Operating Guest Authors: Complaints, Complaints, Complaints w/ Jens Stark
Customer Care as Customer Value: Why Complaints Are A Good Thing For Your Business
Every week, I bring in one amazing friend and expert I trust to share hard-won lessons from the trenches of their work worlds. This week, my friend Jens Stark is in the chair. He brings 30,000+ hours of experience in post-sales environments to a topic most founders treat as an afterthought until there’s a five-alarm fire: customer care.
Jens runs Scaling Customer Value on Substack, focused squarely on monetizing and engaging the customers you already have. If you're burning cash on acquisition but ignoring the people who already said yes, this one's going to recalibrate your thinking.
Pay attention, and go subscribe to Jens's newsletter here when you're done.
- j -
Why complaints are a good thing
Most companies think of complaints as something negative and try to avoid them. Whilst it is certainly a good idea to keep customers happy, what is less obvious is that complaints are a goldmine of information for company operators.
The most honest and raw feedback you will receive from customers can be found in your complaints department. Valuable information and customer insights are hidden within the contents of the customer communications and the complaints data.
If the only people who see this information are your company’s complaint handlers, you are missing out on a wider opportunity.
Having an effective operational process to manage complaints is important, but creating systems and an operating structure to enable you to review, analyze and discuss the customer feedback and insights at a business leadership level is how you enable change.
“Your most dissatisfied customers are your greatest source of learning.”
— Bill Gates
—--------------------------------------------------
You might have come across the complaints iceberg concept before, which suggests that complaints represent only the visible tip of the iceberg. Hidden underneath the surface is a much larger volume of unhappy customers who haven’t voiced their concerns.
In practice, less than 5% of the dissatisfied customers might go on to file a formal complaint. From the vast majority of customers that won’t raise any concerns, some will quietly stop using your product while others will start preparing to leave or switch to a competitor.
This is called silent attrition and it can be hard to spot and difficult to deal with. Once your business realises that there is a risk of losing the customer, the decision to move away from your company’s products and services has already been made.
Because of these dynamics, you can scale your business impact by approaching complaint handling proactively and strategically. When you stop thinking about complaints as items on a conveyor belt, the real question isn’t about processing volumes, speed or efficiency – it’s about the steps and actions you need to take to prevent them from re-appearing there the next time:
Creating a categorisation of different complaint themes
Measuring volumes, proportions and trendlines
Identifying root-causes of complaints
Customer feedback & complaint reporting loop to business decision-makers
Working collaboratively to mitigate the root causes of complaints
The benefits of reducing complaint volumes are not just operational but also financial. Lower complaint volumes means less operational cost and redress.
In addition, the continuous improvements that follow from the above methodology means having fewer weak points – across your products, policies, processes and people.
What do you reckon are the chances that such improvements will enable you to command a higher price point for your products & services in the future?
In one of the first business textbooks that I came across when I first started studying business some two decades ago, I vividly recall reading the following statement:
A happy customer will tell 5 people about their experience
An unhappy customer will tell 20 people about their experience
This is insightful because it highlights the importance of positive customer experiences and also why nipping those complaints in the bud quickly can help limit word-of-mouth conversations about a negative experience with your brand.
However, technological advances over time have radically changed how people communicate with each other. You now need to consider the digitisation of complaints; they can be emailed to your business with other people on copy, your response to the complaint can be forwarded to someone else with the click of a button, or the complaint could be made public on social media.
Possibly the world’s most impressive complaint about poor customer service comes from Canadian musician Dave Carroll and his band, Sons of Maxwell. “United Breaks Guitars” is a protest song which retells the story of how his guitar was broken during a trip with United Airlines in 2008 and the uncooperative reaction from the airline.
Carroll posted on YouTube on July 6, 2009; where it amassed 150k views in one day, prompting the airline to contact the musician. It was also reported that within a month of the video being posted online, the company’s stock price fell 10% and wiped out shareholder value of $180 million. 17 years on, the video is still going strong with 30 million views, 934k likes and 62k comments!
The stakes of complaint handling are higher than ever before and all of this is a very good reason for why you should consider bumping up complaint management in your list of business priorities.
By approaching complaints proactively and working through them holistically and methodically, you will be able to extract valuable customer insights and execute customer-needs-driven changes that will improve your business and make it more resilient.
- Jens -
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John Brewton documents the history and future of operating companies at Operating by John Brewton. He is a graduate of Harvard University and began his career as a Phd. student in economics at the University of Chicago. After selling his family’s B2B industrial distribution company in 2021, he has been helping business owners, founders and investors optimize their operations ever since. He is the founder of 6A East Partners, a research and advisory firm asking the question: What is the future of companies? He still cringes at his early LinkedIn posts and loves making content each and everyday, despite the protestations of his beloved wife, Fabiola, at times.
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Funny, this is really timely. I was just thinking this morning about how valuable negative feedback is in today's "perfect" world!