5

In the Mind of the Complaining Customer

When customers have problems with products they have purchased, few will bother to complain if the products are low in price. The research group TARP found that somewhere between 1 and 5 percent will complain to management or headquarters—that is, to someone who will or can do something about the problem.¹ About half the customers who are dissatisfied will just walk away and not return. What about the other 45 percent? They will complain to customer-facing staff. So, if service representatives are inclined to take care of customers and are empowered to do so, there’s a good chance that many of these customers can be retained.

For small-ticket items, only about 4 percent of disassatified customers complain to retail outlets; if they purchased a large-ticket item, about half of dissatisfied consumers will complain to customer-facing staff and between 5 and 10 percent escalate to local management or corporate offices. Having readily accessible toll-free numbers will double the number of calls to corporate offices. But TARP estimates that senior executives receive only one out of one hundred to five hundred complaints that come into headquarters.² TARP, incidentally, has replicated its research in almost every industry and in more than twenty countries, and these figures hold across the marketplace and around the world.

The types of problems people encounter affect whether or not they will complain. People are much more likely to complain (between 50 to 75 percent) if the problem causes monetary loss. If customers have a problem with service, they are even less likely to say anything compared to having a problem with a product. In other words, customers don’t particularly like complaining about people and their behaviors. The types of staff behavior that might do more damage to loyalty in the long run (such as incompetence, poor quality, and mistreatment of customers) are less likely to be brought up (between 5 and 30 percent).³

Dissatisfied Customers Speak Out to the World

If customers do not say anything to the company, does this mean that they do not speak up? Absolutely not. And they are much more likely to talk when they aren’t in the presence of someone who will confront them directly. These statistics are perhaps the most significant. Dissatisfied customers will tell between eight and ten people about the bad service they received. One in five will tell twenty people.⁴

Many people are puzzled by the statistics generated about complaining customers because they do not always seem to match up. Part of the variance in the statistics can be accounted for by whether the product is expensive or inexpensive, whether customers purchased services or products, how much competition the product or service faces, whether customers bought nationally recognized branded products or generic products, the level of dissatisfaction experienced by customers, the socioeconomic group of the customers, the relative costs and benefits of complaining, the tendency on the part of individual consumers to complain, and the importance of the purchase to the customers. These are a lot of variables, so we should not expect all the research to come up with identical numbers, especially numbers that are unique to various industries. In general, however, the huge amount of research continually demonstrates high levels of consumer dissatisfaction about which customers consistently do not complain. As researchers for a study published in Harvard Business Review concluded, “While we cannot claim that our figures have no upward or downward bias, business should be alarmed at the amount of unresolved dissatisfaction that apparently exists in the marketplace.”⁵

We recommend that rather than attaching yourself to any specific set of statistics, know that throughout the years the overall statistics have not changed much, and they do not look good for businesses trying to learn about the degree of dissatisfaction that exists after customers face problems. Read some of the research that is easily available on the Web to find out what has been learned about your industry. For example, if your company is a utility, you can look at complaints sent to the New York State Office of Consumer Services. Every month since June 2000, this office has produced a well-formatted PDF utilities report. You can even compare your statistics against other utilities.⁶ You can also find statistics about managed health care, railroads, Internet content, special education, homebuilders, the media, airlines, insurance, small businesses, and citizen complaints about the police. These statistics have been gathered in the United States (in some cases, state by state), Northern Ireland, Australia, Canada, Hong Kong, Malaysia, the United Kingdom, London, and many other areas. In addition, the Better Business Bureau tracks complaints by industry. And this is just in English!

Noncomplainers Must Be Factored into Complaint Statistics

Even though complaints can tell a business how it is performing in the marketplace, many companies hide the bad news of complaining customers from themselves. If it’s true, as frequently cited, that twenty-six out of twenty-seven service customers do not complain in such a way that people in charge hear about what goes wrong, then to get an accurate count of dissatisfied customers, service companies should multiply the number of complaints they receive by twenty-seven.⁷ One hundred formal complaints equals a potential twenty-seven hundred dissatisfied customers in the service industry.

