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Capitalizing on Complaints

Restaurant personnel, in a high-profile Hong Kong magazine column, were quoted as describing complaining diners as “moaners . . . whiners . . . demanding . . . explosive . . . rude . . . self-centered . . . power grabbers . . . stupid . . . out-right cheaters . . . and devious.”¹ Even researchers can’t avoid calling customers names. One group divided problem diners into five categories: Bad Mannered Betty, Harold the Intimidator, Freeloading Fickle, Ignoramus Iggie, and Dictatorial Dick.² These labels are cute, but they also reinforce negative mind-sets about consumers. A University of Florida group divided complaining customers into the meek, the aggressive, the high-roller, the rip-off, and the chronic complainers. Nowhere in these designations was there a customer who just wants something that was promised or a problem fixed.³

Actually, most people who complain are not nitpickers; in fact, they represent a “rather broad sample of the buying public.”⁴

To Capitalize on Complaints, You Must First Hear Them

It would be a wonderful world, indeed, if companies could produce services and products that always worked. According to product experts, however, a 10 to 12 percent problem rate may be the lowest that most industries can achieve.⁵ It is safe to conclude that problems will always be with us. So companies need to learn about service recovery—the process of making right what went wrong. In order to engage in service recovery, a company must first know that a problem occurred, and there is no way that the people within an organization are going to find all the problems themselves.

To ensure that complaints are made, customer expectations need to be carefully managed, beginning with how they are formed during the sales process. Customers are more likely to communicate their dissatisfaction if they believe the products they are purchasing are basically of high quality and that any problems will be handled fairly and quickly. Under these circumstances, they will work as partners to regain satisfaction.

Here are the possibilities of customer behavior combined with organizational response.

Being in Quadrant 1 deserves a hooray, a celebration, maybe even champagne. On the surface, the situation looks good because from the company’s point of view, things have gone smoothly, and customers seem to affirm this by not complaining or by paying a compliment. In reality, unless they ask, companies don’t know exactly what percentage of customers are satisfied because most don’t say anything. Given the penchant managers and product sellers have to blame customers for problems rather than take responsibility, it seems likely that when customers are silent, most companies will pat themselves on the back and say, “We must have done all right!” This could be a serious mistake. Some customers that the company presumes are in Quadrant 1 may actually be residing in Quadrant 3.

Quadrant 2 situations require gentle customer education. Sometimes customers do complain about things that are not the company’s fault. For example, airline passengers may complain that it was the airline’s fault that they missed their flight, when actually they misread their ticket. Even though these customers are not right, under these circumstances, they are still customers. Furthermore, customers aren’t the only ones to make mistakes; employees make some whoppers themselves. From the perspective of the organization, it is a good idea to listen to these customers because there is a chance to learn from them. If tickets are commonly misread, perhaps it would be a good idea to redesign the ticket so fewer passengers misread them.

When customer service representatives take responsibility for what happened, at least to the degree that they apologize for the event, they demonstrate customer concern. If a business has a number of these kinds of situations, then it needs to be proactive and educate customers so similar incidents can be avoided. In late December 2007, a young Canadian oil-field worker got an $83,700 cell phone bill from Bell Mobility, a division of Bell Canada. It turned out that the young man, who was lonely working out in the field, used his cell phone to connect to the Internet. He thought this usage was covered by his $10 unlimited browser plan. This story received a huge amount of attention in Canada, and Bell Mobility, bowing to pressure, agreed to reduce his bill to $3,400.⁶ That’s quite a reduction, but it still left a huge sum for the young man, who lives basically paycheck to paycheck. Our recommendation: Bell should wipe the bill clean and use the opportunity to educate other customers that this “unlimited” browser plan isn’t really unlimited after all. Perhaps it should also consider removing the word unlimited from its advertising. The reality is that most people do not read the fine print when they sign contracts of this type, so highlighted advertising words need to be consistent with the small “gotcha” words.

