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Why Most Customers Don’t Complain

“Why don’t you complain?” It’s a simple question with a surprising number of answers. We once heard over 150 discrete reasons from a single group of people as to why they don’t complain. When you hear this many reasons rapidly tumbling from the mouths of people, you begin to understand why so many customers walk away without saying anything.

TARP concluded that complaints are actually declining, even when serious problems are faced. This is due to what the company calls “trained hopelessness.” TARP’s John Goodman says, “The customer has been trained by the system to accept problems as a general business practice—with the prospect of no change, why bother complaining?”¹ Perhaps underscoring Goodman’s statement, RightNow Technologies, in its 2007 Customer Experience Impact Report, concludes that good service is still a huge differentiator. Fifty-one percent of survey respondents said that outstanding service is what makes them return to a company; 60 percent said that it is the major reason why they recommend a company. RightNow also found that a growing number of people said they won’t go back to an organization after a bad experience: 80 percent in 2007, up from 68 percent in 2006.²

Here are some of the many reasons people have told us why they do not complain:

• I didn’t want to spoil the mood of the party. I wasn’t the host, so I didn’t want to make a fuss. I was polite at the dinner table but grumbled in the washroom.

• It wasn’t worthwhile mentioning it. No one would listen to me anyway.

• It wasn’t that bad. After all, compared to people starving around the world, my complaint is nothing.

• They’ll ask me for my PIN number, and I can’t remember which one it is. I have dozens of account numbers.

• It was really clear: the person I was talking with was incompetent, definitely not top drawer. He wouldn’t get the message right anyway.

• They might question my complaint, and I would need to defend myself.

• It would have cost more to complain.

• Their solution was to give me a long-distance number to call.

• I don’t trust that they’ll keep my complaint confidential.

• I complained once, and they recorded my call and then played it to everyone in the call center.

• I can tell by their body language when they don’t want to hear from me.

• Most of the time they get it right. It was just this one situation they messed up.

• I felt sorry for the clerk.

• They told me I’d have to write a letter. Who’s got time for that?

• The clerk helping me was really cute, and I didn’t want to look like a creep in front of her.

• Other people might have gotten involved; maybe the headwaiter would have come over.

• I had a problem with a “female” product and the person helping me was a man. I was too embarrassed.

• I didn’t know who to talk to.

• They would have been rude to me.

• It would have become a big deal.

• They probably would have treated me like a criminal.

• I would have had to wait a long time for a reply.

• I haven’t been approved yet for the loan; I’ll wait until after that.

• The complaint department was closed over the lunch hour.

• Forget it. I sent an e-mail on their Web site before and heard nothing back.

• They will tell me I need all my original documents, and I’m not sure where they are.

• I’d already thrown away the receipt.

• The person I wanted to complain about might have lost her job.

• I wasn’t sure how to talk about this situation. It was too personal.

• Who knows? They might have spit in my food in the kitchen.

• I was partially responsible.

• I would have had to go up to the third floor to the complaint department. I didn’t have time.

• I had a problem last week; they would think I am picky or a whiner!

• The last time I complained, nothing happened.

• I know the person. We go back a long time. No way do I want to complain to my friend.

• I’d rather just leave, never come back, and not say anything. It’s easier that way.

• I’d probably just get more upset. It’s better to just drop it.

• My daughter is a waitress. I know how hard these people work. I’m not going to complain about anybody doing that job.

• If I complain to my son’s teacher, she might take it out on him in the classroom.

• If I complain about that person, he may come after me. You know how nuts people can get today.

• I had five problems. No way am I going to complain about all of them. They’ll never listen. I’ll just mention one of them.

• They could have made my situation worse.

It’s a rather overwhelming list and makes one appreciate why large numbers of people who have complaints don’t say anything.

How Complaint Handlers Tell Customers Not to Complain

Complaint handling that discourages customers from speaking up includes all or some of the following reactions: unfeeling apologies and nothing more, rejection, blame, promises that are not delivered, no response at all, rude treatment, being passed on to someone else, avoidance of personal responsibility, nonverbal rejection, a customer interview with repetitive questions, or a demeaning session that feels like an interrogation.

• Apologies and nothing more: A customer walks into a restaurant and leans against a freshly painted wall, leaving a paint smear on his coat. All the staff he talks to say they are sorry that this happened but make no attempt to remedy the situation in any way. “Sorry.” The customer says, “They’re very good at saying ‘I’m sorry,’ but they don’t do anything. ‘Sorry’ isn’t good enough.”

