Complaint Management – What, Why & How

Complaint Management – What, Why & How / CentraCXComplaint management – the effective handling of customer complaints within an organisation – is a hot topic right now. Go to any online newspaper and search for “customer complaint” and you’ll inevitably find stories on banks, airlines, telco’s, and fast food companies to name but a few.

Effective complaint management is about addressing the specific issues of individual customers in order to retain their business and protect revenue. You only have to look as far as the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry that was conducted in Australia during 2018 to see where ineffective complaint management can lead*.

But other than to avoid customer dissatisfaction and non-compliance with industry regulators, why else should an organisation have an effective complaint management procedure? Here’s three good reasons:

  1. Continual Improvement – With their feedback, complaining customers are offering you important information about your products, services, processes, and/or people and giving you the chance to not only retain their business but fix the problem so other customers aren’t affected by it as well. Dissatisfied customers who don’t complain are more than likely lost to the company for good and the worst part is: you won’t even know the reason. Effective complaint management ensures that customer feedback gets to the right departments within the business and contributes to overall improvement.
  1. Word-of-mouth – to reduce bad word-of-mouth which is amplified through social media. One unhappy customer can nullify the effect of multiple promoters of your brand in terms of their impact.
  1. Productivity – complaints take up a disproportionate amount of time, effort and cost to resolve. Resources that could be spent in much better ways within the business. Not only that, those costs increase the longer it takes to resolve.

Developing a complaints handling policy

When developing a complaints handling policy, start with the end result you want and work your way back. In this case, it’s a customer who feels satisfied that they have been heard, that their time has been respected, that they have been treated fairly, and that their feedback has been used to make improvements. So at some point very early in the process, reassure customers that you value their feedback and are committed to resolving their issues in a fair, timely and efficient manner.

Your complaints handling policy should also:

  • Explicitly detail how customers can make a formal complaint,
  • identify the steps you will take to address and resolve complaints,
  • indicate some of the solutions you offer to resolve complaints, and
  • inform customers about your commitment to continuous improvement.

Complaints handling procedure

Once you have developed a policy you can create a procedure for handling complaints. A procedure will ensure consistency i.e. that complaints are dealt with in the same manner, every single time.

A typical procedure might include the following steps.

1– Acknowledge the complaint

Thank the customer for bringing the matter to your attention, apologise and accept ownership of the issue, and don’t try to shift blame.

2 – Understand the complaint

Get all the facts by asking all the necessary questions.

3 – Record details of the complaint

Log the complaint in a central system. Keeping records of all complaints in a central register helps you identify any trends or issues.

4 – Determine the options for fixing the problem

Ask the customer what outcome they are seeking; it could be a repair, replacement, refund or apology. Decide if the request is reasonable.

5 – Act quickly

Aim to resolve the complaint quickly. The longer a complaint takes to resolve, the more likely it is to escalate and the greater the cost to the organisation.

6 – Keep your promises

Follow through on your commitments and keep the customer informed if there are any delays in resolving their request.

7 – Follow up

Post-resolution, contact the customer to ensure they were satisfied with how their complaint was handled. Also, let them know what you are doing to avoid the same problem re-occurring in the future.

Complaint Management – What, Why & How / CentraCX


* Perhaps as a result of this Royal Commission, ASIC has released Regulatory Guide 271 (RG 271) which contains updated standards and requirements that will drive financial services firms to ensure they handle consumer complaints in a fair and timely manner. Coming into effect on 5 October 2021, it aims to improve the trust and confidence customers have with the financial services industry and to minimise the costs that arise from protracted dispute resolution processes.


This post first appeared on CentraCX‘s blog in August, 2021.

Image courtesy of UnSplash.


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