Quadrant 3 represents the biggest problem for companies: customers who do not say anything about their problems. When an organization concludes that if customers have not said anything, then there must not have been a product or service failure, it, in effect, denies the existence of Quadrant 3. We believe this to be the silent killer of many companies. One way a company can turn this type of dissatisfaction around is to make it easy for customers to sound off. In the financial services industry, for example, making it easier for customers to speak up through specially designated channels set up just for them increases customer satisfaction.⁷ Having the direct telephone number of an assigned private banker means customers know how to contact the bank should something go wrong.

Another way to get more feedback from your customers is simply to ask them when you’re already talking with them. Ask straightforward questions such as, “How is this feature of our product working for you? What’s our response time like? Would it be better if we did this? What’s the best thing about this product?” As Martha Rogers, partner at Peppers and Rogers Group, says when a company integrates customer input, “We get further and further up the learning curve, and after awhile, you’re getting a product from me that you can’t get anywhere else because you helped me create it.”⁸ John Huppertz, winner of an AMA Marketing award, looked at which of the following factors would make customers more likely to voice their complaints to organizations: liberal refund policies, employee empowerment, access to call centers, or reduction of in-store hassles to return merchandise. Looking at these four complaint-friendly approaches in the retail industry, which one do you think would have the strongest impact on customers’ speaking up? Huppertz points out that all these factors made the organizations appear more complaint-friendly, but only liberal refund policies significantly affected customers’ willingness to complain.⁹

Daryl Travis, founding partner with Brandtrust Consultants, strongly encourages asking customers for feedback. As he says, customers love to be asked, though not in surveys or in focus groups. Travis says, “You have to develop an insatiable appetite for that continuous feedback from the customers.”¹⁰ He advises organizations to not let any customers sit in Quadrant 3. When Gary Kelly took over the CEO’s position at Southwest Airlines in 2005, he set up two daylong meetings (six groups in total) with passengers. Not quite the focus groups that Daryl Travis finds stifling but a way for passengers to bend the ear of the top guy at Southwest. After coming out of these meetings, Kelly said, “It helped me to prioritize the things we need to work on.”¹¹

Sun Microsystems, along with a number of other high-tech companies, sets up booths at trade shows. These booths are staffed by high-level managers, who, by talking with attendees, are able to gather a large amount of market intelligence in a short period of time at minimal cost. Ed McQuarrie, marketing professor at Santa Clara University, recommends that operational managers visit customers to hear what is going on. Don’t just send out marketing reps or salespeople to sell. He says, “Customer visits represent a kind of home grown market research,” where you have a real chance to hear from customers about their problems and how your products and services do or don’t work for them.¹²

WinterSilks began selling silk garments in the early 1980s, first by catalog, then on the web, and now also in a single store in Madison, Wisconsin. The company has grown organically, relying primarily upon actively sought-out customer feedback to help shape its growth. Its out-reach efforts touch thousands of customers. All accumulated information is summarized to sharpen the company’s approach to business. WinterSilks creates a top-ten list of customer concerns and then actively works to address these issues. John Reindl, vice president of operations, says, “In terms of the payback, these efforts are very cheap. To become more competitive, you simply have to do it.”¹³

With the growing, widespread use of self-service technology (SST), an increasingly large number of customers may not be able to get their needs met and may have absolutely no way to report this to anyone—at least as far as they know. Just recently, Janelle stood in a large truck stop that featured multiple fast-food restaurants, a large retail shop, restrooms, and a game room. She began to count all the SST devices she could see from where she stood. She quit counting at forty-six. All the workers in the truck stop were busy with their own jobs, so reporting a broken SST machine probably would have done no good. Very few of the devices posted call-in numbers to use if they were out of order. Few people tend to call those numbers anyway. Most customers just find another machine to use or figure out some other way to get their needs met. Every machine that sits unused represents lost revenues. In situations like this, the SST device owners have to primarily depend on store operators to tell them what is happening with their machines.¹⁴

Take a look at the barriers that your organization has in place that may make it difficult for customers to complain. Do you make them write formal letters or call special numbers? How much documentation is required when customers want to exchange something or ask for a refund? How much time do you give them to report a problem? Some of these barriers, combined with unsatisfactory or no responses to complaints, have created a populace that TARP (the most widely quoted customer service research group) says doesn’t believe anything will happen. For this reason, TARP’s president, John Goodman, recommends that staff be taught how to recognize subtly presented complaints and then be encouraged to ask questions to find out what really bothers customers.

