Complaint Management System In Business

A complaint is a customers’ expression of dissatisfaction or discontent with a service offering. When customers are dissatisfied they may or may not complain.

When a service provider fails, Lovelock, Patterson and Walker (2001) explained that four major courses of action are available to the customer:

a) Do nothing, but the service provider’s reputation diminishes in the eyes of the customer and they will consider defecting if it occurs again;

b) Complain in some form to the service organization;

c) Take some kind of overt action with a third party (may seek litigation or arbitration)

d) Defect or simply not patronize the firm again and then tell other customers thereby engaging in negative word of mouth (NWOM) behaviour.

Of these four possible courses of action a customer may take due to service failure, only complaining to the organization provides the organization with the opportunity of correcting its flawed process and strengthen loyalty (Goodman 2006). Customer complaints also provide a valuable source of market intelligence (Priluck & Lala, 2009). Hence, service providers must therefore see every complaint as a gift and treat them seriously (Kotler & Keller, 2009). Service providers must strive to develop an effective complaint management  system (CMS) that will encourage dissatisfied customers to lodge complaints and follow through with the complaint process (Isibor & Odia, 2014b).

Designing a complaint management system 

A complaint management system (CMS) refers to a staged way of receiving, recording, processing, responding to and reporting on complaints as well using them to improve services and decision-making (Ombudsman, 2002). It is a set of procedures used in organizations to address complaints and resolve disputes (Osman & Enayat, 2015). CMS is a marketing concept tool that enables service providers achieve their long term objectives and enhance customer satisfaction (Isibor & Odia, 2014b). To develop an effective CMS, service providers must understand the difference between complaint management and complain handling. While the latter merely represents operational/front line activities directed at helping customers resolve complaints, the former is a managerial process. In other words, complaint management encompasses complaint handling and other internal business processes aimed at resolving and further preventing such complaints (Vos, Huitema & de Lange-Ros, 2008).

According to Ombudsman (2002), a good complaint management system must possess the following characteristics:

1. It must be simple and clear enough for customers and staff.

2. It must be timely. This means the system should be able to resolve complaints without delays. This must be irrespective of the various levels the complaint may have to good through.

3. It must be transparent and user friendly

4. Information about how and where to complain must be widely available to customers.

5. The system must ensure staff members are thoroughly equipped to advise and assist people in making complaints.

6. The system must also make provision for customers to complain to a 3rd party if they are not satisfied with how the complaint was handled in the organization.

Considering these characteristics, Ombudsman (2002) suggested that for a CMS to be effective it must possess the following elements:

a. A frontline or customer service function which is mandated to deal with specified low level complaint.

b. An internal complaint review mechanism that is triggered if the complainant is not satisfied with the frontline decision.

c. An independent external review body to carry out further investigation if the matter remains unresolved after the decision of various internal review mechanisms.

When customers complain, they seek for fairness and justice. Hence the essence of complaining is to: ask for an explanation; seek corrective action; express emotional anger; seek apology; and seek compensation or redress (Heung & Lam, 2003). On the basis of the outcome sought, researchers (Hui, 2007; Tax, Brown & Chandrashekaran, 1998) have proposed four dimensions of justice that customers desire from any complaint management system:

1. Distributive Justice: This means that when customers complain, the outcome must be fair. Compensation must therefore be such that it matches the level of dissatisfaction experienced by the customer. Compensation could be monetary or non monetary. It may be in the form of refund, reduced charges, total replacement or repair.

2. Procedural Justice: This means that customers desire not only a fair outcome but also want the process of resolution to be fair. Procedural justice relates to issues like speed of response, flexibility of procedure and the customer’s accessibility to the resolution process.

3. Interactional Justice: This dimension measure the manner a customer is treated in the CMS process. It is also called interpersonal justice. It is concerned with such issues as provision of apology, concern and honesty demonstrated on the part of the organization’s employees.

4. Informational Justice: This measure the adequacy of communication and information provided in the Complaint management process. Information that customers need in order to complain must be widely and readily available. Personnel and toll numbers to contact or call must be openly displayed.

An effective CMS must cover these various justice dimensions. In addition, Bateson and Hoffman (1999) noted that for a CMS to be effective, it must be designed around: stimulating and receiving complaints; resolving complaints; and sending feedback to customers. In today’s world of business, the internet makes it easier to manage complaint.

Despite the absence of the possibility for face to face interaction, the advent of online CMS offer service providers the opportunity of saving time and other costs as well as eliminating corruption in the complaint resolution process. Service marketer must therefore make use of all available platforms, software and other digital tools in designing their CMS. It has been found that the successful resolution of complaints can further strengthen a customer’s loyalty (Michel, 2001). However, when complaints are not successfully resolved, there is a tendency that instead of being “Apostles” – spreading good news about a service provider, such customers may become “Terrorists” – spreading negative word-of-mouth.


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