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Complaints That Produce Profit

In a recent study of customer complaints undertaken by one large franchise network it was found that of the customer complaints received over a 3 year period 92.7% were based in poor communication, including negative body language, that had directly caused complaints and antagonized customers.  Communication issues were broken down to failing to convey unambiguous information on options, failing to follow up, failing to offer empathy and genuine apology and failing to give priority to the complaint.

Of the 7.3% of customer complaints where the primary issue was other than poor communication it was found that 77% of those involved poor communication as a secondary and inflammatory issue. Reported customer complaints where no issue of poor communication had arisen as causal was a mere 1.7% of this network's complaint data over a lengthy 3 year period.

It was obvious that there was justification to address the contribution of ‘poor communication’ to customer complaint levels however it was then found that the subject was considerably more complex than first thought.  So complex in fact that here at BMM we cannot cater to this subject adequatley and therefore a summary of prompts would seem more appropriate for the thinking franchise entrepreneur.

Firstly; many of the franchise operators who were interviewed suggested that if a complaint was ‘only’ based in poor communication then they would challenge the legitimacy of the complaint. They considered ‘real’ customer complaints to be those where for example; a component had failed, an ingredient had been missed or the floor was dirty.

As we have all been dissatisfied customers at some stage I would expect that we should universally accept that ‘frustration’ and ‘lack of confidence’ are equally inflammatory; and often more so when based in distrust.

Upshot; any breakdown in communication by a representative of the business that creates a customer complaint is a legitimate complaint and such complaints can produce far greater damage to the business. Customers understand that products fail and people make mistakes but when communication is poor or dishonest it leads to mistrust of the operator and the business. The customer is not responsible for the quality of communication.  The business is.

Who other than the customer might be involved when poor communication intrudes to create dissatisfied customers?  One obvious answer is anyone that represents the business and who has contact with customers.  But what of the breakdown in communication in the engine room of the business that leads to incorrect information being given to the customer via the representative.

These are the two distinctly different opportunities that should be considered; ensuring customer skills and reviewing performance. To assist readers to give this subject the level of import that it deserves I would ask what level of investment operators waste in advertising to attract new customers to then disappoint them and ensure they never return or recommend the business to grow the value of the business?  Advertising performs its function when it attracts customers but after that it is up to the operator to keep them.

How do we deal with minimizing customer complaints that are based in poor communication? Of course it can be dealt with in training but not just training. ‘Review’ is critical.

The main topic here and the most important relates to those operators who simply ‘fix’ problems as they arise and fail to review and address the cause with the view to eliminating or minimizing future complaints.  In the 3 year study mentioned at the outset here it was found that 68% of operators ‘fixed’ having decided upon a bandaid solution and then failed to review to learn from the complaint and to introduce an enduring procedural or training solution to address potential repetition of complaints. 

Why only 68%?  It was found that the operator did not know or ask those that were employed to know what the enduring fix was.  They were too busy.  Too busy ensuring their business gets less busy?

It does not take much to be better than the majority of business operators and those with the smarts to learn from and act upon poor performance complaints are more than half way there, whether complaints are based in communication needs or another cause.

Many in business will rely on the ‘little white lie’ to get by in times of unanticipated confrontation but most people just don’t lie well and human instinct in day to day interactions picks up on the ‘little lie’ and quickly transforms it into an oversize version and absolute mistrust.  It just does not pay.  Human instinct is also very good at determining truth in day to day interactions and from truth comes trust and profit. 

A customer complaint is an opportunity to win that customer for life when it is handled well but in how we resolve to approach learning from complaints we create culture that will grow a loyal customer base and wealth.  The alternative approach produces the opposite result.

It should be noted that the franchise network who undertook the review of customer complaints found that the annual level averaged at less than .1 of a percent.  That they undertake reviews gives an insight into their culture and why their complaints are so low, why their customer numbers and revenues grow, why the system produces healthy profit lines and why their network grows without the effort of less sophisticated franchise systems.

The targets must be zero complaints and total customer retention.  Business operators who strive to be the best in their business set an example of the highest standards.

Poor quality communications between franchisees and franchisors should be addressed similarly in reviewing how and why they create outcomes of distrust and expensive distraction to the business.  These operators set the standard for success or failure.

I just love hearing about complaints because they offer a wealth of training material that amongst other things allow great operators to be better.  Have you attended or conducted a training session on handling customer complaints that positively changed behaviours?

Related Articles: The internet offers an enormous array of training course options and many great free articles on handling customer complaints.




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About Ray Borradale

Ray Borradale's picture

Public Profile

Over forty years experience in Small Business and more than twenty-five years in franchising operations as a franchisee and employed by three franchisors, mostly in operations.

I have dedicated more than ten years and over 15,000 hours in the pursuit of quality franchising and exposing franchisor abuse of franchisees while advocating for the introduction of franchise relationship Law and the levelling of the dispute processes between bigger business and small business.


Area of Interest
Franchise Operations