Every CEO knows the theory: Carefully listening to and responding to your customers' complaints builds loyalty and yields valuable information about how service can be improved. Yet, in practice, many companies forget to focus on these "hidden gems" of feedback and do a poor job of resolving service breakdowns.

My Home Depot horror show

My own recent experience with Home Depot is a perfect case in point. I won't bore you with the details, but suffice it to say it took more than 10 hours in total on hold and two weeks of calls and emails to get the company to respond to a problem I was having with some kitchen cabinets Home Depot has misplaced. How in this day and age of technology you misplace a truckload full of cabinets is another blog post for another day.

But the experience reminded me of something I learned long ago as a management consultant and deal with daily as a branding strategist: People don't only complain directly to the company, but to their social network as well. Research shows that if a customer has had a great experience, they will tell other people, but if they have a bad experience, they are two times more likely to talk about that to friends and family.

3 types of customers. 

Along these lines, Chris Denove, author of Satisfaction: How Every Great Company Listens to the Voice of the Customer(Portfolio), says to think of your customers as belonging to one of three groups:

  • Apathetics: Those who are basically satisfied with a company, but not promoters or fans.
  • Advocates: Those who go out of their way to both do business with a company and tell others about their positive experience.
  • Assassins: Those who go out of their way not to do business with a company and want everyone they know to do the same.

Capturing customer complaints and resolving them quickly and effectively helps to convert apathetics to advocates.

Capture the complaints

In the research I did for one of my books, Customer Service for Dummies, I found that to ensure complaint capture, companies should implement a data-based complaint log. The purpose of the log is to record critical information for each problem presented, including the date, customer's name, nature of the complaint, specific details, customer's comments, actions taken to resolve the issue and any follow-up activities.

Over time task teams can analyze the complaint logs and determine patterns, trends and root causes of recurring problems.

Once captured, resolving the customer's problem can be more complex than it sounds.

First and foremost, customers want the chance to vent their frustrations and receive an apology, but they also expect their problem to be fixed in a timely, reasonable and fair way.

Beyond these basics, it's the interpersonal element of the interaction (Was the company empathetic? Polite? Friendly?) that closes the satisfaction deal.

Intangibles count

But it's these seemingly intangible interpersonal qualities that companies often find so hard to demonstrate. Dr. William Withers, a professor at Wartburg College, says one reason for this is a lack of adequate customer service training. A recent study completed by Withers revealed that though 78 percent of companies surveyed said they provide "some" customer service training, 68 percent said they would provide more, if they had the means.

But in my experience, this kind of thinking is shortsighted. "It costs about five times more to gain a new customer than it does to retain a current one, and companies may save some money on the front end by not doing customer service training, but they will lose a lot more on the back end when that customer walks due to poor service." Bailey [This person hasn't been introduced. Should this be Dr. Withers? And is that who is speaking in the preceding quote?] suggests that smaller companies with more limited budgets look at such options as online training to supplement traditional classroom-style education.

In the end, companies that learn to appreciate and deal with customer complaints, rather than avoid them, will be the winners in the service game -- keeping their valued customers around long after the problem has been resolved.