Handling Quadrant 4 situations, in which customers tell the company about their problems, requires great skill. Communicating with complaining customers is when maximum contact takes place, the most information from customers is gathered, and the greatest opportunity for service recovery and continuous improvement exists. If the company can fix the problem, take responsibility for the breakdown, and be polite and friendly, customers are more likely to give the company another chance.

One of our TMI-US colleagues is a professionally trained chef. She bought two very expensive steaks at a store in which she shops multiple times each week. (She likes foods fresh!) When she started to prepare the steaks the next night, they had already turned brown. She took them back to the store and talked with the woman who normally serves her at the meat counter. The clerk asked, “Did you leave them sitting out too long?” followed by the statement, “Your refrigerator must not be cold enough.” Our colleague eventually got two fresh steaks but left with a “browned” judgment about her experience.

How could this have been handled differently? First, the woman could have thanked the customer for bringing in the steaks because clearly the grocery store needs to check with its supplier about such expensive cuts of meat. She could have apologized and maybe even put in an extra steak for the customer’s trouble. After the exchange had been made, the clerk could then have asked some questions to make sure the issue was not an educational one, all the while apologizing for asking the questions. She might even have asked what the customer thought would cause these steaks to turn brown in less than twenty-four hours. At that point, the customer would have been in full partnership with the grocer. And the next time the grocer saw the steak shopper, she could have inquired about the meal she prepared. That’s how long-term relationships get formed.

Companies benefit from customers who speak up, and this is why companies need to let their customers know they welcome complaints and feedback. This means that customer-facing staff must know how to recognize when something is amiss. For example, a friend called a long-distance carrier to complain about the billing procedure it used. At one point he told the service representative, “You aren’t giving me good service.” “Yes, I am,” the representative replied, “I’m following the rules.” This carrier definitely does not advertise its service promise that way: “We give you good service: we follow our own rules.” The public would guffaw, but obviously someone within this organization taught this young woman, at least implicitly, that this is what she is supposed to do and say when questioned. Retailers estimate that 74 percent of dissatisfied customers can be retained if problems are rectified, but as we shall see, the overwhelming majority of customers never complain (or complain only when purchasing expensive items).¹⁵ Therefore, retailers who are more adept at encouraging complaints have taken the first step toward service recovery.

Capitalize on Complaints by Identifying Your Common Service Failures

Service recovery does not happen automatically. Companies need to carefully think about possible errors and build in approaches to handle them (because they will occur). For example, hotels need to teach their cashiers how to respond to billing errors, problems with rooms, and overbooking. The airline industry must instruct staff how to handle late arrivals, late takeoffs, oversold flights, lost luggage, and cancelled flights. Grocers must know what to do and say when long lines form at checkout counters. Retailers need to know how to handle advertised bargains that have sold out, a lack of staff, and items that cost more today than yesterday.

Do all businesses put the spotlight on themselves to find their common service breakdowns and then plan how to handle them when they occur? For example, could any of the following happen at a dentist’s or doctor’s office?

• Patients are kept waiting two hours for appointments.

• Patients do not have their insurance identification cards with them.

• Patients are spoken to rudely by overworked technicians or office assistants.

If an organization actively solicits complaints and then tracks them, it can easily construct a list of the types of regularly recurring service breakdowns. Then the organization must plan its response. Some companies are better at service recovery than others. Those that are good at it educate their employees to anticipate customer problems, even something as simple as reminding customers that a product they just bought requires batteries. In companies that plan their service recovery, customer-facing employees know they have the support of the company behind them to fix things that go wrong. So when they sell something to a customer, they know they are selling a promise that will be delivered.¹⁶

