This Summer, the UK Financial Conduct Authority (FCA) changed the way banks are required to manage complaints. They have been given more time to resolve them informally.
However, even complaints dealt with informally must be reported and made publicly available. In the spring of 2017 we will get a new source of banking consumer insight.
The rise of sorry data
That’s good news for the data-hungry shopper who wants more information about a product or service before they make a purchase. We research an average of 10.4 sources before we buy anything, according to data from Google and Shopper Sciences published in What’s the Future of Business.
That number varies slightly by industry. For banking products, consumers research an average of 10.8 sources, while insurance shoppers do a bit more digging, checking an average of 11.7 sources. That number drops to 8.9 sources for investment companies.
Consumers are doing their homework, which means they’re likely to uncover customer complaints and negative reviews as they research companies.
A new sorry conclusion
Saying sorry is no longer enough and should no longer be the ultimate conclusion of a complaint.
Previously, complaints resolved with an apology and a swift fix could go unreported and unnoticed. It signposted a culture of handling complaints in which companies deal with frustrated customers as they would any other transaction — apologize and move on.
That’s a far cry from what the FCA now intends. In an FT Advisor article, FCA Director Christopher Woolard asserts that complaints are a rich source of insights for customers and the banks themselves.
Banking is finally catching up with other industries that have been under the microscope for some time now thanks to social networks, web forums and so on. Ultimately, complaints offer an opportunity for listening, improving and even competitive differentiation. Complaints are for understanding not just for handling.
Embrace sorry inevitability
No matter what industry you’re in, it’s time to move from a culture of handling to understanding.
The first step? Accept that your business, like every other, will get things wrong from time to time. After all, the only constant is change. A growing business is continuously adapting, innovating and finding new ways to add value for customers.
There is no excuse for being ineffective or inept, but if we are not making a few mistakes along the way we are not trying hard enough for our customers.
Build loyalty with sorry recovery
Once we accept that our business, like every other, is not perfect we can stop minimising complaints and treat them as golden opportunities to make things right for one customer and make it better for everyone else. Along the way there’s an opportunity to demonstrate what kind of business we are when things go wrong.
It’s easy to be delightful on a first date — giving new customers special offers or a friction-free sign-up process. But how do you do business when things go awry? A complaint is an opportunity to show if we are deserving of loyalty. The first instance of dissatisfaction along the customer journey is the ultimate moment of truth. What happens next matters.
The good news is that a recovered customer is likely to be more loyal than a customer that doesn’t experience any problems at all. The phenomena, referred to as the service recovery paradox, suggests that if we recover a customer relationship correctly, it builds a level of trust and loyalty that surpasses that of an untested one.
Paradox aside, we should be delighted that the customer has complained at all. According to a Consumer Experience Impact report from RightNow, almost 9 out of 10 unhappy customers leave for a competitor after a poor experience without ever mentioning it to you.
They will however, according to the White House Office of Consumer Affairs, tell as many as 20 of their friends.
In any event, if the complaint is visible, it is visible to everyone. Complaints are hashtag-able, searchable, bloggable, youtube-able, tripadvisor-able, yelp-able and glassdoor-able, so when your customers google you what will they find?
Some businesses, even in the most visible sectors, are still doing the bare minimum about complaints, which means they are inevitably deterring new customers. Scott Stratten, author ofUnselling, wrote a review about the Econo Lodge Jersey City describing it as the ‘worst decision of my life’, leaving a tip that the ground floor offers the best view of local drug deals.
The response from the hotel, for all to see, was classic handling. They thanked Scott for the review, apologised and assured him that the feedback would be used to make vague improvements at some indeterminate point in the future.
An empty response pacifies those of us too busy to complain in the first place, which is to say most of us. However, it will not give the company another chance to provide a better experience in the future.
Compare this with the experience of customer service speaker and blogger Shep Hyken and his experience with Southwest Airlines when his daughter’s luggage was damaged.
Resigned to a long queue and a disappointing recovery experience Hyken and his daughter were instead offered a replacement on the spot. His daughter just had to pick one that most closely matched her own from a room full of new luggage, transfer her stuff and sign a form.
Both are highly visible, each immeasurably more impactful than marketing, but undoubtedly ending in different decisions for those considering their first purchase with Econolodge or Southwest.
Respond, recover, reinvent
We’re in an era of open and transparent complaints. Instead of handling them, embrace the opportunity to understand, recover and improve.
In an open, digital and social world your complaints are as visible as your marketing. Things go wrong, we make mistakes and this is where we show our true character.
Healthy relationships are not those without difficulties (although who wouldn’t want one of those), but those where hitches are dealt with constructively, reparations are made, trust is built and steps are taken to make it better next time. We should deal with complaints as if the whole world is watching. After all, they are.
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