Customer complaints matter

Bear with me for while I recount two personal experiences of customer service failure. In the more recent case, my mobile stopped working after 11 months of use. By the time I returned it to the First Mobile store in Newmarket it was just out of its 12-month warranty. The sales assistant did not want to consider the option of a free repair given it was out of warranty, despite the phone’s high purchase price and that I had been a regular customer making relatively high value purchases for several years running.

Pointing out such early and fundamental failure meant the phone had not met the legal requirements of durability and being fit for purpose, seemingly fell on deaf ears. I subsequently had to raise a complaint with First Mobile’s head office in writing and the repair was made promptly enough from that point on. What a completely unnecessary and unsavoury process, one that treated a polite and regular customer, who had the gall to raise a valid complaint, with complete disdain.

The second case is less recent. I purchased a digital answer phone from Dick Smith Electronics on Featherston Street in Wellington (up until that point my favourite retail store). Shortly after the purchase the appliance developed a fault. When I returned to the store to have the item repaired or replaced, the sales assistants didn’t want to know. Nor did the store manager or the national manager. It took weeks of badgering and repeated requests before eventually and very reluctantly a replacement was provided. I’ve not bought anything of real value from a Dick Smith store since. And I’ve bought a fair bit of electrical and computing kit over that almost twenty year period!

Does it matter? There are, after all, millions of other consumer fish in the sea. Well, from a customer lifetime values perspective, it certainly does. But even more importantly, twenty years ago I could only tell people I met of my experience and encourage them to boycott the Dick Smith brand. But now, with the ever-increasing use of the internet for shopping and the sharing of consumer experiences and opinions online, the potential for dissatisfied customers to try and get even has grown exponentially.

For that reason alone, it’s increasingly important firms like First Mobile take a close look at the research published in the Journal of Marketing late last year on the effects of relationship strength and time on customer revenge and avoidance.

Researchers Grégoire, Tripp and Legoux undertook the study, which they set up to answer the following three questions:

• Do online complainers hold a grudge over time?
• If so, how does a strong relationship affect the evolution of this grudge?
• Can firms attenuate such a love-becomes-hate effect by offering a recovery after the online complaint occurs?

Their results certainly make for interesting reading. First, they found a company’s best customers have the longest unfavourable reactions, their wish for revenge dissipates more slowly and their avoidance increases more rapidly than that of weak relationship customers. On the up side, however, they also found that strong relationship customers are more amenable to even a modest level of recovery attempt (an expensive recovery does not have any greater revenge-quenching power for these customers). Low relationship quality customers in the study however appeared more calculating and only an expensive, high recovery attempts reduced the revenge effect of these customers over time.

The authors believe their findings have the following additional implications for brand managers:

• Online complainers do hold a grudge and they have a desire to cut any forms of interaction with the target firm. Their patronage is unlikely to be restored with any recovery initiatives, which has obvious and drastic implications on estimations of customer lifetime values. However their desire to retaliate does decrease over time.
• A firm’s best customers hold their grudges and maintain their desire for revenge over a longer time than other customers. As the authors themselves note, their findings in this regard challenge the preconception that strong relationships always offer a safety cushion in service failure contexts.
• High quality customers always feel betrayed when no recovery is offered (and that sense of betrayal is durable over time).
• Post-complaint recovery offers are unlikely to affect the complainant’s desire for avoidance, but it is more likely to diminish their desire for revenge if the offer is within five weeks of the complaint being made.

Grégoire, Tripp and Legoux suggest that when firms identify high relationship customers making complaints online they should promptly (within five weeks of the complaint being made) offer an acknowledgement of responsibility, an apology and a normal level of compensation (in the form of a voucher or replacement, rather than cash compensation).

When dealing with low relationship customers they suggest firms need to be more cautious about using post-complaint recovery simply because, unlike a firm’s best customers, these customers are unlikely to return and their desire for revenge is more likely to dissipate quickly (it becomes very low after five weeks even when no recovery at all is offered).

Grégoire, Tripp and Legoux’s findings certainly mirror my personal experience dealing with product and service failures when shopping both on and off line. Their findings and recommendations around how best to handle customer complaints are a timely and valuable contribution given consumers are increasingly active and outspoken in sharing brand experiences and disatisfaction online.

John Varcoe is a director of brand strategy company Everything Design Limited