Nordstrom may be better than anyone else at excellent customer service in the retail business, and yet Bruce Nordstrom says, “We don’t want to talk about our service. We are not as good as our reputation. It is a very fragile thing. You just have to do it every time, every day.”¹⁷ A city-wide poll conducted in Phoenix, Arizona, a few years ago asked people to name their favorite department store. Nordstrom won by a significant margin, even though a Nordstrom won’t open there until 2009. (There are several Nordstrom stores in surrounding communities, but none in Phoenix itself.) How did Nordstrom create such a legendary reputation? Part of the answer is Nordstrom staff who go way out of their way to deliver outstanding service—every once in a while. We have heard many organizations say they could never do what Nordstrom does for its customers. That’s simply not true. Nordstrom couldn’t perform these heroic acts all the time either. But “every once in a while” is manageable and has impact. Shoppers in New York City voted their Nordstrom outlets as being the best at making people feel special. A lot of that has to do with the stores’ liberal (though not unlimited) exchange policy.¹⁸

And there’s no better time to do something amazing than when customers want a refund. The most extreme story told about Nordstrom is a renowned example that may not even be true. It’s a story about Nordstrom refunding money to an elderly customer for obviously used tires—even though the retailer doesn’t sell tires. If you want to read the whole fascinating story and what it has done for the Nordstrom reputation, the most complete discussion is on the Snopes.com urban legends Web site.¹⁹ The point is, you can build a reputation slowly but surely if you do everything well. But to get people in Phoenix, Arizona, to evaluate you as the best retail store when they don’t even have an outlet there, you have to make a splash.

To Capitalize on Complaints, Get More of Them

The single most critical reason why customers complain is that they believe something will happen as a result of their complaints. It’s useful to separate the dissatisfaction customers experience from the decisions they make to actually complain. Customers can be extremely dissatisfied and not say anything, or they can feel only minor dissatisfaction and speak up if they believe the company will do something for them. Enabling customers to converse with you starts with creating a culture where everyone inside the organization knows that customer feedback is viewed as a marketing investment and not a cost. Some simple methods include giving your staff preprinted forms so they can keep records of what customers tell them. Label the printed forms “Customer Gifts.” Customers will see you are serious if you write down what they say. If you do not keep records of customer comments, they will be forgotten.

When you do something major for a customer, call your customer after the event. One restaurant owner calls the hosts of dinner parties larger than eight, even if they did not complain. He says, “We know with a big party we can lose control of what happens. The host of the party may not want to complain in front of others, and hosts tend to be important customers who spend a lot of money.”²⁰ Many younger people prefer communicating via online chats, including Internet-based video chats. (If you google the words live chat, you’ll find more than 82 million sites. And if that is overwhelming for you, go to Wikipedia [www.wikipedia.com] and search for online chat for a very complete summary of the subject.) Instant online messaging enables people to communicate one-on-one with a company representative in real time. Internet-based cash and coupon transfer technologies make it possible for compensation to be awarded immediately in online chats. Blogs are another way for organizations to speak directly to their customers, and they can be set up to drive traffic to their own Web sites.

Toll-free lines remain one of the best traditional ways to communicate directly with customers, especially one-on-one. Toll-free numbers have been available in the United States since 1967, when the service was introduced. Today, 98 percent of adult Americans use toll-free numbers; 52 percent estimate they make fifty or more toll-free calls a year. Making it easy for customers to successfully locate a toll-free number on a Web site significantly improves the success of any ad, whether online or in print.²¹ Based on its research, AT&T says that 86 percent of customers would rather call a toll-free number than write a letter to a company, and 62 percent are more likely to do business with companies that have toll-free lines than those that do not.²² In short, a company that does not have a toll-free line is at a competitive disadvantage. As a Minneapolis marketing consultant says, “It’s the cost of doing business these days.”²³

Not all incoming toll-free calls, of course, are customer complaints. No exact data exists as to what percentage are complaints, but AT&T estimates that a “sizeable portion” of toll-free calls are complaints or customer feedback, especially when numbers are printed on products. AT&T prints a huge Toll-Free Business Edition Directory each year. Many of these numbers are designed for sales, but they can also be used for customer feedback. Any organization deciding to use toll-free numbers needs to carefully think through what it wants to accomplish.