• Rejection: The rejection usually starts with an apology. “Sorry, but there’s nothing I can do. Next!” If the customer protests, she hears, “Look, I said there was nothing I can do. Now may I help the next customer?” Customer reaction: “They will take my money. That they can do, but they won’t help when something goes wrong.”

• Blame: The customer is blamed for the complaint. “You must have handled it wrong.” “You should have complained earlier.” “You brought the wrong guarantee.” “You didn’t send the guarantee card in.” Customer reaction: “Their guarantees don’t mean a thing.”

• Promises that are not delivered: The service rep promises to correct a mistake in a timely manner but does not. This may be in sharp contrast to advertisements. Customer response: “They definitely don’t walk their talk. I wonder what else they don’t do.”

• No response at all: This happens more frequently than you imagine. Company representatives do not return telephone calls or respond to written complaints. Customers sometimes call back several times, each time being told they will be helped, and nothing happens. The customer says, “Forget it. These people just want my money. Then they’re gone.”

• Rude treatment: Basic politeness goes out the window; many customers are handled brusquely. People are insulted; in extreme cases, they’re made to feel like criminals. “No one else has complained about that,” the company representative may say. (This does not mean that someone has not felt like complaining; it just means no one has complained yet.) Customers promise themselves, “I’ll never have anything to do with these people in the future—unless I’m on my deathbed and need them.”

• Being passed on to someone else: “I can’t help you. You have to go upstairs [talk to someone else, write your comments down and send them to another planet].” “We are just the distributor; you’ll have to contact the manufacturer.” The customer laments, “Why do they make it so difficult? Don’t they want me to be their customer?”

• Avoidance of personal responsibility: “I didn’t do it. It wasn’t my fault.” “I’d like to help you, but I don’t handle this.” “I just work here; I don’t make the rules.” “I didn’t serve you; it was my colleague.” “It was our suppliers [our delivery service, the mail carrier, our stupid policies, my ridiculous manager, the phases of the moon], and what did you expect anyway? It was on sale.” The customer judges, “These people are buck passers. No one wants to take responsibility, so they give me some junior assistant who can’t do a blasted thing!”

• Nonverbal rejection: Sometimes people being complained to frown, act impatient, and in effect tell the customers they are wasting their time. The reps give the impression that they have better things to do than to listen to customers and their measly complaints. This is never said out loud, but the atmosphere sings this message loud and clear. The customer concludes, “They say they want to hear my feedback, but they sure don’t make it pleasant for me.”

• Customer interview: The customer is asked a long list of questions before any attempt is made to help. “What is your name? Your address? When did you buy this article? Who helped you? Who told you that? Did you pay cash? Where is your receipt? Do you have a customer registration number? What is your mother’s maiden name?” Maybe the company needs the answers to some of these questions, but they are not a good way to start the service recovery process. The customer thinks, “They are holding me hostage when I just want to get my money’s worth.” Frequently, the customer interview leads to customer interrogation.

• Customer interrogation: The customer is subjected to the third degree, which stems from doubt about the customer’s motivations, competence, or right to complain. “How can I be sure that what you say is true? Are you sure you bought it here? Did you follow the instructions? Did you read the thirty-page fine-print document that lists all the exceptions? Did you even read any of the instructions? Are you sure you didn’t drop it?” The interrogation frequently ends with, “Anyone can make a claim like that. You just wouldn’t believe the number of people who tell us all kinds of stories.” The customer says, [censored].

If customers are poorly treated when they complain, the service failure they experienced is magnified. Customers are not dense. They feel the rudeness directly from frontline staff. They also pick up on subtle clues that tell them not to complain. Sometimes several clues come at them at once. Emotionally, the customer is out of balance, and even a little product or service problem becomes a huge service failure. If customers persist in complaining in the face of all these disincentives to complain, they may be on their way to creating serious problems for the company.

How Company Systems Tell Customers Not to Complain

Companies tell their customers not to complain by making it difficult for them to know where or how to complain. Experiment by visiting a number of business Web sites and see how many display their telephone contact numbers in such a way that you don’t have to dig halfway through the earth’s crust to find them. Charles Underhill, with the Council of Better Business Bureaus, Inc., told a conference in The Hague about visiting twenty major Web sites prior to his speech and not finding a single site where the word “complaint” or “problem” was used. Underhill blames this approach on marketing departments that don’t like to admit that customers are anything but satisfied.³ Zappos.com makes a point of putting its 800 toll-free number on every single page of its Web site. It may be the only e-tailer that does this. If it’s not the only one, it is definitely one of the few.