Find out how many people tend not to complain about your service or product offering. Then choose a factor estimating how many dissatisfied customers the complaining customer represents. For example, perhaps in your industry, 10 percent typically complain, so each complaint represents nine others from customers who aren’t saying anything. (TARP provides numbers that should make the hair rise on the back of most executives’ necks—for example, if corporate offices receive twenty complaints about a policy, that could mean between six hundred and one thousand customers are unhappy. John Goodman in his speeches says that he has observed situations where the ratios were as high as two thousand dissatisfied customers to one complaining customer whose message gets through to corporate offices.)⁸ Now make another guess, based on your research or on customer trends, about how many of those nine you will lose because they didn’t speak up. Then you can begin to estimate potential revenue gains by fixing service problems.

If you think that your customers are part of the group that always speaks up and that none of this applies to you, you really ought to look at your industry carefully. And remember, most industry complaint statistics require that the complaint be filed in a particular way. Normally, customers can’t just tell agencies their complaints over the phone. If you believe that your customers don’t complain because you offer such great products and service, you ought to think that one through as well. Janelle and her husband had this brought home to them while traveling in Germany and stopping at a charming country inn. Janelle’s husband, Jeffrey, a very experimental eater, chose an exotically named fish on the menu that the waiter assured him was excellent. The fish came to the table basically raw, with the head still attached. Janelle and Jeffrey began to discuss the issue of how people don’t complain even when they are completely dissatisfied while Jeffrey hid the fish in a potted plant nearby—so the waiter wouldn’t feel bad. When the waiter returned, he saw that the fish plate was completely clean—even the bones were gone! “How was it?” he asked. “Fine. It was delicious.” So the restaurant never learned that it’s probably not such a good idea to recommend that particular fish to Americans.

We’ve told this story to dozens of people, always to their great delight. Dissatisfaction is a more popular topic of conversation than satisfaction. The fish story wouldn’t be nearly as appealing if we talked about the most fantastically prepared fish in the whole world. If a line forms at the refreshment counter of a movie theatre and the line moves quickly, most people will not praise the speed of the line: “Wow, look at this. The third movie I’ve been to this month, and the snack line moves so fast. This theatre is really something. It makes up for the price we’re paying for this bag of popcorn.” But if the line is slow, perfect strangers will grumble to each other about how the theatre isn’t staffed adequately on top of what a rip-off the price of the popcorn is. This may remind them of how expensive movies are today, especially compared to twenty years ago. They may even start to complain about government policy. And no one will think this is in any way abnormal. It is so much fun to complain when there is no one around who can do anything about the problem.

Inner- and Outer-Circle Complaint Behavior

If you watch carefully, you’ll note that people talk about products differently to their inner circle (family, close friends, and work colleagues) than they do to their outer circle (people they stand next to in lines; people they meet for the first time at a luncheon; people they have never met but who are listening to them in a meeting; people sitting next to them on planes, buses, and trains; or people to whom they are peripherally connected). People feel comfortable telling their mail carrier, to whom they may rarely speak, about the lemon car they just bought. In fact, some exaggerate their stories, just a little, to get the maximum effect. “Can you imagine such a thing? I was shocked!” We have seen speakers stand before audiences without a word of introduction and tell everyone how an airline lost their luggage, the plane was late and overbooked, and they ran out of pillows and blankets. And the audience, laughing in shared recognition, will accept this as a suitable beginning for a speech.

Listeners generally relate to these tales of woe and are eager to talk about their own horrible experiences. In a worst-case scenario, if someone tells his or her story well, a listener may turn around and retell the experience to another group of people. All these people become bad-will ambassadors for a product or company and seriously undermine the effectiveness of expensive marketing strategies. “Yes, I’ve heard the same thing. (Therefore, it must be true.)” You can also be sure that the story is not retold as it was heard. Generally, the retold complaint example becomes more extreme, dressed up so that listeners are sure to roll their eyes.

