Turning Customer Complaints Into Profitable Opportunities Using the Six Sigma Tool Kit

Service pays! Validated research reveals that it costs five times more to go out and get a new customer than it does to maintain a customer you already have. And anyone who's been a salesperson agrees that there's no worse way to live than depending on cold calls.

Developing expanded business with existing customers and thriving with a reputation as a "service delighter" is a more profitable way to live. Simply using snazzy, high-tech activities aimed at attracting first-time users—while taking today's customers for granted—is a sure-fire recipe for disaster.

Why? Because superior customer service translates into more customers, more growth, more profits. Management expert Tom Peters has often cited the landmark study by Technical Assistance Research programs, which states:

"Twenty six of every 27 customers who have had a bad experience with you fail to report it...the principal reason is not difficult to understand: They expect no satisfaction if they bug you...

...The clincher comes next: Some 91 percent of those who complain won't come back...the scariest statistic is: The dropout ratio hold true for $1,000 purchases as $1.98 ones...and perhaps worst of all, the average person who has had an unsatisfactory experience tells 9 to 10 people; 13 percent of the malcontents will spread the bad news to 20 or more people...

All is not hopeless. The data show that, depending on the industry, you can get 82-95 percent of these customers back if you resolve the complaint in a timely and thoughtful fashion. Better still, a well-handled problem tends to breed more loyalty than you had before the negative incident..."

Managing Customer Complaints

Anybody who is not focusing on proven best practices of complaint handling of customers and problem prevention is going to be dead in the water.

Improving the complaint-handling process and finding the root causes of complaints is, in essence, a marketing problem. Marketing is the art of finding, developing and profiting from opportunities.

Dangers and weaknesses indicate where to look for business potential. Converting them from problems into opportunities brings extraordinary returns.

Using Six Sigma to Turn Customer Complaints to Profits

Traditional Six Sigma practices can be employed to discover the root cause(s) of customer complaints. Indeed, the entire process of defining the problem, making the diagnosis, administering the remedy and holding and extending the gains achieved can be utilized in turning customer complaints into profits.

The best way to improve complaint handling is to reduce complaints via prevention. You must recognize that customer problems have three major causes, namely: 1) employee errors and attitude; 2) poorly designed processes and marketing campaigns that create false expectations; and 3) customers who failed to follow directions.