Complaints excellence – how to lead the industry

Posted: 7th December 2015

Financial services firms can often fail to unlock the true value of customer complaints. In Huntswood’s recent research, all of the firms we spoke with believed that complainants can be turned into advocates for their business, yet only 12.5% were willing to rate their complaints handling process any better than compliant.

These figures cannot be taken lightly; these firms represent more than 80% of the complaints made in the second half of 2014. Moreover, with the FCA’s figures that financial services firms report about five million complaints each year, and pay out about £5 billion in redress to customers, any positive shifts in firms’ complaint management operations can affect these figures and their own commerciality significantly. With so much hanging in the balance, who will step up to the challenge and lead the industry? And more importantly, how?

THE VOICE OF THE CUSTOMER

In the eyes of the customer, the quality of a firm’s overarching complaints processes will dramatically affect its prospects. Financial services organisations should take note of the voice of the customer - by this we mean not simply the voices that that they hear, but of the ones they don’t. An average of 74% of customers across all sectors who had an issue with their provider did not complain to them. And yet, a vast majority of these non-complainants – 90% to be precise - still take some form of action such as mentioning it to family and friends, posting on social media or forums, and stopping account usage. But how many people do non-complainants share their issue with? Pete Blackshaw’s book, ‘Running a Business in Today’s Consumer Driven World’ explores this in great detail with the attention grabbing claim ‘not 3 but 3,000’. A significant figure, undoubtedly affecting a firm’s potential revenue streams and existing revenue streams, a good example of the ‘leaky bucket’ theory whereby any flow of new customers is offset by the consistent loss of existing customers. Furthermore, how can you investigate and resolve an issue if you don’t actually know about it in the first place? From such consumer research, two points become abundantly clear:

• Look to make the most of the complaints that you do receive through effective RCA and its implementation
• To reduce the number of non-complainants, and potentially, lessen lost business and create further revenue streams, look at why customers with issues don’t feel it’s worth putting a complaint forward. What are your firm’s barriers to complaining? As with 42% of our survey’s non-complainants, do your customers believe making a complaint takes too long? Or like 54%, do they expect the complaints to be handled poorly anyway?

THE WAY FORWARD

A great complaints department can be the difference between a growing firm and one fighting a war of attrition. A great complaints department can as such, help to plug the ‘leaky bucket’. Complaints are no longer just a bottom line cost, but a source of differentiation, critical to success in an increasingly competitive and consumer-driven market. Customers are being empowered with easier switching and ever more public ways to voice dissatisfaction. Alongside this, competition and disruption are being sparked by technology and propelled by the regulator. With much evidently at stake in the way complaints are handled, how can complaint handling be reshaped in 2016 (and beyond)? A truly effective approach will be one that goes beyond simple customer retention, using analysis and insight to prevent future issues, boost bottom line profitability and make complaints a centre of excellence within the business. Take some time to explore our research and guidance further by downloading a copy of our ‘Complaints Outlook 2016’. The paper contains the output of a survey of 5,000 financial services customers, interviews with 45 firms and insight from Huntswood’s experts. Why is our study called the Complaints Outlook? Prior to the start of the research, we produced a list of 16 issues that we thought complaints leaders faced in 2016. We surveyed a sample of firms and whittled this list down to seven key topics:

• Implementation of PS 15 / 19
• Management information and effective oversight
• Root cause analysis and rectification
• Quality assurance and outcomes testing
• Training and competence
• Vulnerable customers
• Emergence of new technology in complaints

The report contains a chapter on each of these, featuring insight, best practice and ideas to consider in 2016, gathered from each of these pillars. The consumer research forms both the context and the case for investment in each of these seven areas. We hope that for many firms the content of the report will comply with the 80/20 rule. 80% should serve as validation to your existing operation, while 20% will serve as a challenge or provide ideas for change. This report should also serve as the business case for that change. Download the report here.