Complaining frequently has a high hassle factor attached to it. Customers who go out of their way to publicly attack businesses tend to be alienated from the marketplace. Some feel unfairly treated and move to this position of alienation. Consider the following example, which is a typical example of someone who attempted to complain to an organization and ended up telling huge numbers of people because of how he was treated.

Mitchell Gooze is a professional speaker,⁴ a fact that becomes important a little later in this story. Gooze bought an LG VCR/DVD combo player/recorder. LG is a Korean firm that used to be known as Lucky Goldstar. It describes itself as a major global force in electronics information and communications products. Gooze’s DVD combo worked great for about nine months and then stopped operating. About a month later, Gooze got around to calling the 800 number listed on the company’s Web site. (Janelle tried locating the number herself and after about thirty clicks could not find it, but then she wasn’t quite as motivated as Gooze.)

Gooze was happy with the company’s response except the amount of time it would take to fix his DVD player. The device was under warranty and Gooze could send it back, but it would take three to five weeks to fix. About a month after he sent it back, LG called saying that it couldn’t repair the device because he hadn’t sent in $69 to cover the service charge for warranty service. Gooze had not been told about this. He gave LG his credit card so he could get the device repaired while the company still had possession. About a week later, his device was returned to him, still broken. He called LG again and was informed that the credit card hadn’t gone through. He asked how he could possibly have known that since he was told that it was okay. The rep told him that he should have checked his credit card bill and suggested resending the device, but he would need to send $199 (more than the original cost of the device) because it was no longer under warranty, now being over a year old. Gooze protested at the unfairness of this statement since he had originally sent it when it was under warranty. He got nowhere fast.

Gooze didn’t give up easily. He asked to speak to a supervisor but was told that LG had no supervisors in the United States and that whomever he talked with would tell him the same thing. Gooze, a very pleasant man, says that at that moment, he became an “assassin.” There is no way to contact LG in the United States except by calling this one 800 number, so through its systems, LG has effectively cut itself off from what is happening with its customers. Gooze now features this story in a keynote speech and has written about it in his e-zines.

LG is getting punished in another way as well, and the sad thing is, it’ll never know about it unless someone in Korea reads this book or hears one of Gooze’s speeches. Gooze bought a new DVD player—definitely not the LG brand. His son recently set up a household, and Gooze helped him get started by buying about $5,000 worth of new non-LG appliances. For a sum of $130, LG has lost thousands of dollars in sales from just this one customer. Gooze said that he would have liked to buy LG appliances because he likes them. But he’ll never buy LG again. As he says, “You love it when they act like they’re human and hate it when they don’t.”

Whenever an organization fails to follow through, a message is sent about complaining. And when customers are betrayed on a guarantee, an even clearer statement is sent as well. Explained below are some of the ways customers are told not to complain.

People Do Not Know Where or How to Complain

Many retail shops do not have clear signs telling customers where Customer Service is located. Sometimes service reps are not available to hear what customers have to say. Customers who have feedback to provide a manager may be told to go to Customer Service, which handles product exchanges and is not organized to feed complaints or suggestions for change back to management.

Customers may finally find a telephone number but they have to go through a phone menu that has nothing to do with handling problems or they reach a company operator who has no idea where to direct the complaint. The operator may connect customers to anyone, who will then send them to someone else who also does not know where complaints are to be directed. Customers finally get frustrated and demand to talk to the top person in the company, which is undoubtedly not necessary to solve their original complaints.

You can experiment yourself. The next time you are shopping in a mall, go into a few large department stores and ask where you can make a complaint. Ask around and find out how many people who work in the store know where to send you. See how many make an effort to handle you directly and immediately. Call companies in your area and tell the people who answer the phone that you have a complaint about one of their products and ask to whom you should speak. Or call a large company, perhaps a Fortune 100 company, and ask whomever you reach on the phone for the address where you can send a complaint letter. Based on our experience, unless you get very lucky, you probably are not going to get quick, knowledgeable answers to your questions. Then conduct a similar test with your own organization.

Complaining Has a High Hassle Factor Attached to It

Customers may be required to talk to someone who can handle a complaint during specified hours. These hours may be when customers are normally working. Customers may be asked to fill out complicated forms, or the forms may not have room to list special problems or complaints. On the web, a series of drop-down menus may force customers to choose options that do not describe their situations, and no “other” option is available.

