Unarticulated Customer Complaints: Loyalty Killer? By Robert Bacal

You may have heard of, or read customer service experts who have said, “Complaints are a gift”, with the idea that even negative customer comments provide important feedback about what companies need to do to improve.

There’s obviously truth to the idea that at least some complaints do help in that regard, although it’s little solace to those that have to take the “over the top” complainers and abusers.

There is some research that suggests that encouraging complaints is valuable for another reason: customer loyalty.

Interesting Research On Articulated and Unarticulated Complaints

Research carried out by TARP (Technical Assistance Research Programs – Harvard) found some very interesting results when they looked at complaining, and customer retention/loyalty:

“Original research executed by TARP projectable to the U.S. population shows the following for consumers who experienced a problem with a potential financial loss of less than $5:

• 37% of those who did not articulate the problem stated they would continue to buy the product.
• 46% of those who did complain but were not satisfied by the company remained brand loyal.
• There were several cases in which articulated complaints did not lead to increased loyalty; in fact, if a complaint handling system is poor, it will further alienate the customer, resulting in lower repurchase rates.
• 70% of those who articulated the problem and were satisfied remained brand loyal, and more than 95% of complainants who were satisfied quickly remained brand loyal.

and

For consumers who experienced a problem with a potential financial loss of more than $100, our surveys show the following:

• 9% of those who did not articulate the problem remained brand loyal.
• 19% of those who articulated the problem but were not satisfied remained brand loyal.
• 54% of those who articulated the problem and were satisfied remained brand loyal.

from Understand Customer Behavior And Complaints (Goodman and Newman)

What Do These Numbers Mean?

• That when customers express their complaints, those customers tend to be significantly more brand loyal.
• Some of that brand loyalty appears to be directly related to expressing or articulating the complaint, rather than how the complaint is actually resolves (except for horrible screw ups in the complaint interactions.
• That when a customer complains, the chances of retention increase by a large margin if that complaint is resolved, and increase even more if the complaint is resolved QUICKLY.

As Goodman and Newman sum it up:

The research has since been confirmed in over 500 separate surveys of at least 700 customers from both business and consumer markets. Thus, brand loyalty can be retained by encouraging consumers to complain.

Encouragement can include posting a number in a store or on an invoice. Employees can simply make eye contact and ask, “Is there anything else I can do for you?” .

Even if the complaint handling mechanism is not able to satisfy the consumer, incremental brand loyalty can be achieved.

Of course, if the complainant is satisfied, substantial amounts of brand loyalty can be obtained. In fact, loyalty can actually become up to 8% higher than loyalty when no problem has occurred.

Cautionary Note:

Even though the authors indicate that these findings have been replicated over time, it’s important to note that these studies are based on surveys, rather than on actual buying behavior, AND that they are correlative in nature.

That means that we don’t know if complaining actually causes customer loyalty, or that more loyal customers tend to complain more, OR, whether both complaining and loyalty are being influenced by a third unknown factor.

Conclusion

Even if this research and others like it cannot establish a causal relationship, it’s probably good for companies to make it easier for customers to articulate their concerns, whether through clear contact numbers and clear contact channels, or simple, on the fly interactions at a cash register.

Obviously, this won’t work if the complaint resolution process is poor, and actually makes the customer angry.

For more fascinating information on customer behavior check out the research article: Understand Customer Behavior And Complaints: Eight areas of quantifiable data can be integrated into quality assurance decisions