(taken from Marketing Management by Philip Kotler)

Studies of customer dissatisfaction show that customers are dissatisfied with their purchases

about 25% of the time but only about 5% complain. The other 95% either feel that complaining

is not worth the effort, or they don’t know how or to whom to complain.

Of the 5% of the customers who complain, only about 50% report a satisfactory problem resolution.

Yet the need to resolve a customer problem in a satisfactory manner is critical.

Whereas, on average, a satisfied customer tells 3 people about a good product experience,

the average dissatisfied customer gripes to 11 people. If each of them tells other people,

the number of people exposed to bad word of mouth may grow exponentially.

Nonetheless, customers whose complaints are satisfactorily resolved often become more

company-loyal than customers who were never dissatisfied. About 34% of customer who

register major complaints will buy again from the company if their complaint is resolved,

and this number rises to 52% for minor complaints. If the complaint is resolved quickly,

between 52% (major complaints) and 95% (minor complaints) will buy again from the company.

For all these reasons, companies need to develop a SERVICE RECOVERY PROGRAM.

As a first step, companies should make it easy for dissatisfied customers to complain.

They should provide a suggestion and complaint form or a toll free telephone number.

Pizza Hut prints its toll free number on all pizza boxes. When a customer complains,

Pizza Hut sends voice mail to the store manager, who must call the customer within

48 hours and resolve the complaint.

Second, the company’s employees who receive complaints must be trained and empowered

to resolve customer problems speedily and satisfactorily. Studies show that the faster the

company responds to the complaint, the higher the customer’s satisfaction with the company.

Third, the company should go beyond satisfying particular customers to discovering and

correcting the root causes of frequent problems. By studying the pattern of complaints,

the company can corret system failures that may be the origin of these complaints.