Some companies are at greater risk for giving the impression that complaining is a major bother. For example, many high-tech companies farm out product support to subcontractors. Customers are unaware that they are not speaking to the company that produced the product. For example, customers may call the support line of a software company to report a product defect, which starts the clock ticking on a thirty-day free support period. But what if the customers do not need support at this time and only want to report a bug in the software? They are told that they have reached product support, not the manufacturer. To report a software bug, they have to contact the software company directly. However, the software company does not know where to direct the caller to complain. (Can all of this happen? It did to one of the authors.) What then happens to the customers’ motivation to provide feedback to the software company? Companies that subcontract their support must carefully coordinate their complaint policies so they are seamlessly executed by outside vendors.

Companies Do Not Follow Through

Sometimes all the right systems are in place to help customers, yet after the airing of a complaint, nobody acts on it. Customers get discouraged in the face of failed responses and are likely not to complain in the future. There are several explanations why customers get no response to their complaints. Sometimes a customer-facing employee will hear a complaint and then not pass it on. Many customer-facing staff have never been told to pass along customer feedback, so they do not even think it is part of their job. In fact, many of them have been told to tell customers to contact Customer Service directly when they have a complaint. When pushed to pass along the complaint, staff may say, “No one listens to us.”

Organizational behavior experts have found that just as customers do not like to complain, staff do not like to pass complaints up the organizational hierarchy. Staff apparently feel that when they pass on bad news to management, they are criticizing company policymakers. So they downplay the complaint, blame the customer, or simply do not pass the information along. In fact, Professor Alan Andreasen at Georgetown University writes that just as customer-facing staff do not like to pass complaints along, managers do not like to hear about customer dissatisfaction.⁵ Perhaps the manager frowns or appears annoyed when hearing a complaint. How many staff want to face that? Changing these attitudes about complaints throughout an entire organization will eventually get the word out to customers that the company wants to hear their opinions.

In a broad-based survey, service employees were asked about the amount of encouragement they receive from their managers to report customer feedback or complaints. About a third of the employees felt their managers encouraged them to report customer feedback. But more than 17 percent said they received no encouragement at all, and another 23 percent reported receiving only a little encouragement.⁶ When we ask managers directly whether they want to learn what their customers say, they all report encouraging their staff to speak up. Something isn’t lining up with the research.

Surveys of consumer affairs department employees suggest that the more complaints the department receives in relation to other kinds of consumer communications, the more isolated that department will become from the rest of the company. Consumer affairs departments become the keepers of the dirty secret of customer dissatisfaction. This kind of vicious circle of consumer complaints suggests that the more complaints a company receives, the less the company wants to hear them, which no doubt means that the company is less energetic in managing them.⁷

Guarantees: A Hassle or an Encouragement to Complain?

Guarantees can be a huge subset of high-hassle complaining. Frequently, guarantees have so many requirements that most people give up before trying to implement them. Customers may be required to send in the registration card right after purchase. Many times the original packing is required to return the item. In most cases a receipt is required, and sometimes a credit card receipt is not sufficient. Customers are forced to send the product to a distant location. Only part of the product may be covered by the guarantee. The guarantee may apply only if certain restrictive conditions are met. It sometimes takes eons to repair the item—so long, in fact, that customers give up and buy a new one rather than wait. It’s safe to say that customers perceive many guarantees to be marketing ploys, which they can be. They make customers feel as if they have some protection, but the reality is that guarantees often are not used unless the product is very expensive. Nonetheless, 91 percent of consumers interviewed in one study said that return guarantees were an important part of their decision about where to purchase.⁸ It’s likely that a majority of customers never intend to cash in on the guarantee, but the promise makes them feel more secure about their purchases.

Jon Schwartz, aka Vinny Verelli, had an interesting experience with Iomega. Years ago, he purchased one of the company’s external drives that used removable media to back up his considerable number of large music files. He ended up having numerous drives replaced—all according to the fairly generous guarantee. So, the guarantee worked insofar as replacements were obtained. Unfortunately, the cost of getting these replacements made the guarantee virtually useless. First, Schwartz had to spend hours on tech calls. Technicians would run him through all the prescribed tests and then say, “It’s a bad drive. Send it in.” As an experienced Iomega “bad drive” person, Schwartz knew this. He even bought a second drive in anticipation of one going bad so he’d have a backup for the bad drive. The refurbished drive would soon go bad, and he would then switch to his backup, which eventually also went bad. This went on for five years; Schwartz couldn’t switch brands because he had his music files on Iomega’s storage disks, which could be read only by Iomega drives. When CDs became available and Schwartz could back up his files on them, he did and vowed never to buy Iomega products again. Ever.