If your organization arranges for toll-free lines and advertises them to the public without tight controls, more problems can be created than if the company hid itself from its customers. At a minimum, you must ensure that your staff can handle the volume of potential calls. One major furniture retailer learned this lesson. The retailer’s CEO arranged for widely publicized toll-free lines to be installed. The first two weeks generated thousands of calls—many more than the system was equipped to handle, creating more upset customers. Customer dissatisfaction was beyond anything this company could have predicted. The lesson is clear: test-market toll-free lines.

TARP concludes that toll-free helplines are a great boon to companies—unless the calls are handled poorly. And that is a big “unless.” As TARP warned over a decade ago:

If the (customer service) system is not designed to effectively handle individual customer service contacts and to use that data preventively to eliminate the root cause of difficulties, the company may be better off not soliciting such contacts. TARP’s cross-industry research has shown that an ineffective customer service system can do more market damage than not actively offering customer service.²⁴

Deciding to market a toll-free, customer feedback/support line is a strategic decision; determining the details of responding to these calls are tactical decisions. Some companies do a poor job on the tactics. For example, if a voice-mail system is attached to a toll-free phone number, it must be monitored carefully to avoid what is known as voice-mail jail. This happens when callers get caught between repeating, looping menus and cannot reach a live person. TARP’s president, John Goodman, says that there is major risk of damage to the company-customer relationship if no live person is reachable. Based on TARP surveys, Goodman says that customer satisfaction drops by 10 percent if customers have to leave their names on voice mail and then be called back.²⁵

A review of extensive business literature on toll-free lines reveals the following complaint-related benefits:

• Heightened consumer trust: Customers think you are more solid if they can easily reach you. While Honda Motor Company will not say that its toll-free number alone created the success of the Acura, it does say that installing the line sent a loud and clear message to its customers: “We don’t abandon you if you run into problems with our product.”²⁶

• Immediate customer feedback: Paul Walsh, former CEO of Pillsbury, says, “If we have a problem with a product we want to be the first to hear about it.”²⁷

• Increased ability to reduce complaints about common problems: If customers call to get information, an organization can teach them how to avoid other problems. Armstrong World Industries prints a toll-free number on its no-wax flooring that instructs customers to call Armstrong for information on how to remove the number. The number actually comes off easily with warm water, but while Armstrong has customers on the telephone, they are instructed on how to care for the floor so that wax buildup problems are avoided. Armstrong World estimates that this toll-free training course controls customer dissatisfaction and earns Armstrong a whopping $12,000 per customer over time based on customer retention. Armstrong sees its toll-free lines as revenue generating.²⁸

• Help in controlling legal action: Sometimes calling right away can nip problems in the bud before customers begin to think of whom to sue.

• Increase in market and product research information: Callers on toll-free lines tell companies what they like, what they do not like, what works, and what does not work for them. Tapes of these calls can be played to product managers and factory employees so they can hear directly what customers think. Kraft General Foods puts toll-free numbers on most of its new product packages and says, “Our 800 numbers give us a great feedback mechanism for improving our products.”²⁹

• Opportunity to sell additional products: While most companies view product-support toll-free lines primarily as a way to strengthen client brand loyalty, it is also remarkably easy to introduce customers to additional products over the phone while they are calling with complaints: “If you liked (or didn’t like) this product, could I also recommend . . . Most of our customers say . . . Would you like me to send you a half-price coupon to try it?” Most companies realize that the biggest hurdle in developing loyal customers is getting them to try their product in the first place. If they like it and it is priced right, they will probably continue to purchase it.

• Enhanced ability to pay special attention to special customers: By assigning special toll-free lines, companies can provide personal attention and special services to high-volume customers. United Airlines has a special toll-free number just for its Global Services fliers, those customers who fly more miles at the highest ticket prices on UA. UA personnel on that line will do more for their customers and resolve complaints more readily.

• Generation of additional complaints: A toll-free line says, in effect, “We’re not afraid; we want more of your gifts!”

