By Vikki Zelkin, Head of Client Services, Promotions and Incentives, The Grass Roots Group

The old adage “bad news travels fast” has never been so relevant in today’s social media driven society, with 65%[1] of us relying on it to get in contact with a supplier to vent a grievance rather than going through a call centre. But for every person who does complain (often via this very public, immediate channel) it is predicted that there are 26 other unhappy customers who have remained silent[2], with many choosing instead to tell family and friends about their dissatisfaction rather than making a formal complaint.

This combination of actions could be extremely damaging for any business that fails to react in the right way to the vocal minority and the silent majority. With even more ways for consumers to complain about bad service and experience, businesses need to have a slick way of responding to these and ensure there is no impact on customer retention levels.

With every happy customer who gets their issue resolved going on to tell four to six people[3] about their experience, here are some top tips for businesses on how to effectively respond to complaints and retain customers at the point of contract renewal and in the wake of competitor offers and incentives.

Time is of the essence
Unfortunately, it is inevitable that things will go wrong, but it’s how a bad situation is dealt with that is key to retaining customers and building loyalty. A quick and positive reaction may be all that is required to stop dissatisfaction spreading across social media or between friends and will make all the difference in how the customer perceives your level of service.

Empower staff

Frontline staff will bear the brunt of customer complaints so it is imperative to arm them with the tools they need to not only resolve but pacify the situation. As well as putting the appropriate training in place to ensure complaints are dealt with sensitively, customer services staff also need to be able to make the right gesture of “compensation” at the right time, to ensure a customer feels valued.

Aviva is one such company that has empowered its customer service representatives to resolve complaints quickly and efficiently. A dedicated programme enables them to send a retail voucher to a customer by way of an apology - choosing an appropriate award and value based on the customer and level of complaint. Once approved by the manager, the gift is dispatched the same day, with a message of apology, to enable a quick response to the situation without it needing to be escalated.

Know your customer

Giving the right apology gift can make the difference between a customer staying with you or defecting to a competitor. Much like the process Aviva has put in place, it is important to use rewards that will appeal to a range of customers and to give them something that will resonate and add value. With changing consumer spending patterns, and enhanced communication mediums, personalised, targeted apologies and relevant apology gifts, are not just expected but are a necessity to turn the negative into a positive. Variable communications routes (paper, email and SMS) allow you to create a dialogue with customers on their terms. A diverse reward choice that appeals to a wide demographic is an essential part of an apology gift – giving someone something that they do not value is just as bad as nothing at all.

Reward the loyal as well as the vocal

As well as using rewards to pacify potential defectors, the silent majority could also benefit from being rewarded for their loyalty at key times in the customer lifecycle, such as coming up to policy renewals or in the wake of a competitor promotion. Showing a customer you care during key milestones within the relationship will ensure that they feel valued and think twice about switching. Early bird renewal offers and loyalty benefits are a great way of making sure your customers remain engaged with your brand.

Putting these simple, but significant measures in place will have a massive impact on customer defection rates. With just a 5% reduction, profits can increase by between 5% and 95%[4], making it all the more important to respond to unhappy customers at the right time and in the right way. Indeed, responding with the right gesture has been found to increase customer retention rates to a massive 70%[5].