Page 154 - Marketing Management

CREATING LONG-TERM LOYALTY RELATIONSHIPS | CHAPTER 5 131

CUSTOMER COMPLAINTS Some companies think they’re getting a sense of customer
satisfaction by tallying complaints, but studies show that while customers are dissatisfied with
their purchases about 25 percent of the time, only about 5 percent complain. The other 95 percent
either feel complaining is not worth the effort or don’t know how or to whom to complain. They
just stop buying. 33
Of the customers who register a complaint, 54 percent to 70 percent will do business with the
organization again if their complaint is resolved. The figure goes up to a staggering 95 percent if the
customer feels the complaint was resolved quickly. Customers whose complaints are satisfactorily
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resolved tell an average of 5 people about the good treatment they received. The average dissatis-
fied customer, however, gripes to 11 people. If each of these tells still other people, the number
exposed to bad word of mouth may grow exponentially.
No matter how perfectly designed and implemented a marketing program is, mistakes will hap-
pen. The best thing a company can do is make it easy for customers to complain. Suggestion forms,
toll-free numbers, Web sites, and e-mail addresses allow for quick, two-way communication. The
3M Company claims that over two-thirds of its product improvement ideas come from listening to
customer complaints.
Given the potential downside of having an unhappy customer, it’s critical that marketers deal
with negative experiences properly. 35 Beyond that, the following procedures can help to recover
customer goodwill: 36
1. Set up a 7-day, 24-hour toll-free hotline (by phone, fax, or e-mail) to receive and act on
customer complaints.
2. Contact the complaining customer as quickly as possible. The slower the company is to
respond, the more dissatisfaction may grow and lead to negative word of mouth.
3. Accept responsibility for the customer’s disappointment; don’t blame the customer.
4. Use customer service people who are empathic.
5. Resolve the complaint swiftly and to the customer’s satisfaction. Some complaining customers
are not looking for compensation so much as a sign that the company cares.

Product and Service Quality
Satisfaction will also depend on product and service quality. What exactly is quality? Various ex-
perts have defined it as “fitness for use,”“conformance to requirements,” and “freedom from varia-
tion.” We will use the American Society for Quality’s definition: Quality is the totality of features
and characteristics of a product or service that bear on its ability to satisfy stated or implied
needs. 37 This is clearly a customer-centered definition. We can say the seller has delivered quality
whenever its product or service meets or exceeds the customers’ expectations.
A company that satisfies most of its customers’ needs most of the time is called a quality com-
pany, but we need to distinguish between conformance quality and performance quality (or grade).
A Lexus provides higher performance quality than a Hyundai: The Lexus rides smoother, goes
faster, and lasts longer. Yet both a Lexus and a Hyundai deliver the same conformance quality if all
the units deliver their respective promised quality.
IMPACT OF QUALITY Product and service quality, customer satisfaction, and company
profitability are intimately connected. Higher levels of quality result in higher levels of customer
satisfaction, which support higher prices and (often) lower costs. Studies have shown a high
correlation between relative product quality and company profitability. 38 The drive to produce
goods that are superior in world markets has led some countries—and groups of countries—to
recognize or award prizes to companies that exemplify the best quality practices, such as the
Deming Prize in Japan, the Malcolm Baldrige National Quality Award in the United States, and the
European Quality Award.
Companies that have lowered costs to cut corners have paid the price when the quality of the
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customer experience suffers: When Northwest Airlines stopped offering free magazines, pillows,
movies, and even minibags of pretzels on domestic flights, it also raised prices and reduced its flight
schedule.As one frequent flier noted,“Northwest acts low cost without being low cost.”Not surpris-
ingly, Northwest came in last of all top U.S. airlines in both the ACS index and J.D. Power’s cus-
tomer satisfaction poll soon thereafter. Home Depot also encountered turbulence when it became
overly focused on cost cutting.