Capitalize on What Complaints Can Teach You About Your Marketplace

Complaints tell you what is meaningful to your customers. Extensive research conducted over the past twenty-five years reveals that customers mostly speak out about problems that matter to them, about issues they think can be solved, and about issues they want redressed. This view of customers runs contrary to what many service providers and managers think: that complaining customers want something for nothing. Complaining customers are the people who put money into the hands of businesses and are trying to—in the overwhelming majority of cases—right a perceived wrong. While it may seem paradoxical, to capitalize on complaints you have to welcome them rather than cringe when you’re being taught about the marketplace.³⁰

Here are a couple of examples. After listening to complaints, the tourist travel industry has learned that if positive memories can be created around food service experiences, an entire vacation is viewed more positively.³¹ Darty, a French household appliance distributor, welcomes customer complaints that tell the company its products aren’t the cheapest in the market. Its brand promise is that they will be, so customers are, in effect, conducting market intelligence when they complain that Darty’s prices aren’t the lowest.³²

Frederick Reichheld underscores the importance of welcoming complaints when he says that in order to create value for your customers, you have to understand what their viewpoints are, what they want, and what they don’t want. Hopefully, they’ll tell you while complaining.³³ When we are customers, we hold a particular point of view, but when we represent a product, we appear to have another. As mentioned earlier, customers tend to be blamed by business representatives for product and service failures, while the company tends to get blamed by customers. When it does not acknowledge the customers’ point of view, companies seriously underestimate the legitimacy of customer complaints. This makes it difficult for staff to see the link between complaining behaviors and the benefits they receive from customer feedback.

Presented with a set of complaint letters, a group of managers and a group of customers were asked whether they thought the complaints were legitimate. Over half the managers saw the complaints as unreasonable, while over half the customers supported the letter writers as having legitimate complaints. The managers concluded that the customers clearly wanted something for nothing, they were confused, or they were simply dead wrong.³⁴ If large numbers of managers believe this about complaining customers, is it any wonder they don’t want to hear complaints? And wouldn’t this attitude permeate the entire organization?

In another research study, the viewpoints held by apparel shoppers and automobile owners whose cars needed repairs were compared to those of apparel salesclerks and car mechanics. All four groups were asked whether a fictional service problem (a car breakdown after a repair) or clothing problem (split seams in pants) was caused by the customer or was the result of poor product quality or defective service repair. Eighty percent of the customers blamed the mechanic for a sloppy repair job, whereas 80 percent of the mechanics indicated that the driver or “other problems” were the cause of the auto breakdown. The split seams were attributed to the manufacturer’s poor quality in 87 percent of the cases by the customers. But 64 percent of the apparel salesclerks blamed the customers. Customers bought the wrong size or they were too fat, said the clerks. The researchers also learned that the attitudes of the sales or service people were held only in relationship to the products they sold. In other words, the apparel salesclerks blamed the mechanics for the car repair problems, and the car mechanics blamed the clothing manufacturer for the split seams.³⁵

An essential goal of complaint-handling education must include getting everyone in the organization (including the manufacturing side of the business) to understand how very infrequently customers will say anything. One of China’s strongest brands is household appliance manufacturer Haier. The company was nearly dead when Zhang Ruimin was assigned the responsibility of turning this state-owned enterprise around in 1984. Zhang had a strong sense of quality management gleaned from all the reading he had done. He believed that customer complaints were major teachers for everyone in the factory. When a customer brought back a Haier refrigerator, Zhang was determined to get one that worked into the customer’s hands. He went through the entire inventory of four hundred refrigerators and learned that about eighty of them didn’t work at all. Zhang had his employees destroy the defective ones with sledge-hammers. They were more than reluctant to do so. The average worker had to work for two years to be able to buy even a nonfunctioning one. Zhang told his employees, “If we don’t destroy these refrigerators today, what is to be shattered by the market in the future will be this enterprise!” The refrigerators were smashed to bits.³⁶

One hammer is still on display at company headquarters to remind everyone about quality. The story has taken on a legendary status similar to that of the Nordstrom tire story. Today, Haier is ranked as one of China’s power brands, with $10 billion in annual sales.³⁷ In 2006, Haier joined the global top 500 list.³⁸ A lot of people believe that the Chinese population will buy only on price for nonluxury brands. But Haier clearly demonstrates this is not the case. And it all started with a complaint.

