Customer complaints are something that business leaders generally like to avoid, yet they are a fact of business life, and handled well, they can have a huge impact on the success of the organisation

Some industry sectors are better at dealing with complaints than others, according to the UK Customer Satisfaction Index, a new survey carried out by the Institute of Customer Service. Ranked highest, by virtue of having created the least number of problems for customers in the first place, were companies in the leisure, retail and services sectors and car manufacturers and dealerships, while the lowest scores belonged to businesses in the transport sector, particularly trains and airlines, where customers ranked the satisfaction with which their complaint had been handled a miserable 2.9 out of 10.

ICS director Robert Crawford says: "Some businesses are getting it badly wrong, and by failing to deal with complaints efficiently, risk losing customers."  

The ICS also compiled a loyalty index; it found loyalty levels of 65 per cent among customers who experienced no problems over a three month period. Where complaints weren't dealt with satisfactorily that figure dropped to 34 per cent. When they were responded to quickly and efficiently, loyalty rates soared to 72 per cent.

"Customer complaints are not necessarily a bad thing, as long as you deal with them the right way," adds Crawford.

The UK Customer Satisfaction Index also revealed that almost a third of customers (31 per cent) who had experienced a problem within the last three months didn't bother to complain about it. Whether that is because they felt it was pointless, or not very British, Nigel Hill, chairman of customer satisfaction specialist the Leadership Factor, says it is an attitude that needs to be changed.

"Businesses should be telling their customers that they welcome their complaints so that they can put things right, and making it easy for them to do so online, by telephone, or speaking to someone face to face," he says.   

Small and medium-sized companies could argue that they lack the resources to run a formal customer service department, but Hill disagrees. "They are more likely to have close contact with their customers than large organisations," he says. "That means they are in a better position to listen to what they have to say, both formally and informally."

At Motorway Direct, a Sheffield-based provider of motor warranty insurance, employing 115 people, customer satisfaction is a priority. Managing director Simon Tennyson says: "We are regulated by the Financial Services Authority, which has a formal complaints procedure. If we do get a complaint our strategy is to resolve it without resorting to that procedure. A lot of our business comes from satisfied customers renewing their policy. It costs a lot less to keep existing customers happy and on board than it does to find new ones."

Essentials of customer complaint management

• Make it easy for customers to voice their complaints
• Offer an apology for their dissatisfaction
• Resolve the problem at the point of entry

Source: ICS