Most studies report that only one in 10 service failures are reported to the company. This segment churns at a rate as much as 250 percent higher than customers who have not experienced a service failure and as much as 20 percent higher than customers who have experienced a service failure, but did contact the company. It s too difficult for consumers to get access to relevant customer service and for companies to get access to their at-risk customers. The second source of churn after a service failure is due to companies mishandling of reported complaints. For one major Midwest bank, for example, mishandling of complaints resulted in more than a 400 percent higher churn rate than those complaints that were handled well.
Companies can clearly benefit from improving the effectiveness of how they handle complaints.
The following data shows how valuable it is for companies to get access to at-risk customers and then how valuable it can be to handle complaints well. How to Turn Consumer Complaints into Gold Turning consumer complaints into gold requires companies to jointly attack the access and the effectiveness problem. The goal is to identify dissatisfied customers and provide them tailored resolutions in a speedy, cost-effective fashion. The ultimate objective is to maximize a customer s intent to repurchase. The following is a five-step approach to turning consumer complaints into gold.