How effective complaint management affects customer retention

Abstract

In a highly competitive modern business world, keeping a dissatisfied customer is essential to any company, considering the high cost of acquiring new customers. It is easier than ever for dissatisfied customers to spread their experiences and bad word of mouth through the various media that new technology and the Internet offer. Therefore, handling customers’ complaints effectively can be a critical factor in a customer’s decision - whether to continue using the company’s services or products or switch to a competitor. In this context, “effective” means minimizing costs for the company while achieving the intended or expected result. A content analysis of customer complaints emailed to t he group-buying web- site Grouper.mk was conducted. A total of 220 complaints and related decisions were reviewed, analyzed, and categorized into six reasons for customer dissatisfaction and three ways to compensate for the dissatisfaction. In addition, the internal customer database analysis revealed that timely resolution of customer issues with the right approach resulted in 80% of all dissatisfied customers staying with the company. The analysis also showed that more frequent customers are more likely to remain after a complaint has been resolved than less frequent customers.