Some people go so far as to relate bad consumer experiences that happened decades ago. The company involved may have changed hands or improved its customer service, but the public is still discussing the company as if it currently performs as it did twenty or thirty years ago. The Jaguar automobile company is a case in point. Jaguars used to have major repair problems. It used to be said that if you bought a Jaguar, you needed to buy two so you would have one to drive while the other was in the shop. Today, Fortune magazine describes Jaguars as being among the most dependable cars manufactured in the world.⁹ It took a long time for that old reputation to mend. Incidentally, blogger Joe Sherlock explains how listening to and addressing vendor complaints substantially contributed to Jaguar’s improved quality. “Ford, appalled at the poor quality of vendor components supplied to Jaguar, initiated frank discussions with suppliers. Ford got the equally frank feedback that crap was supplied because Jaguar was a crappy customer and very slow in payment. Ford traded prompt payment . . . in exchange for improved component quality.”¹⁰

Consider the Chevrolet Prizm as an example of where reputation matters. The Prizm and the Toyota Corolla were both built at the NUMMI plant in California by the same workers. The Prizm consistently sold for less than the Toyota Corolla, even though it was essentially the same car. Yet Chevrolet had to add incentives to sell the Prizm. And after a few years, the Prizm lost value in the resale market when compared to the Corolla. Consumers in the know understood that these two cars were the same; resale ads normally mentioned that the Prizm is a Corolla, the best-selling car in the world. How did the Toyota Corolla maintain an advantage over its twin but tainted Chevrolet sister? Toyota has been better at providing what most car buyers want—the basics—and then standing behind its cars when problems occur. Over the years, consumers have told a brand story about Toyota’s reliability, reasonable price, value in the resale market, and excellent after-sales service. The Chevrolet story has been considerably more mixed. Consumers remember the failures and tell each other until they become reality, even if in this particular case it wasn’t.

In contrast to the large numbers of others to whom people relate negative stories, those who are pleased with a car purchase will tell only eight other people. And these will likely be people in the person’s inner circle. People more readily tell friends and family about positive purchases because those who are close to them will more likely be happy for them without showing a lot of jealousy. For example, if a woman buys a new car for her family, she will feel comfortable telling her friend, “Hey, I just got a new car. You have to see it. It drives like a dream. The children love the color of the leather seats, and we got it for a great price. I’ve been waiting a long time for this.” This is a normal interaction among friends. The friend won’t be thinking, “What a turkey. Here we’re going to see a movie and she wants to show me the color of her new car.” If the proud car owner doesn’t know the other person very well, however, it’s unlikely she will brag. Pleased recent buyers generally don’t extol the virtues of their cars to strangers unless they are asked.

TARP found that if companies can get customers to complain directly to them, they can minimize the damage. Customers who complain about their dissatisfaction are also more likely to repurchase, even if their complaints are not handled satisfactorily. In fact, TARP, along with a large number of other research groups, concluded that customers who don’t complain are the least loyal customers, while those who complain may be or become the most loyal customers.¹¹ The reason for this goes back to basic psychology. If you receive a significant discount for something you purchased because you received poor service, you can brag about this and not incite jealousy. After all, you had to endure some pain to get the benefit. If your friend says, “Oh, you’re always so lucky,” you can respond, “I’d rather not have gone through the ordeal they put me through. I’d rather not have had the problem.”

This is probably the strangest conclusion generated in the complaining customers arena. A company actually has a chance of increasing positive word-of-mouth advertising if it recovers well for dissatisfied customers.¹²

Complaints and the Reciprocity Principle

The reason why customers are likely to say positive things after a problem has been fixed for them is best explained by the social psychology principle of reciprocity. Humans like to return favors (reciprocate) when something nice has been done for them; in other words, “you scratch my back, and I’ll scratch yours.” This principle applies in every culture across the world. It translates into consumer behavior this way: even if I have had a problem with your company, if you do something nice for me, including something as simple as giving me a free hamburger or sincerely apologizing, I will be likely to give you more of my business and tell others what a great company you are. In other words, customers will reward businesses for taking care of them.

Reciprocity provides the justification for businesses’ being proactive when errors occur. Acting proactively to create a feeling of reciprocity puts the service provider in the driver’s seat. If the organization takes care of the customer’s complaint but only after making the customer jump through hoops, the sense of reciprocity is muted. A financial services survey of six thousand North American households found that “the number one [determinant] of customers’ willingness to buy again or buy more products from the company” is customers’ feeling that the company has acted as their advocate or in their interest.¹³

