What to do about customer disputes?

A recent engagement with a national industry Ombudsman office revealed some very interesting insights into what causes customer disputes.

A dispute, remember, is not the same as a complaint. A dispute is a complaint that a company has been unable or unwilling to resolve to the satisfaction of the complainant. Like most Ombuds schemes, the scheme in question only deals with issues that have already been referred to the service provider by the customer for resolution, without success.

In its annual report the scheme classifies disputes according to their focus: billing and payments, credit management, customer service and so on. Up to a dozen different categories are reported.

Last year, the largest volume (about 23%) of all disputes were about billing and payments. That doesn't come as a surprise.

What we found utterly amazing was that the next largest category (16%) was the complaint-handling process of the service provider. Customers had engaged the complaint-handling process of their vendor and found it such an unsatisfactory experience that they asked the Ombuds office to intervene.

Why were we amazed? It is surely now accepted that investment in handling complaints well pays off in customer retention, advocacy and organizational learning. Service providers in this particular industry had managed to be so inept at resolving customer complaints that the complaint-handling experience was itself the cause of a significant number of disputes referred to the Ombuds office.

Want some specifics? The Ombuds office notes an appalling lack of responsiveness (such as failure to acknowledge receipt of written complaints), failure to keep promises (such as issuing a refund), failure to maintain adequate complaints records and data, failure to escalate a complaint to a manager at the request of a customer, charging fees for handling a complaint, and levying charges to itemise a disputed bill.

This is sheer madness. Any complaint-handling process that deteriorates an already tenous customer-supplier relationship is corporate lunacy. If you are going to invest in a complaint-handling process, it's got to work well, otherwise it'll simply give rise to higher numbers of disputes, and who wants that?