Introduction
Techniques
Managing customer
dissatisfaction through
effective complaints
management systems
Mohamed Zairi
The author
Mohamed Zairi is SABIC Chair in Best Practice
Management, University of Bradford Management
Centre, Bradford, UK.
Keywords
Complaints, Customer satisfaction, Customer loyalty,
Customer retention, Best practice
Abstract
Complaints handling is not a substitute for abdicating the
responsibility for managing quality and achieving
customer satisfaction. Indeed, the former and the latter
are nothing but synonymous expressions and quite
compatible concepts. This paper treats the issue of
complaints handling and management as essential for
achieving customer retention and loyalty. It argues the
principle, demonstrates the points through best practice
application, and produces a roadmap and an audit tool for
developing a culture which is not averse to handling
complaints.
Electronic access
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The TQM Magazine
Volume 12 . Number 5 . 2000 . pp. 331335
# MCB University Press . ISSN 0954-478X
331
As we approach the new millennium, it is
becoming very clear that most business
organisations have, in their quest for progress
and advancement, put the customer first.
Globalisation and value driven business
imperatives would therefore mean that
mistakes are not going to be tolerated,
substandard products and services will ensure
that the weak are not going to continue
competing, and fragile practices and poorly
defined and managed processes will not get
accepted. Apart from anything else, true
competitive advantage will only be established
through excellence in customer value and the
ensuing relentless care and attention provided.
The immediate challenge that business
organisations are going to face is how to move
away from an ``introverted'', profit-orientated
approach, to an external customer-focused
and market-oriented approach?
Part of the answer to this question is going
to be provided in this paper, since it is going
to be argued that the effective management of
customer complaints can deliver customer
loyalty and retention.
Customer complaints: putting right
what has gone wrong or doing the right
thing in the first place?
David Garvin, one of the gurus in the field of
service quality has written that:
High quality means pleasing customers, not
just protecting them from annoyance (Garvin,
1988).
It is interesting to note that the word
``pleasing'' means a deliberate, targeted and
well thought out approach to work beyond
mere basic requirements and to develop
intrinsic and long-term relationships. This is
echoed by the founder and chairman of
Matsushita (Konosuke Matsushitsu) who says
about his company:
Our social mission as a manufacturer is only
realised when products reach, are used by, and
satisfy the customer . . . we need to take the
customer's skin temperature daily.
What this indicates, therefore, is that
customer satisfaction is not an absolute
scenario, but very much depends on
interactions; feedback, praise, and, yes,
complaints. Complaints have to be looked at
in a constructive, positive and professional
perspective:
 Managing customer dissatisfaction
Mohamed Zairi
. They are a way of receiving feedback
from customers and therefore necessary
means for putting into action
improvement plans.
. They are a tool for preventing
complacency and harnessing internal
competencies for optimising products
and services.
. They are a useful way of measuring
performance and allocating resources to
deal with the deficient areas of the
business.
. They are a useful ``mirror'' for gauging
internal performance against competition
and best in class organisations.
. They are a useful exercise for getting
nearer the customer and understanding
them better.
One could go on and on by listing the benefits
and highlighting the usefulness of receiving
customer complaints.
As the chairman of British Telecom (BT)
said in an article in the Financial Times:
The day we stop receiving customer complaints
is the day I will start to worry about the future
of BT.
Of course he is right, but the caveat is,
however, in dealing with complaints and the
approach used for managing them.
Examples of best practice in complaints
management
Boeing Airlift and Tanker Programs
Winners of the Malcolm Baldrige National
Quality Award, the Boeing Company Airlift
and Tanker Program (A & T) designs,
manufactures and supports aircraft for both
passenger and cargo transportation. They
serve four major markets and three major
customer groups. Their primary customer is
the US Air Force.
Their vision is to be ``The world's first
choice for airlift and tanker aircraft'' and this
is delivered by their focus on quality first,
followed by schedule, and finally cost. Their
commitment to the customer is very evident
and they consider the intensity of the
relationship with their customers as one of
their key competitive advantages.
Their focus on customers is through three
distinct segments: owners, evaluators and
users. Currently they serve over 7,000
customers and customer access occurs
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Volume 12 . Number 5 . 2000 . 331335
through joint teams. They have currently over
100 people stationed with key customers.
Boeing A & T use different approaches to
handling customer complaints. Amongst the
key aspects of Boeing's complaints handling
system are the following:
. Service standards set jointly with the
customer and linked to their processes.
. Proactive management of customer
contacts and complaint resolution
through joint teams (see Figure 1).
. Teams handling of complaints is
facilitated by a systematic management
meeting process that involves the
customer as a partner.
. Teams with customer interfaces maintain
logs of customer complaints, issues,
concerns and warranty claims.
. Complaint management assessments are
correlated with other customer
satisfaction data to give teams feedback
on the quality of complaint management.
National Roads and Motorists
Association (NRMA)
Winners of the Australian Quality Award in
1992, the NRMA was set up to provide
services to road users and to promote the
interests of motorists. Some of the services
provided by NRMA include: emergency road
service, insurance, investment advice, finance,
technical, legal, touring, travel, amongst others.
NRMA started its journey with quality in
the 1980s from quality circles to a full concept
deployed on four principles including:
(1) satisfy your customers;
(2) continually improve through small steps;
(3) involve everybody in improvement;
(4) control through measurement and
statistics.
Figure 1 Complaint management
 Managing customer dissatisfaction
Mohamed Zairi
The NRMA's culture of customer service is
rooted in the belief that satisfying customers
and continual improvement is everyone's job.
Customers are served through the
deployment of quality teams at all levels.
NRMA manages complaints through 14
principles and a three-level model (Figure 2),
which provides a comprehensive and
systematic way to deal with complaints.
NRMA's principles of complaint handling:
. Staff and management as owners of work
processes should pay particular attention
to processes when they fail, or complaints
occur.
. Complaint resolution should, therefore,
receive as much focus as conducting the
work process effectively in the first
instance.