John O’Neill and Anna Mattilla, at Penn State University, surveyed 613 hotel guests and concluded that customers like being upgraded to nicer rooms. No big surprise there! It’s like winning a minilottery. But the reason they are upgraded affects satisfaction and loyalty. If the upgrade occurs because an honest mistake was made, customers tend to be satisfied and are even more likely to return to the same hotel. Reciprocity in action. However, customers don’t like it when the hotel has a policy to overbook figuring there will be last-minute cancellations. The flying public doesn’t like the overbooking practices of the airlines, but they’ve gotten used to them. So far, however, consumers don’t think hotels should overbook, and O’Neill and Mattilla conclude that if a guest with a reservation believes that the hotel regularly overbooks its rooms, an upgrade isn’t nearly as satisfying. The researchers advise hotels to be careful about their overbooking practices because they open themselves up to punishment by guests who won’t return.¹⁴ It matters whether customers believe that the hotel is to blame for the problems they face, even if they’re upgraded to a royal suite.

Reciprocity is not a technique used to manipulate customers. Rather, if all the people in an organization take the attitude that they are going to give their best to customers, then reciprocity will naturally emerge during the customer-business relationships. If reciprocity means “I’m smiling at you, so you better smile back,” the positive power of natural positive human behavior is lost. A good example of a company that creates a lot of natural reciprocity is USAA, the military insurance company. One way it does this is to advise customers not to buy insurance just because they want it if the USAA representative feels they do not need that coverage. Reps will talk people out of inappropriate purchases. That sends a very strong message of customer advocacy.

At some point, good customer service has to be about simply offering it because it’s good for customers, whom we want to take care of, and also because it makes service providers feel good to help their customers. In our personal relationships, a lot of tit-for-tat behavior goes on. For example, I’ll iron your shirt if you take out the garbage. That type of personal negotiation is unspoken and enables a couple to take care of each other without negotiating behavior exchanges. In commercial relationships, we ultimately have to get down to economic basics. Utilitarian ethics, on which modern economics is based, argues for the greatest good for the greatest number. At every interaction point with a customer, someone has to answer the question, “What should I (or my company) do?” If the company does something that results in an enhancement of the feeling of reciprocity, we are probably behaving in the best way for everyone, which is the definition of cooperative economics.

Levels of Complaint Reactions: Driving Our Customers to Anger

One of the most complete research studies on dissatisfied-customer behavior was conducted at Case Western Reserve University.¹⁵ Thousands of households were contacted to determine if they had had a dissatisfying experience in one of four areas: grocery shopping, automotive repair, medical care, or banking services. Of the hundreds of households interviewed in depth, approximately 30 percent recalled a dissatisfying experience and were eager to talk about it. The researchers wanted to know what these people did about their bad experiences and divided their responses into three categories, or “levels of reaction.”

• Level 1: Complain to the company. The customers spoke up and told the salesperson, retailer, or provider directly about their bad experience.

• Level 2: Complain to other people. The customers told people they knew but not the company about their bad experience; they also stopped buying from the company in question.

• Level 3: Complain to a third party. The customers went to a third party such as a lawyer to initiate legal action or a newspaper to tell of their experience in a letter to the editor, or they issued a formal complaint to an agency such as the Better Business Bureau.

The interviewed subjects fell into four clusters and were identified as Voicers, 37 percent; Passives, 14 percent; Irates, 21 percent; and Activists, 28 percent.

Voicers

The most desirable of dissatisfied customers, from our point of view, are the Voicers, who tell the organization when they have bad experiences. They assist the company in trying to improve services and products. The Voicers will let the company know when something does not please them, and they generally do not go out and tell a bunch of other people about bad service or products. Voicers are actively interested in getting redress for their situations. If the company does not handle them well, they may become Activists. Companies must convert all their dissatisfied customers into Voicers and then satisfy them. They are truly helpful to any organization.

Passives

Many companies set goals to reduce the number of customer complaints they receive. Such companies might choose the Passives as the preferred group of customers. A company can provide problem-ridden service or products to this group and they will keep coming back, at least for a while. Furthermore, they will not tarnish the company’s reputation by telling anyone else. Employees can feel good about their services and products, oblivious to the customer experience.

