Customer complaints have zero ROI

Customer complaints are rarely useful.

With a few rare exceptions, of course. If it is something that leads you to discover something –  employee fraud or whatever – then it is obviously useful.

In high-value, low volume products – such as an airline providing feedback to Boeing – there may also be some value.

But in the everyday, typical retail environment, I would go so far as to say that dealing with customer complaints produces negative ROI – worse than zero.

If the complaint is about the product or the experience (a drink is too cold, or a service is too late or too expensive) then they are merely providing subjective feedback on a sample of one.

Consider these two questions in your retail environment:

  1.       What do customers usually complain about?
  2.       Do you already know that those are the types of things that go wrong?

Even the most ‘average’ retailer would know what the typical complaints are: too slow, too expensive, too late, not enough this, too much of that etc.

Setting aside the fact that a particular customer had a particular experience might be ‘news’; the type of problem is rarely something new that surprises a retail operator.

If you know what types of problems you typically have, surely you are addressing those and these problems should not be happening routinely?

That is, you should be working on systematising those out of your business anyway – with or without complaints. And the system should work well enough that it doesn’t need to rely on the end experience alone to send a warning signal. A good system will tell you before the customer has the bad experience. In fact, the whole ‘quality control’ industry exists for that very reason.

Customers rarely know your business well enough to make constructive complaints. Airing a complaint is usually, simply an emotional reaction for a customer; and they do this in a range of ways from decent human being to being a total a**hole.

It is almost impossible for the average retail employee to really handle a psychological issue that masquerades as a complaint.

For example: a customer rocks up at a coffee shop five minutes before close. The kitchen has been closed for half an hour. They complain loudly, and freely give you advice on how you should be running your business. They sincerely believe that you should stay open as long as it takes, until they have the opportunity to ‘gift’ you the $2.00 margin you are going to make on their purchase. They don’t understand the cost of doing business, the process of running (and cleaning) the kitchen, the legalities of awards, overtime or even, heaven forbid, extended trade charges from the shopping centre. They certainly don’t appreciate that you are still going to be in the shop for at least another hour-and-half. And that the two bucks just does not cover it.

Focusing on customer complaints can have a range of negative impacts:

(a) They are a distraction from fixing the real issues

(b) It takes a disproportionate amount of time that adversely affects productivity

(c) It breeds customers who feel entitled to complain

(d) It often leads to a blaming culture developing amongst employees

There are still consultants out there who will tell you that the ‘customer is always right’. In the early days, my view was that they may not be always right but act as if they do. And I would usually add that taking money off the nastiest customers is even more satisfying. But I have come to know better.

Of course, I know the ‘lifetime value of the customer’; but that idea works a lot better on paper than it does in practice.

Now, my advice is: thank them and do the minimum to shut them up and move them on, including giving their money back if necessary, and if push comes to shove, then – just shove.

Treat a complaining customer much like that friend with too many drinks under the belt who feels compelled to provide unsolicited advice, like how Bitcoin is where the action is – even if he does not understand the difference between blockchain and a blocked drain.

Dennis Price: Co-Founder at ganador.com.au and yearone.solutions – can be reached on 0411030436.

Comments

7 comments

  1. Paul posted on February 12, 2018

    I have to disagree - I don't believe for one moment that there is no (or even negative) value in listening to customer complaints. Yes, you will get the odd occasion of the "emotional" complainer who is reacting without consideration of the business (and I've certainly experienced this exact situation in my teenage years in retail). One customer complaining about a lukewarm coffee? 0 Value. One hundred customers, across 10 (disparate) stores? This is where the opportunity is. To your point of "Even the most ‘average’ retailer would know what the typical complaints are: too slow, too expensive, too late, not enough this, too much of that etc." - how do you think a business comes to understand this as "typical"? by listening to customer complaints of course! reply

  2. James posted on February 12, 2018

    I must admit, I find this a bit hard to swallow as well. After 35 years in retail, tourism and customer service, i have had my share of upset customers. Very occasionally I have met the ones that step well over the line of acceptable behaviour. Most of the time, in dealing with complaints, I have dealt with customers who were upset, frustrated or dissapointed with an aspect of there dealings with my organisation. I, too, am frustrated, upset and dissapointed, and share their feelings. Hence, I want to know about the problem, so I can fix it. As a professional I choose to focus on their message, not their manner, in order to solve their issue. I found the third point interesting 'c) It breeds customers who feel entitled to complain'. What makes you believe they are not? '(a) They are a distraction from fixing the real issues' In a retail/service business, isn't potential loss of custom a real issue? 'b) It takes a disproportionate amount of time that adversely affects productivity' If you are losing customers, who are you producing for? I agree that the blame game is counterproductive, but shouldn't we be cultivating acceptance of responsibilty? I am interested to read your response so that I can understand your comments better. reply

  3. Dennis posted on February 12, 2018

    The point being that you should know what constitutes poor performance. Do you really need a customer to tell you what is poor performance? And if you are producing 100 cold coffees, and only find out when customers tell you, may be there are bigger issues? I think anyway. Thanks for writing anyway. Cheers. reply

    • Paul posted on February 14, 2018

      While I agree that the example of 100 cold coffees may be a fairly basic one (there is a problem with the product or service which is realised at the time of transaction) and subsequently it feels "obvious", consider for example an apparel retailer - garments which break down 5 washes later are going to result in 2 things - 1) a customer complaint and 2) that customer never returning. Without understanding that customers are no longer shopping due to quality concerns, the business may believe that the fall in foot traffic could be attributed to a lack of marketing effort. What truly illuminates the picture is the customer feedback. reply

  4. Bill Rooney posted on February 13, 2018

    This article is one of the worst pieces of retail advice I have ever read at so many levels. I posted my feedback to Dennis post on LinkedIn and so far I have had 2,982 views , thanks Dennis When one of the key differentiators a retailer has against Amazon, Global Players and Fast Fashion is the customer experience then this advice that sends a message to staff and customers that the "customer isn't important and your number 1 priority ", is a road to disaster. In a digital age where social media and your customers can communicate bad service (think tripadvisor) or poor retail practices to the world at large almost instantly and then proceed to tell anyone that will listen , its a brave retailer that treats customers with this amount of distain reply

  5. Dennis posted on February 14, 2018

    Glad you benefited from the advice Bill :) Being an actual retailer too, I possibly have a different experience/take on what happens outside the world of blogs & boardroom tables. The point is not that the customer does not matter. The point is that the priority should be to build systems that deliver the right customer experience. And if your system is working, then you will notice 'failures' before it translates into poor experiences. And that any retailer worth their salt knows what is working/ not working before it becomes a complaint. Etc... reply

  6. PM posted on February 16, 2018

    Sorry, Dennis, I don't see how you can differentiate between the known and unknown problems your customers are facing without taking some time to understand them. Even then, there is at least some value in knowing that this is another occurence of 'that' issue. Ideally, you can placate the customer and spend your time fixing the issue. But you also need customers to come back to experience the improvement. reply

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