New research highlights how complaint handling can drive brand loyalty

Only one in 10 (8%) consumers is willing to ‘forgive and forget’ when it comes to a poorly managed complaint, according to new research from Ombudsman Services.

The third annual Consumer Action Monitor (CAM) – the most comprehensive multi-sector survey of customer complaints – reveals that there were 52 million complaints about products and services last year.

In terms of driving brand loyalty, the research suggests that complaint handling is becoming increasingly important. A well-handled complaint makes customers 67 per cent more likely to return to a company or brand, with only a quarter (25%) saying they would not make a repeat purchase even though their complaint was handled well.

  • A well-handled complaint will see three quarters (75%) make a repeat purchase
  • Poorly handled complaints affect brand loyalty, with less than one in 10 (8%) saying they would return
  • Also revealed: social media is becoming increasingly important tool for customers’ to seek redress

Customer service doesn’t just improve customer retention; having an effective complaints management system in place can significantly affect a brand’s reputation for the better, according to CAM.

More than half of consumers (52%) think more highly of a business that handles complaints effectively, while a quarter (26%) said they would be more likely to buy any product from a business offering a dispute resolution service than from one that didn’t.

Currently, nearly a third of consumers (31%) say big businesses are only interested in making money and don’t care if something goes wrong with a product or service, and one in seven (16%) believe that companies’ default position is not to help them if they have a problem.

Trust in business may be low, but there are steps businesses can take to boost consumer confidence, such as being signed up to a dispute resolution service, like an ombudsman scheme, to handle complaints2. Ombudsman Services recently launched the Consumer Ombudsman, opening up alternative dispute resolution to companies in all sectors.

The make-up of complaints is changing, as more than a third of people (36%) now use social media to escalate a complaint, up 5 per cent from last year – the equivalent of more than 18 million complaints3 of the 52 million total.

The likelihood of a customer complaining on social media varies dramatically depending on a company’s complaints handling procedure. Companies that expect customers to visit a small claims court if they’ve been unhappy with their service can expect to see a third of customers (34%) also complain on social media channels, while those offering a dispute resolution service will see this decrease to just a quarter (24%).

When it comes to redress, companies shouldn’t underestimate the value of the humility, as half of consumers (48%) say they would be happy with just an apology. Most people just want the service they paid for, with three quarters (75%) saying when they complain they want the problem to be put right. Less than a third (31%) of people expect financial compensation.

Commenting on the findings, Chief Ombudsman Lewis Shand Smith said:

“Last year, customer service was brought into the spotlight with the introduction of a new EU directive and the updated Consumer Rights Act, giving great legal rights to consumers, but they are also choosing to vote with their feet more than ever.

“Our three-year study suggests that consumer activism is on the rise and that complaint handling has become an increasingly important part of brand marketing.

“Companies should take steps to ensure their procedures do not fall short of customers’ expectations. Forward-thinking companies are starting to sign up for alternative dispute resolution services, which are free for their customers and have been shown to reduce customer propensity to complain via other, more public, routes.”

1 This refers to ‘actioned’ complaints, which are those that were taken to the supplier, shared on social media and/or escalated to a third party. 1.1 complaints per person were ‘actioned’ – this multiplied by the adult population of the UK (47.5 million) gives a total of 52 million ‘actioned’ complaints

2 43% of consumers would feel more confident in a company that offered access to a dispute resolution service, such as an ombudsman scheme, to handle complaints

3 36% of people complained on social media, this as a percentage of total complaints ‘actioned’ is 18.72 million