Unfortunately, such a group does not help with positive word-of-mouth advertising. Because these customers are passive, they may not say anything negative, but they definitely are not going to be cheerleaders either when things go right. We also do not know how far these people can be pushed before they move to one of the other levels. Passives could just as well be called fence-sitters, waiting for something else to go wrong before they act. Maybe they are the three-strikes-and-you’re-out kind of people, or perhaps they are the slow burners. It takes them awhile to heat up, but once they do, they do major damage to a company’s reputation or switch suppliers. Perhaps they grew up in a culture where complaining is looked down on, such as in Japan, where the virtue of gamen (accepting whatever fate throws in your path without complaint) is highly prized. Unfortunately, companies do not know much about these shoppers because they have little chance to communicate with them.

Passives also do not share their insights as to how the company can improve its products and services to meet customer needs. Companies interested in providing higher-quality products and services must adopt strategies to get this group of customers to feel comfortable speaking up when they are dissatisfied or have ideas.

Irates

The Irates are dangerous to an organization’s reputation; in many cases, they will not say a word to the service provider or company. But they will tell lots of people about their bad service and generally will stop buying. The company thereby loses the opportunity to regain these customers’ loyalty. They just leave, talking all the while as they take their business elsewhere!

Some industries generate more Irates than others. Retail stores that sell relatively inexpensive items will rarely hear complaints directly. It is not worth the trouble to complain about a $1 or $2 item. Travelers also rarely complain to the travel industry. The TARP report quoted earlier found that 55 percent of travelers who have problems with airlines, hotels, or rental-car companies endure in silence. Jean Otte, former vice president of quality management at National Car Rental, explains it this way: “Many feel that complaining won’t do any good, and the rest are too damn busy or don’t want to be humiliated.”¹⁶ But put a group of frequent travelers together, and you will quickly learn one of their all-time favorite topics is the bad things that can happen while traveling. Monopoly businesses have to be particularly aware of this phenomenon.¹⁷ Customers tend not to complain because they don’t have anywhere else to go, but they readily engage in negative word-of-mouth as payback.

Activists

The Activists are potentially the most lethal of the four groups, particularly if they are dissatisfied with the company’s response and are out for more than redress. They may be seeking revenge while spreading the word of the company’s bad service to everyone and never again patronizing the company. Activists can even damage a company’s stock price. As a case in point, a study measured the impact of Activists’ escalating their complaints to the Complaints Service of the Bank of Spain, a government body. When the Complaints Service annual report is released, the stock market reacts negatively to those banks with the most complaints. This may be because the market knows from experience that there is a negative relationship between complaints and performance. In Spain, at least, complaint handling should clearly be considered an investment rather than an expense in the banking sector.¹⁸

The Case Western Reserve University study found a larger number of Activists (28 percent) than most other research studies. Perhaps this is because automotive repair was one of the services included in the study. Consumers have been educated to complain to state government agencies when they have car repair problems. A much more common statistic of Activist behavior that gets reported is closer to one in twenty-seven, or 4 percent.¹⁹ With the exception of car repair, most people do their complaining to their inner and outer circles and nowhere else.

Starbucks seems to attract an inordinate number of Activists. In late 2007, some 337,000 Web sites appeared when we searched for “Starbucks complaints” on Google. In the 1990s, Jeremy Dorosin of Walnut Creek, California, bought two espresso machines at a Starbucks and both malfunctioned. Dorosin began his campaign against Starbucks by taking out ads in the Wall Street Journal, asking, “Had any problems at Starbucks Coffee?” He signed the ad, “One mistreated customer” and asked other mistreated customers to call a toll-free number that he set up at his own expense. Starbucks has tried to settle with Dorosin a number of times, but Dorosin describes its offers of settlement as always being too late and only in response to his Activist behavior. Dorosin’s latest demand is that Starbucks fund a nonprofit center for runaway children in San Francisco. He says he does not want any compensation for himself. A Starbucks spokesperson has called Dorosin’s requests “ridiculous” and labeled Dorosin himself an “ego.”²⁰ Dorosin says he is not a contentious person and had never made a consumer complaint before he went after Starbucks.