Nice people and guarantees that work aren’t sufficient to maintain customer loyalty. Products have to work as well. Just replacing a product for another that causes problems doesn’t make happy customers. As researchers at Deakin University indicate, focusing on the process of recovery by itself isn’t sufficient. “Relying purely on the guarantee compensation to recover the customer may not satisfy the customer.”⁹ No doubt Jon Schwartz would agree with them.

Here is a sample of a real guarantee.

Customer Satisfaction Policy

We are committed to your total satisfaction. Unopened product accompanied with original sales documentation may be returned for a full refund within 30 days of purchase. Opened products cannot be returned unless defective, with some important exceptions; please ask your representative. Defective software may be returned for replacement within 30 days of purchase when accompanied with original sales documentation . . .

Before returning any product please call our customer service department for a Return Merchandise Authorization (RMA) number and instructions.

We want to know how this policy results in total satisfaction as promised in its opening sentence. How many people buy a product and then not open it before finding out it is not what they want? And what if the product is not defective but the customer wants to return it anyway? You might say, “Wouldn’t a software company go bankrupt if it took back opened software that was in good operating condition? What if computer users have already installed the hardware on their computer?” Actually, most software companies can tell when a product has been installed if the computers are online, which they almost always are. The companies can simply render their software unusable over the Internet.

We say to all companies that have guarantees like this: “Fine. But be prepared for some off-the-wall complaints when you guarantee total satisfaction.” Promising total satisfaction is generally misleading and can make an already alienated buyer even more cynical. Personal taste makes total satisfaction very difficult to deliver. For example, how do you guarantee total satisfaction with the temperature of a hotel swimming pool? Pools can easily be too hot or too cold for different people.

A famous German designer company guarantees that it will fix any of its writing implements free of charge—forever. This sounds great until you learn there is an automatic $20 service fee for each repair, and your pen or pencil must be shipped by insured transport, adding an additional 20 percent to the total charge. This “free service guarantee” amounts to about 15 percent of the total cost of the pen. When you are buying the pen, the guarantee is proudly marched out, but nothing is said about the cost of implementing the guarantee.

Effective Guarantees

What is an effective guarantee? It must, above all, assure customers that if they are dissatisfied, the company will be there to help. From a marketing point of view, a guarantee is a statement to consumers that the company trusts its own work so much that it’s willing to guarantee it. Consumer uncertainty is reduced. Even for companies that have reputations of the highest quality, an explicit guarantee is still preferred by consumers. They like matters spelled out for them. Offering an explicit guarantee may not necessarily drive more traffic to your door if you already have an outstanding reputation. But, even if you are doing a great job and consumers know this about you, you’ll have more communication with your customers by offering a concrete guarantee.¹⁰

An effective guarantee does not mean that customers will always get a brand new product or money back whenever they express dissatisfaction. But it does mean that they will have the feeling that the company is there to help them achieve satisfaction with a new hotel room, a functioning computer, or a fresh hamburger. Jochen Wirtz at the National University of Singapore has empirically tested which is the best type of guarantee to offer: an effective guarantee that describes the attributes being guaranteed or a “no-holds barred” guarantee. An effective guarantee does not have to be unconditional, but it needs to be specific, simple, and clear. A guarantee of this type says to the customer: “Give us a try. If we do not live up to your satisfaction, we will make it up to you by refunding your money or replacing or fixing the product. We will not abandon you.”

His conclusion: full-satisfaction guarantees are no better than attribute-based guarantees. The major reason for this, Wirtz reports, is that consumers are uncertain about what a full-satisfaction guarantee covers, and this leads to a “discounting of their expected value.”¹¹ This point is important, and we have included it in this book because many managers are reluctant to offer guarantees when they are nervous about customers who cheat. More managers need to understand that guaranteeing specific attributes is just as effective as, in essence, writing a blank-check type of guarantee, the kind that frankly this scares most managers. This also means, as Wirtz suggests, that organizations should conduct research to find out which attributes consumers would like guaranteed. Good advice. Here’s an idea: maybe it’s what they complain about.

Family Fare, mentioned in the introduction, guarantees a clean washroom. If it’s not clean, the customer gets a free cup of coffee. Family Fare doesn’t have to give out much coffee, and it’s not that the company minds giving away the coffee. The guarantee affects staff behavior so that even executives will mop restroom floors if they are dirty.

Some products may demand restrictions on their guarantees. When such restrictions are in place, however, companies have to be careful with the use of the phrase total satisfaction. Car companies, for example, cannot replace a used car with a brand-new one at any time at any customer’s demand. But a fast-food hamburger chain can easily replace an unsatisfactory hamburger.

