As well as being a compliance requirement for most financial service providers, a good quality complaints handling process is an essential part of good business. It provides a means of reducing costs by minimising the chances of a complaint escalating to an External Dispute Resolution (EDR) scheme or a Court. It is also a recognised way of obtaining valuable information that can be used to improve business operations as well as increasing customer satisfaction levels.
A poorly handled complaint can bring a number of negative results. These include:
1. Damage to your brand or reputation – statistics show that 95% of people who have a bad complaint experience will tell others about their experience.
2. High costs if the complaint escalates to an external dispute resolution scheme or a Court.
Loss of business if your competitor has a good complaint process.
On the other hand a good internal complaint process can have many benefits including:
1. Brand or reputation enhancement – statistics show that 97% of people who have a good complaint experience will tell others. In other words when you handle a complaint well your customer will become an advocate for your organisation.
2. Complaint costs will be minimised. Again statistics show that the early resolution of a complaint substantially reduces costs and in fact often increases business as the customer values your product and/or service.
The other main benefit of having a good internal complaint process is that if it is run properly it will provide quality data about your business that can be used to improve your services and products and it is obtained for free!
What is meant by this is if you have a good complaint system in place that is highly visible and easy to use your customers will feel comfortable and confident in making a complaint to you.
Whilst this may sound a bit frightening – i.e. you want people to complain about you! – you want your customer to complain to YOU and not their friends otherwise you cannot fix the problem and maintain your good reputation. If you make it hard to complain you won’t know about your customer’s dissatisfaction.
The good news is that the information you can obtain from your customer’s complaints – regardless of how minor they are – can be used to improve your business and give you a marketing edge without the need to engage in a costly client survey.
The internal complaints process.
In simple terms there are five basic steps to handling a complaint. They are:
1. Acknowledge receipt of the complaint and inform your client of what will happen next. Ensure you are clear what the client wants to resolve their complaint and if not ask them.
2. Resolve the complaint or commence investigation of the complaint. Consider as many options as possible for resolution and be aware of alternatives to reaching resolution.
3. Completion of the investigation, advise the client of the outcome, and resolve (if possible).
4. If not resolved inform the client of their right to refer the complaint to your dispute resolution scheme (DRS) and the time frame for doing so.
5. Once a complaint is resolved or the DRS has completed its investigation close the file and ensure all information in relation to the complaint is captured and recorded for future analysis.
Trevor Slater’s Tips to Reduce Complaint Escalation
1. Know how to identify a complaint. The definition of a complaint as per the International and Australian Standards on complaint handling is:
An expression of dissatisfaction made to an organisation, related to its products, or its complaints-handling process itself, where a response or resolution is, explicitly or implicitly expected.” (“Product” also means “Service”).
2. Clearly establish what your client’s complaint is. I have seen on many occasions a person not clearly stating what their complaint is about and a person trying to resolve the wrong thing. It is easy to establish what the complaint is by asking your client some simple questions to ensure you are clear about their dissatisfaction.
3. Find out the resolution the client is seeking. This can also be done by asking your client some simple questions such as “what can I do to fix this problem?” One further tip on this point. If your client has an unrealistic expectation about the outcome he or she is seeking, such as an apology on the front page of the national newspaper, you must let them know this is not possible as a very early stage. If you don’t, their expectation may be confirmed, which makes resolution very difficult. Silence alone is not sufficient to reduce the expectation.
4. Tell your client what, how, why and when about the actions you are going to take to try to resolve their complaint. Check this is OK with them and that you are on the right track.
5. Do what you say you will and when you have promised to do it. If you can’t let your client know why and when you will be able to do so.
6. Try to see their side of the story and put yourself in their place
7. Don’t look to blame someone or argue which person is ‘right’. The basis of good complaint resolution started when you understand that
“It is not about who is right and who is wrong it is about a complaint that needs to be resolved”.
8. Look for options and alternatives. Too often we think there is only one answer to a problem when in fact if we turn our mind to it we are able to find many options and alternatives. Try to think outside the square or discuss it with someone else.
9. When you have completed your investigation and are ready to negotiate and/or deliver your decision do so in a genuine and honest way. Explain to your client what you have done and the basis for your decision. Do not haggle or bargain. This is dishonest. If you are making an offer make it the best offer you can and explain to your client why this is so.
10. If you cannot resolve the complaint be prepared to co-operate with your external dispute resolution scheme in a positive and professional manner. An EDR schemes’ role is to try to help the parties reach a settlement either via facilitated agreement or arbitration. If that is not possible they can make a formal decision that is binding on the financial service provider.