How to Handle Customer Complaints -- a Look at Customer Retention

Customer service can be somewhat of a fine art at times. An unhappy customer can challenge business owners today on a multitude of levels. For many, the simple thought of dealing with an unhappy customer can make some business owners break out in a cold sweat.

In 1999, Fred Reichheld (a US business guru) said, "It is not how satisfied you keep your customers, its how many satisfied customers you keep!"

Words to live by. Its been estimated that it is 20% CHEAPER to spend marketing money on customer retention that on acquiring NEW customers. How about that statistic? Customer retention is a major factor in the survival of any business. If you keep your customers happy, they will advertise for you...for FREE!

But what do we do about an UNHAPPY customer? How do we keep them and avoid them being tempted by the competition?

First off, perception is everything. Whether the customer is right or wrong, in their perception they are right and HAVE BEEN wronged.

Bill Gates has said "Your most unhappy customers are your greatest source of learning". Mr Gates is 100% correct! The only way we, as business owners, can know how to IMPROVE is to constructively find out what is not working.

Service recovery is the immediate step that should follow a mistake.

Service Recovery Actions-

1. Apologize SINCERELY.

2. Take responsibility.

3. Compensate the customer with something of perceived value to the customer (hopefully, at not a large cost to you.

Stay calm and really listen to your customer. They are providing you with an invaluable learning tool. Through-out the conversation, take a moment now and then to summarize and repeat back to your customer what you feel their issue is. This promotes validation for the customer and a perception of being understood and valued. If needed, tell your customer that you will research further into the situation and FOLLOW UP with them as soon as possible.

We business owners spend a lot of money on our advertising but many seem to fall short in proper training for our customer service representatives. Customers can only be retained if they are loyal and motivated to resist competition. A loyal customer, even one that may have been unhappy at one time, can be the catalyst to a beautiful business cycle:

Customer is happy with product and/or service.

Customer continues having a strong intention of doing business with you.

Customer then is willing to recommend you to others.

"The more volatile the environment, the more varied the choices, the more people want some certainty to stick to"

How many happy customers are YOU keeping?