CHAPTER SIX

Complaints Passed by Word of Mouth

Businesses and CSRs fail to hear complaints for several reasons. If you know anything about how few people complain when they have issues, then you know that the percentages of people who complain have little to do with the problems they face. Unfortunately, some business leaders think it’s good to set targets to reduce the number of complaints they receive. We presented this idea in the second complaint-handling myth in the introduction. The manager’s thinking goes something like this: reducing the number of complaints we receive means customers are facing fewer problems. But that’s not quite true.

Why Your Goal Shouldn’t Be No Complaints

I’ve heard leaders of some of the best hotel chains in the world say, “Yes, I like the idea of A Complaint Is a Gift, but I’d rather not get any complaints at all.” Nice aspiration. I then ask them about their swimming pools and their temperatures. Almost always, they are heated to an uncomfortable temperature for vigorous lap swimming, which is my style. When I complain about the pool temperature, I watch for their reactions because I know the pool assistants can’t do anything about it. “It’s set by management,” they tell me, “It would take too long to cool off.” If another swimmer comes along (probably someone who is mostly just going to stand in the water), the guest will want it warmer. I ask the managers, “How do you deal with complaints that can’t be fixed? Specifically, how can you fix it so everyone is satisfied with the pool temperature? Would it perhaps be a better idea to explain to the pool assistant how to respond to a guest who wants to swim in colder water?”

Sometimes complaints become hidden because a part of the company’s public-facing business is owned and managed by outside companies. In these cases, companies must be creative in how they listen to complaints about these outsourced businesses. Entertainment parks and other venues frequently outsource essential parts of their business, such as food services, security, and cleaning services. Outsourcing allows park owners to concentrate on park management and also reduce costs. The price to be paid is that the entertainment park may not hear about food complaints. From the perspective of those who visit the amusement park, that soggy hamburger or surly treatment by a vendor is still seen as the park’s responsibility. The public may not know the park doesn’t directly manage the restaurant. The amusement park itself learns little about such bad service and, thus, is unable to fix it.

Some companies conduct customer satisfaction surveys to learn more about complaints. This is a good idea—to a point. But the customers who left your business dissatisfied last week or last month are part of the pool of hidden complaints. Surveys mostly reach existing customers. Existing customers are still sufficiently satisfied, at least up to their last purchase. Collected customer satisfaction surveys are not representative of your dissatisfied customers. Existing customers tell you about current issues. If you can find the customers who have left you and determine what drove them away, you can uncover a large number of hidden complaints you otherwise would never know about.

Complaints can also remain hidden because surveys don’t identify dissatisfaction due to the way they are constructed and used. Both my husband and I were recently surveyed after receiving service, one from our health-care provider and the other from our car dealership. In the health-care case, I received a text message from the survey company asking me to complete a response online. I ranked the urgent care location low.

The survey company called me directly a couple of days later. Great follow-up! However, the CSR called to ask me if I wanted to change my rating and mark the organization higher on the Net Promoter Score survey it used. The person was not interested in what made me rate it so low—a hidden complaint. She just wanted a higher score, asking me three times for a higher number during the interview.

Because our car’s warning light came on, my husband took our car to the dealer. He was told it would be at least two weeks before someone could even look at our vehicle. My husband logically asked whether we could bring it in in two weeks. The mechanic said no; our car had to be parked and wait its turn. It turns out it took six weeks for the dealer to diagnose the warning light, during which time our car was unavailable to us. The dealership did its normal excellent job checking a number of items we hadn’t requested—but after six weeks.

The technician who worked on the car told us how important the survey feedback my husband would receive was to his career. He said if we didn’t give him a good rating on the survey when we received it, it would affect his income and he would not be able to make his mortgage payments. Whoa! When my husband received a follow-up telephone call asking whether he was satisfied with the service, he responded, “Other than I had to wait six weeks for the service to be handled, I was satisfied.” Hearing this, the person on the phone, who was from a metropolis in India, repeated the question, “So were you satisfied?” My husband repeated, “Other than waiting for six weeks, I was satisfied.” Once again, the caller asked, “So were you satisfied?” At that point my husband ended the call. That specific complaint to be harvested was not hidden, but we’re confident it was never passed to someone at the dealership.