Carl Sewell, a car dealer and the author of the perennial best-selling Customers for Life, offers a satisfaction guarantee that has limits but is still effective. Sewell Village Cadillac has relationships with customers whose families buy dozens of cars from the dealership, and it doesn’t want to say no (within limits) to customers like that.¹² Sewell says that if a customer buys a car from Sewell Village Cadillac, takes it home, and shows it to his or her spouse, who hates the color, he will gladly take the car back, no questions asked. But if someone buys a car, drives it around for ten days and then learns he or she could have bought it cheaper at another dealer, Sewell will not take it back. A deal is a deal, Sewell says, and the dealership’s satisfaction guarantee does not include refunds in such cases.¹³

Easy product exchanges have contributed to customers’ becoming champions of Nordstrom, the high-end retailer, even calling themselves Nordies. Nordstrom customers spend more, pay higher prices, and tell everyone they know to shop there. Nordstroms no-hassle guarantees and refunds more than compensate for their higher prices. In the early 1990s, Nordstrom sold more per square foot than any other department store in the United States. When Nordstrom began to develop the chain out of the Seattle area, pundits had already predicted the demise of the large, full-price department store. Almost immediately, Nordstrom shot to the front of the pack with high profits and astounding customer loyalty. If you give customers what they want and handle their complaints when they emerge, it is possible to be successful in almost any market.

Many hotels are beginning to jump on the guarantee bandwagon. Those that do are enjoying a marketing edge as a result.¹⁴ Eric Pfeffer, president of Howard Johnson Franchise Systems, uses statistics to support his hotel’s guarantee. He says that a guest with a complaint that is satisfactorily resolved is 92 percent more likely to return to the hotel. A guest whose problem is not solved is less than 50 percent likely to book a room again.¹⁵

Empowerment is the key to making guarantees work. Customer-facing employees have to know about the company’s guarantee, feel comfortable with complaining customers, and understand that delivering satisfied customers is their most important job. McDonald’s uses a video training session with role-played examples to teach managers and front-line staff how to carry out the McDonald’s guarantee.¹⁶

Components of an Extraordinary Guarantee

Christopher Hart, who introduced the notion of a “high-octane” guarantee, claims that every company that offers an extraordinary guarantee outpaces its competitors and dramatically improves its financial performance.¹⁷ “In its strongest form, a guarantee of this type promises exceptional, uncompromising quality and customer satisfaction. It backs that promise with a payout that has few strings attached and is intended to fully recapture the customer’s goodwill.”¹⁸

The purpose of an extraordinary guarantee is not just to make sure your customer’s spending with you is safe but also to make sure your organization learns from satisfaction failures and then plugs those holes. It’s clearly not an approach for every organization, but for those that take a step in that direction, the results can be phenomenal. Hart relates one example: Northeast Delta Dental. As a result of its extraordinary guarantee, this dental insurance company charges 20 percent higher fees, and its market share has gone from 25 percent in 1995 to over 80 percent in 2006.¹⁹

Tom Jones, CEO of Epsilon, a database marketing company, once wrote a refund check of $210,000, the entire client’s fee. The company had instituted a guarantee promising unconditional satisfaction or a 100 percent refund. Jones says he returned the client’s money to put pressure on his team internally; it wasn’t done as a marketing ploy. He wanted his entire team to find out what it had to do to offer that level of service. Jones states, “Call me crazy, but I was excited. There are few moments of opportunity where a CEO can create major change through a single, symbolic act. This was one of them.” The customer didn’t even want to take the money back. Jones insisted. You can imagine how this news spread throughout Epsilon. Jones says, “That $210,000 was the best investment I could have made.”²⁰ Jones is hitting on a point that other people have made: a service guarantee also acts as an internal change agent. It gets employees to focus on meeting the terms of the guarantee and helps define the terms of staff empowerment—namely, do what it takes to deliver the terms of the guarantee.²¹

Christopher Hart describes an extraordinary guarantee as a marketing investment in an organization’s good reputation. He says it has three parts:

1. The promise: a clear “no-holds barred” pledge with no weasel words

2. The payout: a clear statement of what customers will get that leaves them thinking “wow”

3. The payout process: a clear statement of a hassle-free process to collect on the guarantee²²

In Hart’s opinion, the process also needs to be proactive (“We found a mistake, even if you didn’t”) and empathic (“We’re sorry and we don’t want this to happen again”).