Now a man calling himself DaVido is pestering Starbucks with his song, “Java Jitter,” inspired by Starbucks. DaVido wants Starbucks to sell his song in its stores. The company keeps saying no. He keeps going into its stores, dancing, singing, and filming. He keeps getting thrown out. He keeps putting his videos up on the web, including on YouTube, where his original video, “The Starbucks Rejection Tour,” has been watched by huge numbers of people. His music is catchy. Seth Godin, author of All Marketers Are Liars,²¹ says, “So if I was in Starbucks’ shoes, I’d say this is great because we got 10,000 people who would love to sell their CDs. Let’s let them sell them on the website and we’ll take the five best-selling ones and bring them into the store.”²² A major complainer is telling Starbucks that it has become like Nashville or American Idol, and it might be a good idea to listen to DaVido’s song and Godin’s idea. Starbucks refuses. DaVido seems to be more energized every time he gets thrown out of a Starbucks, which to date has been over two hundred times. As he says, he’s not going away. Whether people love or hate him, when you read all the comments written about him on the Web, it’s striking how thoroughly DaVido engages people. One thing is clear, Starbucks needs to figure out a strategy to deal with the likes of Dorosin and DaVido because the brand and all it stands for seems to attract this intense kind of energy.

If an industry allows complaints to go unanswered until large numbers of people become Activists, then government agencies tend to step in and take charge. It’s not going to happen to Starbucks, but where the government acts as the watchdog, politicians will step in. Fines have been imposed for selling incorrect policies and using misleading advertising in the insurance industry. Banks have also been allowed to move into the expanding marketplace of lifetime financial investments, directly affecting the insurance industry’s market share.²³

One final word. Some businesses categorize their customer complaints into two response groups: public and private. Public responses are complaints to the company itself and complaints to third parties; private responses are behaviors such as boycotting of the company or product and negative word-of-mouth. Many businesses see private responses as nonassertive behavior by customers, and as a result, these responses are considered unimportant and undeserving of attention by managers.²⁴ Irates who complain on the Internet would be categorized as private complainers. In other words, many companies ignore the Irate group, while in this book we consider them dangerous to the health of a company!

How Are Activists Created?

As a group, Activists are consumers who tend to be the most alienated from the marketplace. In this case, alienation can be described as a mind-set that when something goes wrong, normal complaint channels will not work so other methods of redress must be chosen. Something very personal happens to Activists that prods them to engage in behavior that frequently is costly to them and, at a minimum, occupies a great deal of their time. Customer research shows that alienated consumers generally agree with the following statements:

• The provider of the service cares nothing about the customer.

• Shopping is an unpleasant experience.

• Merchants forget about the customer once he or she has purchased something.

• The customer is the least important part of the business.

• The customer does not get to decide which products are available for sale.²⁵

Even though Activists tend to be alienated from the marketplace, this does not fully explain how these customers come to believe that normal complaint channels will not work for them. Activists in most cases are created over a period of time, it’s like loyalty in reverse. Loyal customers aren’t created overnight, and neither are Activists. Consumers move from one category to another depending on how they are treated when they initially voice their complaints. They may even move from Activists back to Voicers if they are treated well.

A well-known ice cream company runs the risk of legal action whenever the extras (nuts, raisins, cookie chunks, etc.) it puts in its ice cream cause tooth damage or, in the worst case, choking. This particular creamery had a policy that once a case became known to the company, its service department was to cease communication with the customer and let the legal department handle the case. The customer service people thought this wasn’t the best service and proposed an experiment. They would contact the injured person, apologize, and continue to check in with the person, even though legal action might have begun. A year after this experiment began, the creamery’s insurance company reimbursed the creamery a quarter of a million dollars because of the sharp reduction in legal claims.

What Do Customers Want When They Complain?

Remember the reciprocity principle discussed earlier in this chapter? If you do something for someone, he or she will likely reciprocate by doing something for you. Most customers want only what they were denied and perhaps an apology. So if a company gives them a token of atonement beyond what they expected, they will likely reciprocate by continuing to do business with the company and perhaps say something positive. Numerous research studies suggest that companies’ success in tapping into this reciprocity behavior—in other words, getting the customer to repurchase—varies widely (between 40 and 80 percent).²⁶ Companies can create a feeling of reciprocity by taking customers’ complaints seriously and offering one or more of the following:

• A price reduction, or no charge at all, if this is appropriate

• A sincere apology

• A free product or gift

• A coupon for future price reductions

• Assurance that something has been changed inside the organization so this will not happen again