Suppose companies only look at the people who ordinarily complain rather than seek out additional feedback from noncomplaining customers. They may not have a representative cross section of who is dissatisfied or why. People who complain tend not to be typical of the total population with unvoiced complaints. The complainers are unwilling to accept what they consider second-rate service.

In terms of national differences, NOP World Inc. interviewed more than thirty thousand consumers in thirty countries in its annual study of consumer attitudes. According to its latest survey, different responses are dependent on national identities.¹ Here’s how a few nations rank in terms of their residents making at least one complaint in the previous year, according to NOP World.

Most likely to complain:

Sweden: 41 percent

UK: 36 percent

Australia: 30 percent

Canada: 26 percent

USA: 23 percent

Brazil: 23 percent

Argentina: 23 percent

South Africa: 19 percent

France: 17 percent

Venezuela: 15 percent

Least likely to complain:

Taiwan: 1 percent

Saudi Arabia: 3 percent

China: 4 percent

Poland: 5 percent

Russia: 6 percent

Turkey: 7 percent

Spain: 7 percent

Egypt: 8 percent

Thailand: 8 percent

Indonesia: 8 percent

I’m surprised by these rankings, having traveled to all the listed countries (except Saudi Arabia) and spoken to local groups. Interestingly, when I informally ask citizens of these countries, they all say their fellow citizens complain all the time—that they are the biggest complainers in the entire world, except, of course, they say, for Americans. US travelers are seen as demanding complainers. It’s possible the various citizenry are hearing complaints made by their fellow citizens to each other and not to someone who can do something about their problem. This suggests we shouldn’t rush to conclusions about groups of people based on just a few incidents we have personally heard about. Unfortunately, it’s what we tend to do. Instead, we can get a much better idea when we look at larger numbers, such as these thirty thousand consumers surveyed by NOP World. Big data is a topic we’ll cover in chapter 9.

Complaints Are Easily Spread through Word of Mouth

Businesses are understandably interested in their reputations. Word-of-mouth (WOM) comments can make or break a business or product, and every dissatisfied customer is a potential marketing threat for negative WOM. Comments by dissatisfied customers can work for or against your company in the following three ways.

Personal Recommendations Beat Advertising

People are more likely to believe a personal recommendation than an advertiser’s promotional statements. Positive statements are genuine gifts as recommendations made by people customers know carry an enormous weight. It also means that negative comments can cut right through your advertising.

Qualtrics, a leading experience management software company, says online reviews count even more than direct comments. Eighteen-to thirty-four-year-olds trust online reviews as much as they do personal recommendations to the tune of 91 percent.² Every bad word told and retold about a business becomes more difficult to overcome through marketing promotions. I have watched people in line leave and return an item based on what someone else in line says about something in their shopping bag. I’ve also witnessed a sale being made when someone says, “Oh, I have one of those, and it’s great. I love it. And the guarantee is a very good one. Definitely get it, and you’ll think it was one of the best buys you ever made.” Qualtrics also points out that 92 percent of business-to-business buyers are more likely to buy after a positive review by another business owner. They talk to each other at conferences, in mastermind groups, and in other situations where they bump into each other.

Negative WOM can even dramatically affect an entire industry. Consider the personal insurance industry. Its image worldwide is always at a low. This is in part because, as Peter Maas, a Swiss professor of management and member of the executive board of the Institute of Insurance Economics, explains, insurance holders deal with agencies after adverse events have occurred. Plus insurance agencies have a reputation of dragging their feet about claims.³

As a result, you’ll see television advertising for USAA, which is ranked high in the world of insurance for military veterans, showing an agent appearing almost magically before a claim is even made. Lots of good advice is available on the internet about improving the reputation of insurance companies. My advice is to deliver what you promise in your advertising. Remember, a complaint is a state of dissatisfaction. How did that dissatisfaction get there? Perhaps what was promised was not delivered.