Capitalize on Gaining Strong Customer Ties, Positive Word of Mouth, and Additional Sales

When a customer turns over large sums of money to drive away in a new car, both the buyer and the seller are happy. But the sales process does not really test the mettle of the car dealer. It takes something going wrong to find out how the dealership operates under pressure. Is the dealer still going to smile when the customer reports problems with the car? Is the dealer going to be as responsive to needs as when the customer first inquired about the features of the car? In the automotive industry, customer treatment during car service transactions largely determines whether customers will return to purchase their next car.

Exceeding customer expectations, whether during the initial sale or when a complaint is made or maintenance is required, builds trust between buyers and sellers. This is particularly true in professional-client relationships. If people are pleased with how they are treated by their doctors, lawyers, dentists, psychologists, accountants, or other professionals, a bond is created that builds client loyalty and inspires referrals.³⁹

Customers who return products to stores for repairs can be enticed to buy more if they feel good about how they are treated. One of our TMI employees recently called about a malfunctioning laser color printer. She was treated so genially and effectively that she made a spot decision to purchase a second color printer. She would never have done this had she been angered by the treatment she received from the repair department.

This next example was sent to us by e-mail.⁴⁰ An attorney for a major telecommunications company went bed shopping. When it came time to sign the ninety-days-same-as-cash, no-interest purchase contract, she asked questions that the salesperson couldn’t answer. The manager was called over to help. The manager didn’t like the tone of the questions and basically told the attorney that this was the way the contract was and if she didn’t like it, she could go elsewhere. The manager then proceeded to yell at the salesperson, telling her that she should have said the same thing. The attorney walked away with the brochure for the Sleep Country mattress that she had wanted to purchase. She sent an e-mail to the owner of the boutique firm and told her what had happened. The owner herself responded the next day, apologized, and had the same bedroom set delivered to the customer at no charge!

Now most would agree that this is probably going overboard, and we wouldn’t be relaying this story if there weren’t more to it. The next day, someone else heard about this remarkable recovery example and told her mother, who was in the market for a new mattress, about Sleep Country. The mother, who had been planning on going to an upscale retailer, instead bought a similar set from Sleep Country to be delivered to her home the following day. Based on word of mouth, Sleep Country got this second sale that it would have otherwise missed. Sleep Country’s Web site says, “Founded in 1991, the company achieves an unmatched level of customer service, excellent values and committed community involvement.”⁴¹ That would seem to be the case.

In a major study of seven hundred service incidents from the airline, hotel, and restaurant industries, researchers found that of all positive memories customers have of good service, fully 25 percent started out as some kind of failure in service delivery.⁴² The lesson to management is critical. Businesses do not need to run away from service breakdowns. Each company representative has a chance to turn a negative situation into a positive experience for the customer.

Capitalize on Complaints by Creating a Strong Foundation for Total Quality Management

The late quality guru, W. Edwards Deming, described service recovery as putting out fires. “Finding a point out of control, finding the special cause and removing it, is only putting the process back to where it was in the first place. It is not improvement of the process.”⁴³ As such, service recovery is not the same as quality improvement. The fundamental precept of Total Quality Management (TQM) is continuous improvement. Continuous improvement assumes you never achieve total quality; you only move closer to it. It is a process of adapting the company, its services, and its products to the ever-changing marketplace.

To discover what processes and products need to be changed to satisfy customers, companies need information. Complaints can be a major part of that information source. Continuous feedback tells employees how to improve services and expand product lines in ways they may never have thought of themselves. Treating complaints as feedback from a most valuable asset, customers, helps create a customer-focused culture. This, in turn, is the basis of TQM strategies. As Phil Crosby, author of Quality Is Free, puts it: “Satisfy the customer, first, last and always.”⁴⁴

Service recovery takes care of customers, makes them whole, and ensures that the organization lives up to its service promise. Customer complaints provide the information to improve the organization’s quality.