This does not mean the company has to give the store away. Customer complaints can be solved in ways other than a refund—in fact, consumers do not always want a refund. For example, fewer than 10 percent of diners expect even a bill reduction, let alone a free meal, if a specific dish they ordered was unsatisfactory.²⁷ But they would like the dish replaced or reheated or cooked a bit longer. Tearing up the bill or giving out a coupon for a free meal may be handing over money needlessly. Some things customers complain about, such as a noisy environment, antismoking laws, lack of free parking, or an inconvenient restaurant location, can’t be fixed in any case. Customers dissatisfied with issues that cannot be fixed may not have any intention of becoming a long-term client of the restaurant, so offering a free meal will not create long-term customers in these cases. But give them a coupon for a free dessert or a half-price meal and at a minimum the restaurant will receive some cash back for their apology. The customer may also bring a dining partner whose future business can be enticed.

Customers want different responses depending on what happened to them. One useful way to figure this out is to sort complaints into two groups:

• Complaints about issues that can be fixed

• Complaints about situations that cannot be fixed, but about which customers, nevertheless, want to be heard and have their feelings acknowledged

Understanding and then categorizing customer complaints into these two groups is useful in determining how to satisfy customers. For example, if you buy a computer that does not work, you want it fixed or replaced. You may not care why the problem occurred: you just want your computer fixed or replaced with a new one that works as promised. It would also be nice if the company representative is courteous and pays you some attention, but mostly you want your problem solved as quickly as possible.

Some situations cannot be fixed in the same way that your computer can be replaced. For example, if you order a gift through a mail-order house in plenty of time for it to arrive for a friend’s big birthday bash and it’s late, this situation cannot be remedied. Nothing can be done retroactively to get that gift there on time. An airline representative may have ignored you, thereby making it impossible for you to catch your flight. You cannot get to the event you missed as a result of not catching your plane. A lab technician may have lost your blood sample, requiring you to return to the lab at great personal inconvenience and have blood drawn again. The lab cannot recreate the blood sample that disappeared. In these cases, customers want to be emotionally compensated, and part of this includes being told what caused the service breakdown.

In the field of health care, one survey revealed that however else they are compensated, 87 percent of customers want to know that the problem won’t happen again. Of the group that doesn’t want a repeat, 79 percent want to know specifically how procedures will be changed. They also want more disclosure from hospital staff and expect staff to admit when a mistake has occurred. There are more people who want a full explanation of what happened (65 percent) than those who want an apology (41 percent). A relatively small 7 percent want some type of financial compensation.²⁸

Customers respond more favorably when they learn the company had no control over what happened: “I’m so sorry your special-order package hasn’t arrived. The entire East Coast delivery system isn’t working today. Have you heard about the blizzard? It’s causing problems for everyone.” The same is true when they learn that the product or service failure is an exception: “This is so unusual. This just never happens. In fact, I’m very shocked by this. Thanks for telling me.”

In any case, an explanation goes a long way toward satisfying upset customers.²⁹ Sometimes a company can offer an alternative solution: “I’m sorry, we don’t carry that product. Perhaps another company has it. Would you like me to call for you?” By contrast, customers who are “dumped” because the company cannot help are infuriated: “There’s nothing we can do. Now, excuse me, I need to help the next customer.” Implying that customers are the cause of their own misfortune is also a mistake: “I’m sorry, but it’s not our fault. If you had only come in yesterday, we might have been able to help you.” Customers want the company to put some effort into keeping their business. When a company has wounded them in a way that can be only emotionally recovered, customers want a sincere apology more than anything else.

Some airlines are effective at handling complaints that cannot be fixed. Japan Airlines uses a strategy it calls a Service Irregularity Message, in which it patches things up with a customer while he or she is still on board the plane or in the airport terminal. The airline tracks any problem a passenger has had through the entire flight, which means that a problem that occurred in reservations might be addressed on board, in the transit lounge if the passenger is connecting to another flight, or upon arrival at the final destination. Making amends means a lot more if it is done quickly than if the customer has to wait to receive a letter three weeks down the road. Scott Friedman, a humorist who speaks to corporations around the world, talks about holding a reservation on Cathay Pacific and being told that because of a shift to a smaller aircraft, he was going to have to fly on a different carrier. As it turned out, there was a seat on Cathay for Friedman but on a different flight leaving from another gate. A gate attendant personally escorted Friedman to the other gate, making him feel very special indeed. Small courtesies after small insults are remarkably memorable and remarkably healing.