. Staff should make decisions on complaint
resolution to the limit of their authority
and knowledge.
. Line management must be equipped to
make and be responsible for all decisions.
. Any complaints resolution/review process
is not an opportunity to pass on difficult
cases.
. Complaints must be resolved as close to
the customer as possible.
. Complaints must be resolved promptly,
effectively and fairly.
. Resolve the problem to the customer's
satisfaction as far as possible.
. Use complaints and their handling as an
additional quality of service indicator.
. A client should not be transferred to more
than one other person for resolution of
the complaint.
. The first person of contact must
determine the person in the best position
to resolve the matter.
. If the complaint cannot be resolved to the
client's satisfaction at contact one or two,
the further steps in the complaint process
should be explained, and relevant
documentation handled or posted out to
the client.
Figure 2 Complaints handling model
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Volume 12 . Number 5 . 2000 . 331335
. Analogous to a piece of machinery
breaking down in a factory, every effort
must be made to resolve the problem as
soon as possible, to enable the full and
proper functioning of the process.
. We must learn from complaints.
To create a culture which is not averse to
complaints handling, NRMA has undertaken
two key initiatives:
(1) Designing processes to handle
complaints/problems as closely to the
source as possible, by eliminating the
previous practice necessitating
complaints be registered in writing.
(2) Designing a ``welcoming a complaint''
form to facilitate the process.
Complaints handling and effective
management: key challenges
Most organisations that face big challenges in
customer complaints handling:
. Suffer from a lack of systematic approach
to complaints handling.
. Do not recognise the importance of
customer complaints at a strategic level.
. Are ill-equipped in terms of systems and
processes for logging in complaints,
processing them, etc.
. Are not proficient with measurement and
in particular in non-financial areas such
as customer satisfaction and complaints.
. Have adverse cultures and too much of
``blame and reprimand'' practices.
. Have not embraced the concept of quality
management and its related concepts.
In all, it is not therefore surprising to see that
the most successful organisation in terms of
customer complaints management, tend to
have all of the above plus much more.
Whether it is in the banking industry sector,
airlines, leisure and entertainment,
telecommunication or others, there are many
organisations who have excelled at delivering
optimum value to their customers, though
service excellence, an effective approach to
dealing with complaints and through
innovation and creativity.
The challenges for any organisation
wanting to succeed in the global market place
must start with acknowledging that the
``customer is king'' and that the whole
purpose of any organisation is to serve
customers and stakeholders and then become
profitable. Not the reverse!
 Managing customer dissatisfaction
Mohamed Zairi
A key message for senior managers
The difference between being a leader and a
laggard is not really in terms of financial
performance and the short-termistic approach
to managing business organisations. It is more
in terms of:
. Whether there is a genuine willingness to
turn the business upside down and re-
define all of the operations in terms of
customers and their needs?
. Whether there is boldness in appreciating
that true sustainable performance comes
from delivering customer satisfaction first
and then profit second?
. Whether there is courage to ``rock the
boat'' and change the culture of the
organisation, so there is no fear, no blame
and no reprimand?
. Whether there is true commitment to
drive the business with clearly defined
customer objectives, with reviews and
reporting systems supported by the right
measures.
. Whether a culture of team-work,
continuous improvement and a firm
commitment to delight the customer can
be integrated?
. Whether a reward and recognition system
can be developed, put in place with a
clear intent to reward and encourage
employee involvement and participation
in improving customer value and
resolving problems?
. The acid test is going to be whether there
is true empowerment to doing the right
things rather than doing things right?
A useful way forward for senior managers in
any industry context is to:
. Develop true leadership in customer care
and a vision for building loyalty and
retention.
. To develop smart information
infrastructure so that an effective dialogue
with customers can be established.
. To have clearly defined goals and targets
geared towards improving customer
service.
. To put in place the right systems, quality
assurance procedures so as to ensure that
the right things are done right the first
time and every time.
. Managing through a process-based
approach instead of a product-based,
transaction-orientated approach.
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. Working through a value chain principle
and using teamwork as a driver for
optimum performance.
. Using measures at all levels to attract
feedback, intelligence and create an on-
going dialogue with customers.
. Develop a closed loop customer
complaints management process capable
of dealing with concerns from customers
as quickly and effectively as possible.
. Encouraging innovation and continuous
learning so that people can go the ``extra
mile'' in order to create customer delight.
. Having an effective reward and
recognition system operating at various
levels and in the key areas of the business.
Failure in management is not through having
a high percentage of customer complaints to
deal with. By capturing customer complaints,
organisations are already indicating their
commitment to their customers because they
have listened. Remember the iceberg
phenomenon.
In most industries nearly 50 per cent of the
customers do not bother complaining. The
absence of complaints is, therefore, not a true
indication of effective management. Smart
organisations need to encourage their
customers to complain and to provide them
with the necessary means to do so.
The process of creating customer delight
out of a deficient situation is through listening
? empathising ? innovating ? caring.
In order to assist with the process of
developing a culture which is not averse to the
idea of receiving, accepting and handling
complaints, a proposed tool (see Appendix)
was put together, inspired from the work of
Blazey (1997) and studying best practice
applications across the world.
The audit tool itself seeks to draw attention
to the need for having processes and
procedures in place, reliance on facts and
quality information and a commitment for
continuous improvement through problem
solving, target setting and gap analysis.
To close with the profound words of Goethe:
Since it is the joy to have the benefit of what is
good, it is a greater one to experience what is
better.
References
Blazey, M.L. (1997), Insights to Performance Excellence,
American Society for Quality (ASQ), Quality Press,
Milwaukee, WI.
Garvin, D.A. (1988), Managing Quality, John Wiley &
Sons, New York, NY.
 Managing customer dissatisfaction The TQM Magazine
Mohamed Zairi Volume 12 . Number 5 . 2000 . 331335