When customers ask to have your company’s guarantee implemented, be sure to use the opportunity to win back their confidence. Don’t just fulfill the terms of the guarantee. Janelle once asked for money back on a “no-questions-asked” guarantee, and the money was handed over, no questions asked, no comments made—and no effort made to win her future business. This was a wasted opportunity. At a minimum, the representative could have said, “We realize we have a ‘no-questions-asked’ guarantee, and so we respect your not telling us why you were dissatisfied. But it would be very helpful to us to learn why. Your feedback could help us with the rest of our customers.” A statement like that would have recaptured a lot of Janelle’s confidence.

Finally, a word of caution about guarantees and complaints. Domino’s, the famous pizza maker, used to guarantee that if a telephone-ordered pizza was not delivered in thirty minutes, the pizza would be free. Many readers may be aware that Domino’s got into trouble with this guarantee because the company was held liable when some of its drivers had accidents while speeding to meet the thirty-minute guarantee. Domino’s also discovered that many people ordering pizzas felt guilty cashing in on the guarantee when the pizza was just a little late. Domino’s slowed down its speedy drivers (now the guarantee is an estimated thirty minutes) and emphasizes its Total Satisfaction Guarantee: “If for any reason you are dissatisfied with your Domino’s Pizza dining experience, we will re-make your pizza or refund your money.” Domino’s keeps its unique selling point and still receives customer feedback about its delivery service. Today Domino’s, described as a megabrand, operates in more than fifty-five countries, is the world’s leading pizza restaurant chain, has over 145,000 employees delivering more than 1.3 million pizzas per day, and earns gross revenues of $1.4 billion per year.²³

What About the Cheaters?

Hart is careful to point out that you can’t just make an offer of “100 percent satisfaction or your money back” without putting in-house processes into place. He points out that most extraordinary guarantees are gutted by financial and legal departments that want to put in so many exceptions to the guarantees to protect their companies that the guarantees are no longer extraordinary.

Our experience from working with companies is that it doesn’t take an entire legal department to prevent a guarantee from being put in place. It takes just one skittish manager who is afraid of all those cheaters running wild in the marketplace just waiting to take advantage of guarantees. After all, we are fully aware that people do shoplift, as evidenced by all the security devices placed on clothing. And most retailers have security cameras attached to their ceilings to catch sticky-fingered shoppers. We are also aware that a lot of people think the problem of stealing is much worse than it probably is. Whenever we bring up this topic in a workshop, people will tell us, “Oh, you can’t offer such a guarantee. Everyone will cheat.” So we ask them, “Would you?” And they say, “Of course not.” We then ask, “How come you’re so different from all the people that you think are cheaters?” It’s something to think about.

Stretching guarantees to a maximum, some people buy a product, use it for a period of time, and then return it for a full refund. Hart writes about a Hampton Inn policy that encouraged customers to regularly take advantage of the inn’s guarantee of 100 percent satisfaction or no charge. A truck driver allegedly said he liked Hampton Inn because he could stay there for free.²⁴ TMI sells leather calendar binders and has gotten its share of people who used these products for twenty years and then asked for replacement binders because the stitching came undone.

Jochen Wirtz, quoted above, has looked extensively at consumer cheating on service guarantees. He has identified situations that inspire customers to cheat and situations that make the customers afraid to cheat. He has measured the likelihood to cheat against what is to be gained. Wirtz also examined personality variables, comparing those who have strong tendencies to cheat anywhere with people who never engage in cheating behaviors. Remember our earlier statistic: somewhere between 1 and 4 percent of customers cheat with their complaints. Here’s what Wirtz discovered: people who are your loyal customers and are satisfied with what you do for them and tend to have pretty good morals in place are the least likely to cheat. No surprise there. This implies that customers who have no loyalty toward you, who don’t like what you have done for them (perhaps feeling that you owe them something), and who tend to take advantage of situations where cheating is easy, are the people most likely to cheat.²⁵ The lesson to be learned from this is to get to know your customers and do well by them. If you discover that some of your customers are going to cheat regardless of what you do, such as the truck driver who stayed at the Hampton Inn, it might be a good idea to fire those customers. (Hampton Inn could tell the customer that he can no longer book rooms because it is impossible for the inn to satisfy him.)