The Unhappiest Customers Are Most Likely to Use Negative WOM

The more dissatisfied customers become, the more likely they use WOM to express their displeasure, so you should avoid situations where customers leave in a huff. Customers like talking about their unsatisfactory experiences (to upwards of twenty people).⁴ In comparison, they will only tell about three people when they are happy. When they talk about the good customer service they received, it almost makes them appear to be bragging. If customers walk away angry with “expressed complaints not handled,” a company may not be able to do much to stop their negative WOM, especially when communicated orally to friends and family.⁵

An example of this type appeared in a Inc. magazine article by Matthew Swyers, whose wife purchased several items from a national discount store.⁶ When she got to her car she checked her receipt and found she had been charged full price for everything even though several items had been marked 25 percent off with a yellow sticker. She returned to the store and waited in line only to be told, “How do I know you didn’t just put those stickers on yourself?” Swyers’s insulted wife retorted, “You’re right. I’ll return everything.” Another customer in line put her soon-to-be purchases on the counter and said, “I don’t need to be treated like that either,” and walked out of the store as well.

Most Sales Are Impacted by Both Positive and Negative WOM

Because WOM affects a large portion of sales, organizations should take care to see that negative complaint experiences are changed to something positive by well-handled complaints. This means customers’ emotions need to be handled without bruising them in the complaint process. Customers will use WOM if they have a reason to talk. Positive comments can be amplified by marketing departments, and it’s worth the effort. Positive WOM brings in five times more sales than paid advertising, and customers who are brought in through recommendations spend 200 percent more than average customers.⁷

Consider niche products like baby food. According to market researchers Nielsen Communications, 44 percent of women learn about baby food from friends and family, which is significantly higher than those who learn from television advertising.⁸ Community chatter is the most commonly cited source for information about baby food and formula. These discussions account for 40 percent of switching behaviors. For example, one parent says to another, “I don’t like that brand. My baby spits it up.” Do you suppose either parent bothers to pass that information on to the baby food manufacturer? Chances are they instead switch to using a different brand.

Imagine you are the one who sells baby food, and an infant has an adverse reaction to a newly introduced product. Wouldn’t you rather hear about it than see it spread throughout social media? If you read all the complaints posted on the web, they mainly involve complaints not handled well. If companies make it easy for customers to complain and then handle these complaints well, dissatisfaction levels will decrease, negative WOM will lessen, and positive WOM will be generated. It seems as if many customers want to tell someone about their problems, and if companies do not respond to them, they will find another audience.

Companies control negative WOM when they demonstrate to customers they are sincere about doing what it takes to create satisfaction. In the case of companies with easy exchange policies, we expect the public to share fewer negative reviews of them. Costco, the second largest retailer in the United States, is a good example because part of its reputation is “We’ll take it back—no questions asked.” Costco will take returns without a receipt; after all, it can quickly look up the purchase on its computers. Costco is saying, “Bring us your complaints. We want to fix your problems with any products we make available.” Amazon is another online retailer underscoring this point. PBD Worldwide, an infrastructure fulfillment service, also lives by the idea that return policies are a major key to customer satisfaction.⁹

Based on research by TrueShip, a shipping software service, advertising return policies help reduce the number of returns requested. TrueShip studied shoppers and found 60 percent review a company’s return policy before making a purchase.¹⁰ On the surface, these provisions seem to be about everything except complaints until you begin to consider every time a product is returned, a complaint is embedded in it. These complaints go way beyond a broken or malfunctioning product. They include whether the product was the right color or fit or didn’t meet expectations.

To protect its citizens, the state of California has enacted regulations that unless a business offers a full cash refund, exchange, or store credit, business return policies must be posted at least seven days before the purchase. If no policy is displayed, customers gain the upper hand; they can return a product within thirty days and receive a full refund, no matter what the policy says. All these approaches seem to stimulate more customer purchases. California is not the only place with such regulations; in the United Kingdom, businesses are required to issue a refund if a product is broken, does not match the product description, or doesn’t do what you said it would. Purchases made online are entitled to a refund within fourteen days of receiving the goods—no reason required.¹¹

When free returns are offered, customers are encouraged to purchase more. It’s the equivalent of saying, “If you have a complaint, we’ll handle it at no cost to you.” A 2012 Journal of Marketing study found free returns increase spending by 158 to 457 percent after a customer returned a product. This data includes lots of data points as the study was conducted over a four-year period. On the other hand, if customers had to pay for shipping, they reduced spending by 75 to 100 percent at the end of two years.¹²