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Published Articles by David Balovich

Title: Handling Customer Complaints
Published in: Creditworthy News
Date: 3/20/06

“When a customer complains to the seller, the original transaction may be less relevant to their overall satisfaction then the events that follow the complaint.  Customers whose complaints are quickly resolved tend to be more profitable than those customers who have never complained at all.”

Source: JD Power and Associates

 In many organizations today the credit department has been delegated the additional responsibility of resolving customer complaints. Our experience, as both a credit manager and department head, is that there are times to take responsibility for resolving the customers complaint and times to pass the problem on to those who should handle it, in which case our responsibility is to check to make certain the person who we passed the problem on to has, in fact, taken care of and resolved the problem to the customers satisfaction.

Many years ago we took on an assignment to turn things around in an organization. This particular organization not only had problems with its products but also with providing the customer timely answers to their complaints. Prior to our involvement the customer, upon contacting customer service and telling his tale of woe, would be transferred to another department where he would have to repeat his story and then was usually transferred again after being told that he was talking to someone who could not help him but the party he was being transferred to would be able to assist him. In many instances this was not the case and the customer would continue to be passed from one department to another probably in hopes he would get tired and go away. This happened so frequently that customers were not only losing confidence in the customer service department but the organization itself and were being driven to the competition by the organizations inability to address customer complaints. This not only had an impact on sales but revenue as well because unhappy customers often do not pay their bills.

We began by immediately implementing a customer response program borrowed from the consumer credit organization, the American Express Company. The process was very simple and straightforward.

Ø      Customer contacts us and informs us of complaint;

Ø      Complaint is documented and forwarded to responsible party in organization;

      Ø      Responsible party has no more than 30 days to determine if complaint is founded or             unfounded and report back.

      Ø      Customers account is provided a temporary credit;

      Ø      Customer is notified in writing of temporary credit and that complaint is being investigated              and will be resolved in 30 days or sooner;

      Ø      Follow up is initiated every 7 days by credit department with responsible party to               determine status of investigation;

                   If complaint is founded temporary credit becomes permanent and customer is notified;

       Ø      If complaint is unfounded temporary credit is re-billed and customer is notified of reason             complaint is not valid and asked to pay amount that was temporarily credited.

 Over time, using this technique, things began to improve. (Although customer service remained a separate organization, the customer service manager reported directly to us and was in the same facility as the credit department so that credit and customer service personnel could not only develop rapport but also work together on issues when necessary).

Another method we employed on occasion was to arrange for the customer to “conference” with both the credit representative and responsible party (sales, customer service, billing, distribution, etc.,) so that 1) the customer did not have to tell their story more than once and 2) it could be determined and communicated what action would be taken and by whom to resolve the complaint and 3) the time frame for resolving the complaint. This method often lead to immediate resolution because the responsible party could usually make a decision “on the spot” especially if it had been determined there was a “glitch” in the system.

Many feel that complaints are a customer ploy to avoid paying the bill on time. However, according to customer service managers, over 80% of customer complaints are valid. As a consultant we have clients whose accounts receivable problems are entirely a result of their inability or refusal to address and resolve customer complaints.

Debt collection firms have told us that a significant number of assignments placed with them for collection are in fact legitimate disputes and in accordance with the FDCPA they have to return these claims. One collection agency manager informed us they are now charging their clients for collection claims that turn out to be bona fide disputes.

We can make the customer happy simply by the way we resolve the problem. The credit department is often the first to find out there is a dispute. This is due to the majority of customers waiting until payment is due to inform the seller that something is not correct. Often, the person responsible for authorizing payment does not inform the accounts payable department that there is a problem until they inquire about the invoice after being contacted by the collection representative.

How do customers want their complaints to be handled? What leads a customer to think: “That was handled in an excellent manner” or “This is an excellent company to do business with”?

What customers want usually fall into two categories.

1)      Relating to the complaint – they want it resolved to their satisfaction.

2)      Relating to the manner in which the complaint is received – they are looking for courtesy, professionalism, helpfulness and a friendly disposition on the part of our staff. They want us to keep them informed, keep our word and do what we say we will do. They want to be able to easily contact the right person and be told in language (verbiage) they understand what is going to happen and how long it will take.

 Always remember that what the customer really wanted was for us to get it right the first time. A business may not be able to entirely recover from the way it handles a problem but sometimes, a problem can be handled so well that customer loyalty is enhanced. Often though, problems are handled so badly that the memory lives on long after the problem is forgotten.

Take a moment and think about what you just read. When was the last time you had a problem resolved to your satisfaction and how many people did you tell about your experience? When was the last time you had a terrible experience in getting a problem resolved and how many people did you tell about it? Statistics show that if you remembered a good experience, you had to think about it and you told less than five (5) people. Whereas a bad experience you probably thought “which one” and you have told at least twenty-five (25) people and are still talking about it today.

Excellent complaint handling involves six elements.

1.       Keep your word. Do what you say you will when you say you will. Have you ever waited at home for a repairman who never shows when they are supposed to or never shows at all? The failure of organizations to keep their word is frustrating and keeping your word is the most important perception of quality service.


2.       Respond quickly. Always strive to exceed your customers’ expectations. When we issued temporary credit when the customer complained they did not expect that.


3.       Be easy to contact. Voice mail and called ID is technology that allows us to “put off” whomever is trying to contact us for whatever reason. Customers should not have to go through a series of “prompts” on their telephone keypads. We may not be able to control the telephone systems our organizations employ but we can control how we use them. Respond promptly to voice and email. Leave a message informing the caller when you will return their call or leave a cell phone number where they can easily contact you. Not responding promptly to a customer is not a sign that you are either important or busy. Instead it says that you are lazy, incompetent and not interested.


4.        Keep the customer informed. This includes getting back to the customer and informing them their complaint has been resolved. Never promise the customer to do something within a time period unless you know for certain that it will be resolved. Customers want to know that their problem will be resolved and the majority is willing to accept a reasonable timeframe.


5.       Explain things in an understandable way. No company jargon, no assumption that the person you’re speaking with has industry knowledge and no unintelligible foreign accents. Those customer service folks in India, China and other foreign lands are very courteous and friendly BUT they don’t speak or understand American English and it is difficult to decipher what they are saying because of the accent.


6.       Be courteous, friendly, professional, helpful and understanding. The simple secret is good manners and attention. The customer is not your “buddy”, “pal”, “friend”, “dude”, “honey”, or any other term you use in your personal life. If you choose not to address them by name then “sir” or “ma'am” is appropriate. Practice how to transfer a call without losing it before trying it with the customer. Listen to what they want and if you’re uncertain ask questions. It’s perfectly acceptable to ask “What would you like us to do” or “What can we do to resolve this to your satisfaction”. Often what the customer wants can be accomplished very easily. Our experience is, that in many cases, they only want an apology and assurance it won’t happen again

 It’s not easy dealing with complaints or keeping customers happy. However, it’s not uncommon for customers to feel genuine gratitude to the people who have helped them resolve their problems especially when it’s those people in the organization who usually created the problem to begin with.

I wish you well.  

The information provided above is for educational purposes only and not provided as legal advice. Legal advice should be obtained from a licensed attorney in good standing with the Bar Association and preferably Board Certified in either Creditor Rights or Bankruptcy.  

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