Some complaints are about the rude or heavy-handed behaviors of company representatives. We would argue that these are also situations that cannot be fixed in the same way that a company can fix or replace a broken computer or other tangible product. Impersonal or rude behavior can be made better by an apology, but the rude behavior has already occurred, and sometimes it is delivered publicly so the customer has been both insulted and embarrassed. In cases like this, customers may appreciate a price reduction, but they probably want to see conciliatory behavior. Such service wounds cannot be erased, but they can be eased. A heartfelt apology and a statement of embarrassment by the company goes a long way to recovering the emotional balance of the abused customer. Nancy Friedman, in Customer Service Nightmares, shares a letter from a woman who argued with a billing clerk about the charges to cover the expenses associated with the birth of her premature infant. The clerk eventually told her that if she didn’t want problems, she should have had a healthy baby.³⁰ Serious service recovery needs to be delivered in such a situation. Just reading about this situation makes one cringe. It’s hard to imagine how it felt to be on the receiving end of such a comment.

When Christopher Hart, originator of the extraordinary-guarantee concept, analyzed data from PlanetFeedback.com, he found that having a service-provider issue is much more likely to affect a customer’s future willingness to recommend a brand than having a product problem.³¹ The emotions generated when talking with a service provider are likely to be more pronounced and therefore memorable than if the customer is trying to get a product to work. It makes sense. After all, getting angry with an inanimate object is rather pointless. Most of us save our anger for people.

Some industries do not understand this distinction of fixable and unfixable complaint categories and end up handling complaints poorly as a result. In a joint research project, three business school professors from across the United States looked at how one teaching hospital with two thousand staff “handled” and “managed” complaints. The researchers defined complaint handling as fixing the situation directly with the customer, whereas complaint managing was defined as fixing policies or the way the hospital does business so that future customer care is improved. The researchers found that hospital administrators preferred to “manage” complaints they were informed about but were unlikely to recommend direct follow-up with the complaining patients. As a result, customers rarely received apologies for the negative interactions they experienced. The patients also never learned what was done to ensure the problem would not happen again, even though many quality changes had been instituted, thanks to their complaints.³²

One of the major findings of this study was that complaints about quality of care (adequacy and delivery of medications, assistance with bed pans, etc.) were viewed by hospital personnel as more important than complaints about their attitudes. Hospital personnel tended to create an “us versus them” attitude toward customers who complained about them. They were inclined to excuse bad attitudes on the part of their fellow employees by saying, “Anyone can have a bad day.”³³ Furthermore, because customer-facing staff—or as our organization, TMI, likes to call them, “the fingertips of the organization”—felt uncomfortable dealing with complaints about attitudes, they tended to push these problems upward to managers, where they took longer to be resolved. Managers had the same reaction. They saw complaints about personnel as accusations, disapproval of what they were doing, or whining. Small wonder that most managers prefer to “manage” complaints about policies, which is much less direct and confrontational, rather than “handle” complaints about people.

A Special Note About Older Complainers

We haven’t specifically discussed older consumers. We do know that, according to research, the elderly do not complain as much as younger people. But once they make up their minds to complain, they seem to take very strong positions, and many are willing to fight for what they consider to be fair.³⁴ As the world’s population—particularly in developed nations—is growing proportionally older, there are greater numbers of elderly consumers. While we have conducted no research on this topic ourselves, in our discussions with clients, we hear that elderly complainers are more emotional when something goes wrong and that they don’t always understand the rational side of the problems they seek help with.

Perhaps because every day is increasingly precious to them, service issues strongly affect their overall emotional well-being, or perhaps they have stopped caring what others think about them. Emotions are a part of every complaint, but they can be remarkably strong among the elderly who decide to complain. The big question for organizations is whether their customer-facing staff are equipped to deal with the intensity of an older person’s highly emotional complaint. An emotionally upset elder is not going to be satisfied just by having a problem solved. The emotional impact of having the problem in the first place must also be addressed, and we recommend that it be addressed before any attempts are made to solve the problem. This requires careful listening, great empathy, and assurances to the person that he or she will be treated fairly and that the problem will be solved.