Customer relationship management as customer service dialogue

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.