Cost of complaining: $40 billion of potential spending impacted every year by poor experiences

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Negative experiences are costing businesses more than $720 per customer, according to the latest EY Customer Experience Series survey The cost of complaining.

EY Advisory Partner, Jenny Young said 39% of customers were not contacting their supplier to attempt to have their complaint heard or resolved.

“Instead, we found that a large number of customers were either ‘sulking’ about their issue or ‘walking’ - leaving the supplier without trying to reconcile the issue.”

The survey explored the experiences and reactions of customers of key service industries, including telecommunications, utilities, general insurance, private health insurance or banking. More than half (56%) of the customers surveyed had reported a poor service experience over the past 12 months, with most issues encountered within the telecommunications industry (38%) and the least within the banking industry (12%).

Summary of results:
Overview of the customer experience

Industry % of households who have had an experience that could have been better Less than perfect experience driven by:
Telecommunications 38% Poor coverage and service interruptions 35% Poor customer service 30%
Utilities 27% Price rises/not competitive 32% Issues with billing 25%
General Insurance 15% Price rises/not competitive 35% Poor customer service 17%
Private Health Insurance 15% Price rises/not competitive 27% Poor customer service 19%
Banking 12% Poor customer service 29% Interest rates not competitive 27%

Social media: the new age of customer complaints

Ms Young said nearly half (47%) of all customers who had an issue with their supplier either spoke ‘publicly’ about their issue (to two or more friends, family or colleagues) or posted social media comments.

“Australian’s place a lot of trust in what our friends and family say and take recommendations on which companies to use or not use seriously,” Ms Young said.

Each comment on social media was estimated to be viewed by approximately 200 people (not taking into account second degree shares and comments) and in 75% of cases the supplier did not acknowledge or address the comment, potentially allowing negative brand sentiment to grow within networks.

“This demonstrates a clear opportunity for suppliers to ensure that they are open and responsive to all channels, enabling customers to voice their issues and maximise the rate of customer retention.

“Suppliers need to develop social media policies to monitor and manage communications through this important and growing channel, minimising any brand impact from publicly voiced issues,” Ms Young said.

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Formal complaints: what is stopping us?

“Social media has changed the landscape and there can already be real consequences to brand and reputation in the time that it takes for a complaint to make it to the ‘right’ person. It’s a matter of minutes and hours, not days and weeks.

“The reality is, we are not keeping pace with the rapid change in consumer channels – we can buy online 24/7 – why can’t we get a resolution to a complaint or even an avenue for complaining in real time?” Ms Young said.

Ms Young said there were a number of barriers preventing customers making contact with their supplier to discuss the issues they might be having.

“Time and effort was the main reason people gave for not contacting a supplier but there were also a series of secondary reasons like not knowing or not being able to find the right contact details, or thinking that the experience would be too arduous and stressful,” Ms Young.

Compounding the issues is that of the 60% of customers that did make contact with their supplier, only 8% of those were satisfied with the outcome of the contact.

“As well as creating open and responsive channels it is essential that staff have the knowledge and tools at hand to reconcile a customer’s enquiry quickly and efficiently, leading to a successful outcome.

“Many organisations are stuck in the dark ages when it comes to how they deal with complaints. Dissatisfaction exists across the whole complaint process and it is essential that suppliers have the back office capability and processes aligned to deal with the volume and nature of inbound issues,” Ms Young said.

Customers are more than twice as likely to vent through social media if they are dissatisfied with the outcome of their contact. While 7% of satisfied customers turn to social media, 15% of unsatisfied customer will vent their frustrations on social media.

“Additionally, brand advocacy is significantly reduced if the customer comes away from the experience dissatisfied, with 58% of customers saying they would mention the bad experience to others. In contrast, if the customer came away satisfied, advocacy was significantly higher with 13% of customers prepared to readily recommend the brand to others,” Ms Young said.

Findings about dissatisfaction across the whole complaint process include:

  • 54% very or fairly dissatisfied with the speed in which the issue was dealt with
  • 57% very or fairly dissatisfied the quality of feedback or explanation provide
  • 48% very or fairly dissatisfied the ease of accessing information help reconcile the issue

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Complaint profiles: are you a sulker, walker or private talker?

The Customer Experience Cost of complaining survey identified the following key types of customers who have had a less than perfect experience:

“Sulker”

  • Reduced life-time value (fewer cross-sell/up sell opportunities)
  • Reduced advocacy
  • Increase in cost to retain

“Walker”

  • 100% loss of lifetime value
  • Difficult to re-obtain business
  • Loss of advocacy

“Private Talker”

  • The ideal profile to enable the supplier to reconcile the issue and satisfy the customer

As well as one of the three categories, customers could also be a “Public Talker” who are characterised as active brand antagonists with the ability to promote issues across a large audience.

Ms Young said the profiles demonstrated the opportunities there were for businesses to make improvements to their retention strategies.

“Businesses need to break down the perceived barriers of time and effort to ensure issues can be proactively addressed and managed in a positive way.”

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