix the problem for good and can now tell you we've taken the following steps to fix the problem..." would also lead to an additional round of positive word-of-mouth for the company--all in all, a huge return on investment for a simple CRM solution.

Thanks Michael!

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