What does all this suggest? You can offer full money-back guarantees without fearing that your loyal customers are going to cheat at any higher level than they currently do. And you will reap the benefit of customers’ feeling more confident about doing business with you. If customers feel this confidence with you, they will be more likely to give you repeat business, which will drive down the chances that they will cheat because they’ll feel guilty if they cheat while they are regular customers. If you are still worried about cheaters, Wirtz recommends setting up your strongest guarantees for your most loyal customers. “Perhaps service guarantees could be incorporated into a firm’s membership or loyalty program and even be positioned as an additional benefit of that scheme.”²⁶

The Difficulty of Complaints in Unequal Relationships

Some industries must deal with dependent or unequal relationships—real or imagined—with their customers. How do patients complain, for example, when the person they complain to may be responsible for helping them get well? The health-care industry is by no means the only industry that faces this complaint challenge. How do parents complain about teachers when those teachers can then take it out on their children? How do policyholders complain to insurance companies when their files might be deliberately lost or moved to the bottom of the pile to be processed? How can staff members or political appointees complain to their boss or the head of government when they fear losing their jobs? How can hotel guests complain in the middle of their stays when they feel threatened that things may not go right for the rest of the trip or that staff may discuss their behavior in unflattering terms at morning meetings? How can spouses complain to their partners if they’re afraid they will be abandoned? How do people getting their hair styled complain when the stylist may take revenge on whatever hair remains? How many people risk complaining to tax authorities such as the U.S. Internal Revenue Service if they might trigger an audit? And how can suppliers complain to merchandising departments when they fear losing accounts if they say anything?

This lack of parity is the bedrock of relationships between employers and employees. Only recently has whistle-blower legislation in the United States and other countries attempted to protect people who speak up.²⁷ Most analysts seem to agree that even with protective legislation, career damage is significant for anyone who alerts the public about corporate or government misdeeds.²⁸ Institutions that are based on dependency relationships with customers have to be particularly careful in how complaints are received if they are to be received at all. Research demonstrates that in these situations, consumers prefer to say nothing at all rather than alienate the provider that they are dependent on.²⁹

Any business that provides more personal services, from a hospital to a beauty salon, must strongly communicate that it wants to hear from customers. Roadblocks that stop people from complaining need to be removed, and when customers (even when they are patients, clients, or patrons) do complain, they need to be assured in words and behavior that nothing negative will happen to them. The health-care industry needs to pay particular attention to this issue as it has only recently adjusted its mind-set regarding patients as customers. If you scan the thousands of documents on this subject on the Internet, you will find a great deal of disagreement among health-care professionals on whether patients should even be considered customers. Many medical people object because they say it turns medicine too much into a “business.” To deny the business side of the health-care industry, however, is to ignore reality. Most medical doctors function as legal corporations these days.

If pushed too far with bad treatment, customers who have complaints will assume they have nothing to lose and resort to legal action. Vanderbilt University advisors say, “Patients frequently tell us the reason they went to a lawyer was because their health professionals showed no concern, no warmth, wouldn’t listen, wouldn’t talk or wouldn’t answer questions.”³⁰ By any standard, that’s horrible complaint handling. Dr. Philip Greenland suggests a simple question to remind the health-care industry of the importance of empathy in dependency relationships: “What if the patient were your mother?”³¹

An elderly woman—we’ll call her Lucy—was hospitalized and unfortunately had her chart confused with another patient’s. As a result of this mix-up, an unwarranted medical procedure was performed on Lucy, and her lung collapsed. A collapsed lung is extremely painful and dangerous, especially for a person in her late seventies. A few days later, with staff tiptoeing carefully around the issue and lots of questions being asked by her children, Lucy was finally told about the mistake. Hospital staff also told her that her stay would need to be extended for at least another week, and they did not offer to waive those charges. Lucy’s children were aghast. They insisted that their mother take legal action in what was an obvious case of malpractice.

Lucy was clear: she didn’t want to sue. Her reasoning was that the staff had made a mistake, she didn’t want to upset them by calling attention to what they had done, and they shouldn’t be sued for a mistake. “They didn’t mean to do it,” she said. And she really liked her primary care physician and didn’t want to make him feel bad. The hospital’s legal department had a policy in place that prevented staff from talking with patients who were going to sue, though there was no indication that Lucy was planning that. As a result, the hospital staff were warned that they should not talk with Lucy about the collapsed lung—or about anything else either.

After a few days of zero communication from the staff, except minimal daily greetings, Lucy went from feeling isolated to rejected to insulted to annoyed and finally to angry. You can guess what Lucy finally decided to do. She was awarded a tidy sum from her legal action. If the hospital staff had continued to communicate with her, apologized, and observed basic courtesy after such a traumatic incident, legal action would have been avoided in this case. Research conducted by A. J. Kellett found that physicians who own up to a problem, apologize, and then explain what happened are sued significantly less frequently than physicians who do not apologize. It would have worked for Lucy!³²