Appendix. An audit tool for the effective . Aggregation of customer complaints

management of customer complaints
Structure of the audit tool
Complaint management process
. Effective resolution of complaints.
. Recovery of customer confidence.
. Learning from complaints.
. Dissemination of information to all
relevant employees to eliminate the
causes of complaints and meet customer
requirements better.
information from all sources for evaluation
and use throughout the organization.
. Creation of systematic action to improve
through complaints.
. Analysis and priority setting for
improvements need to be set through
potential cost impact of complaints
(including cost of losing customers).
. Effective complaint system should be able
to convert a dissatisfied customer into a
satisfied, loyal customer.

Table AI Auditing customer complaints management systems

Degree of importance Degree of effectiveness
Not
important Relatively Very Not effective Relatively Extremely
at all important important at all effective effective
Best practice application from MBNQA winners ! !
1. Several methods are used to ensure ease of customer 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10
contact, 24 hours a day if necessary (for example, toll-free & & & & & & & & & & & & & & &
numbers, pagers for contact personnel, surveys, interviews,
focus groups, electronic bulletin boards)
2. Requirements for building relationships are identified and 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10
may include factors such as product knowledge, employee & & & & & & & & & & & & & & &
responsiveness, and various customer contact methods
3. Customer-contact employees are empowered to make 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10
decisions to address customer concerns & & & & & & & & & & & & & & &
4. Adequate staff are available to maintain effective 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10
customer contact & & & & & & & & & & & & & & &
5. Performance expectations are set for employees whose 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10
job brings them in regular contact with customers & & & & & & & & & & & & & & &
6. The performance of employees against these 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10
expectations is measured and tracked & & & & & & & & & & & & & & &
7. A system exists to ensure that customer complaints are 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10
resolved promptly and effectively & & & & & & & & & & & & & & &
8. Complaints and customer concerns are resolved at first 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10
contact. This often means training customer-contact & & & & & & & & & & & & & & &
employees and giving them authority for resolving a
broad range of problems
9. Complaint data are tracked and used to initiate prompt 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10
corrective action to prevent the problem from recurring & & & & & & & & & & & & & & &
10. Problem resolution priority setting is based on the 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10
potential cost impact of customer decisions to repurchase & & & & & & & & & & & & & & &
or recommend the product or service to others
11. Procedures are in place and evaluated to ensure that 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10
customer contact is initiated to follow up on recent & & & & & & & & & & & & & & &
transactions to build relationships
12. Feedback is sought on the effectiveness of service 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10
& & & & & & & & & & & & & & &
13. A systematic approach exists to evaluate and improve 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10
service and customer relationships & & & & & & & & & & & & & & &
14. Feedback from customers and employees is systematically 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10
used in the improvement process & & & & & & & & & & & & & & &
15. Training and development plans and replacement 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10
procedures exist for customer-contact employees & & & & & & & & & & & & & & &
16. Objective customer service standards have been derived 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10
from customer expectations (for example, timeliness, & & & & & & & & & & & & & & &
courtesy, efficiency, thoroughness and completeness) Overall actual score
Max: 160 &
Commentary
The role of complaint handling to achieve customer loyalty. More insights from a dynamic player in the
quality field.

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