Six Steps to Deal with Unhappy Customers

by Jimmy Smith
S-Squared Enterprises USA

Dealing with disgruntled customers is one of the greatest opportunities to leave a lasting impression on your business’ clientele.

Every organization needs customers to remain in business. If you don’t believe that, just try doing without them for a week or so. Coping with unhappy customers is an inevitable part of success, and how you deal with them is a predictor of your success. Sam Walton once said, “There is only one boss: the customer. And he can fire everyone in the company—from the chairman on down—simply by spending his money somewhere else.”

Dealing with an unhappy customer who has a complaint doesn’t mean the customer is always right. However, dealing with customer complaints presents a “moment of truth” in which frontline employees have one chance to provide a lasting impression that your organization really cares about treating them fairly and with respect. The outcome will determine your customer’s perception, and that’s either a positive or negative experience that will ultimately impact your future business climate.

Complaints as Gifts
A study from the Profit Impact of Market Strategy (PIMS) project by the Strategic Planning Institute in Massachusetts, in cooperation with Harvard Business School, revealed some interesting results. The PIMS project looked at 3,000 business units in 450 companies. The analysis showed that the top 20 percent of business units with high positive customer perception averaged a 32-percent return on investment (ROI), while the bottom 40 percent averaged a 14-percent ROI.

In the last few years, there has been a plethora of literature on how to deal with unhappy customers who, thankfully, actually voice a complaint. Some studies reveal that just four percent of unhappy or dissatisfied customers inform the organization of their problem, while the other 96 percent vote with their feet—and take their purchasing power with them.

I’ve lately been reviewing one of the more interesting publications on this subject, A Complaint Is a Gift: Recovering Customer Loyalty When Things Go Wrong. The authors, Janelle Barlow and Claus Moller, cite a study in which the data showed 47 percent of those who suffered a "negative experience" with an organization responded by swearing and/or shouting. Interesting regional differences were also observed. In certain regions, some unhappy customer were "more likely to swear, feel their chest tighten or get a headache," while in other areas, they were inclined to silently walk off, never to return—but were also likely to write something nasty about the company online. If problems occur, a dissatisfied customer will tell nine to 10 people about it, on average.

Here are a few principles to handle unhappy customers who do organizations a favor by voicing their complaints.

  1. Treat internal associates as external customers. An associate or employee can be defined as an internal customer who is anyone in the organization affected by the product or service as it is being generated. In Tom Peters’ book Thriving on Chaos, he stressed that it is impossible to get people’s best efforts, involvement and concern for the things your organization believes are important to your customers if they aren’t treated with respect, honesty and trust.

    Research has shown that management practices relate to employee satisfaction, which also influences customer satisfaction. When associates are satisfied with their treatment, given the right tools to do the job, and supported by management, customers are more likely to continue to do business with your organization. To cite one study, a major fast food chain found that 20 percent of the stores with the lowest employee turnover rates had double the sales and 55-percent higher profits than the 20 percent of stores with the highest turnover rates.

    Organizations should keep in mind that if the external customer is king, then the internal customer is a prince—and should be treated with the same courtesy and respect.
  2. Select and train frontline associates carefully. An organization’s “customer-contact” associates (employees) are in direct contact with customers. Each one provides a “moment of truth” about their organization every time they have contact with a customer. They represent the face of the organization—good or bad. The selection of these key people has been tagged as vital by many top-notch organizations.

    Frontline employees need to be selected from key behavioral characteristics, trained and retrained—and the frontline, customer-interface level should be involved in the training effort. Organizations should be advised to remember the turnover statistics cited above and keep in mind that this important training effort is not to be cut during tough times!
  3. Defuse the situation. A few years ago, while training people to go out to customer sites, I stressed the concept, “Act as if the customer is always right. Then back up from there.” What this meant in practice was to defuse the situation and let cooler heads prevail to resolve the situation.

    Anger is like a volcanic eruption. We shouldn’t try to interrupt the volcano while it's spewing lava! Take notes instead. Once the eruption is over, acknowledge the customer's anger by saying something like, "I know you're angry. I would be too." If that doesn't calm the customer’s anger, remove the unhappy customer, if possible, from the crowd so he or she can subside without losing face in front of the other customers. If the customer still shows signs that he or she can’t be satisfied, seek further assistance.
  4. Measure your words carefully. Avoid saying anything that sounds like a command or contradiction. For instance, don't say, "You must…" Instead, say, "I need you to…" (Fear of angering nicotine addicts is the reason "No Smoking" signs were replaced by signs that read "Thank you for not smoking.") Avoid words like "but" and "however" because the unhappy customer will only hear the words that follow those qualifiers. If you have to say no, then first "put a look of regret on your face, or make an 'effort' sound," as Barlow suggests. Say you're sorry you can't do ______, then explain why and suggest an alternative solution.
  5. Strive for a partnership relationship. When faced with a dissatisfied customer, talk about solving the problem together. Make your challenge the customer’s challenge. What are we going to do, partner? Try to avoid handing them off to someone else, but if you must, ask for a phone number (assuming they are on the phone) in case you get disconnected, and stay on the line until the person to whom you're handing them off is on the line.

    A clerk at a major upscale clothing store experienced a customer who wanted to return an expensive evening gown after wearing it to her big event and getting a stain on it. When she became upset about being turned down, the store manager, in a “moment of truth,” stepped in and refunded her money. This person had a positive experience and went on to spend more than $100,000 over the next 20 years, making sure that all her wealthy friends did likewise.
  6. Get personal. Address unhappy customers by name, and give them your name, too. Give the customer a business card if you've got one. If the customer hurts your feelings, let them know. This helps to create a personal affiliation, supports a partnership relationship, and can actually help defuse the situation.

Owen Harari, author of The Leadership Secrets of Colin Powell, writes, “When a customer complains, consider getting down on your knees to offer profuse gratitude, because that person has just provided you with priceless advice—free of charge.” Customers actually buy expectations, not just products and services. Maybe that’s why many become disgruntled.

Henry Ford once said, “If you satisfy the customer, you win the game.” Isn’t that what we all want? Strive to create a win-win situation in which everyone comes out on top. iBi

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