Complaint management - a short overview

Table of contents

List of figures

List of abbreviations

1 Introduction
1.1 Executive Summary
1.2 Scope of Work

2 Problem and Research
2.1 Problem Definition
2.2 Relevance and Motivation
2.3 Methodology

3 Basics of complaint management
3.1 General classification into customer management
3.2 Objectives of complaint management
3.3 Development and effects of customer dissatisfaction

4 Complaint management as an instrument for customer retention
4.1 Complaint stimulation
4.2 Complaint acceptance and processing
4.3 Complaint reaction
4.4 Complaint analysis, - controlling, - reporting, -utilization

5 Conclusion, critical comments and outlook

Bibliography
Literature

Appendix

ITM Checklist

List of figures

Figure 1 - Complaint management within the CRM concept

Figure 2 - Objectives of complaint management

Figure 3 – Development of satisfaction and dissatisfaction

Figure 4 - Possible behaviour options of customer satisfaction/dissatisfaction

Figure 5 - Complaint process

List of abbreviations

Abbildung in dieser Leseprobe nicht enthalten

1 Introduction

1.1 Executive Summary

In the past years the stress of competition towards companies is growing. In addition, companies can hardly grow or make profit in the long run due to stagnant or shrinking markets and increasing internationalisation. Continuous improvement or enhancements of production technology and the products themselves lead to the fact that products are even more substituted. Thus, it is not sufficient to sell only good products but the service is coming more to the fore from customer’s point of view.

This change in general conditions leads to a focusing on customer orientation. While the acquisition of new customers was formerly relevant, today’s instruments regarding the customer retention gain more importance. Companies recognized that satisfied customers considerably contribute to corporate success. Empirical studies showed that it is five times more expensive to acquire a new customer and considerably cost extensive to recover a lost customer than binding existing customers.^[1]

Dissatisfied customers change to competition or harm the company via negative word-of-mouth propaganda. Permanent customer relations in comparison do have a profit- as well as cost-advantage. Customer retention leads to more profit due to the buying frequency, cross-selling-effects and cost savings in consequence of saved acquisition costs and efficiency advantages. Further chances result from the decreasing price sensitivity of the customer.

Beside of the direct profit impacts of customer retention, indirect impacts on further customer relations occur, e.g. recommendations of satisfied customers. The corporate objective should be the focusing on customer retention and thus to improve the corporate competitive position.^[2]

1.2 Scope of Work

The assignment about complaint management starts with the introduction which includes the executive summary and the scope of work that is realized in here.

The second chapter deals with a detailed definition of the problem that causes the relevance of this assignment, the determination of the objectives as well as the methodology that describes the assignment’s structured procedure.

Chapter three is focused on the basics of complaint management. At this juncture in particular the classification into customer management, the objectives of complaint management, the development of customer dissatisfaction as well as the complaint satisfaction and customer retention is being analyzed.

Chapter four is about complaint management as an instrument of customer retention. It contains a detailed analysis about complaint stimulation, complaint acceptance and processing, complaint reaction as well as complaint analysis, controlling and reporting.

Finally, the results of this assignment are summarized; especially whether the set objectives are reached as well as critical comments about the assignment is given in the last chapter. Furthermore, an outlook about possible future effects of applied complaint management is provided.

2 Problem and Research

2.1 Problem Definition

Instruments like customer retention are coming more to the fore. Changing market conditions like internationalisation, shrinking or stagnant markets, increasing competition and different customer behaviour are only some reasons for the deflection of marketing’s priorities. Only a few years ago emphasis of marketing was only put on customer acquisition. However, with the modification of business conditions customer orientation, customer satisfaction and customer retention gain in importance. Today, the priority of marketing measures is not the pre-sales marketing but rather after-sales marketing.^[3]

2.2 Relevance and Motivation

According to the arising importance of complaint management for companies, the focusing on customer relationship management respectively customer retention is an essential requirement from managerial point of view.

This change requires a stronger orientation of companies towards an optimized customer relationship management in order to crate a lasting added value for the enterprise.

In order to meet these requirements, the primary objective of this assignment is to reveal and underline the importance of well implemented and managed complaint management for corporate success and to explain methods for the management critically.

2.3 Methodology

In general, data researches are clustered into two groups:^[4]

- Secondary Research
- Primary Research

On the one hand, the secondary research is based on already existing literature. The primary research or the so-called field research raises data and information on the market originally - starting point for the data collection is the origin respectively source of facts and opinions.^[5]

Due to time restrictions this assignment is only based on secondary research which is particularly about the arising problems that causes the relevance of that assignment.

Today, the stress of competition, stagnant or shrinking markets and increasing internationalisation as well as product substitutions are the main developments which cause the growing importance of well implemented and managed complaint management.

In addition, the objectives of this assignment are defined: Primary, these are the explanations about the significance of complaint management, the critical analysis about the necessity as well as methods to manage complaints. The next approach is to include the general theoretical analysis of complaint management and to describe the relation between customer satisfaction and customer retention.

3 Basics of complaint management

3.1 General classification into customer management

The complaint management aims to stabilize customer relations at risk and can be classified in the context of customer relationship management (CRM). CRM is defined as all aspects of interaction between the company and its customers, whether it be sales or service related.^[6] Measures of CRM are passed for potential, current as well as for lost customers.

Part of the CRM is the customer retention management which focuses on current, already existing customer relations. Customer retention management put emphasis on the systematic analysis, planning, implementation and control of all measures which are targeted on the existing customer base with the objective to keep and care for future customer relations intensively.^[7]

The complaint management is focused on customers who express their dissatisfaction via complaints. Following illustration shows the classification of complaint management within the CRM concept.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1 - Complaint management within the CRM concept^[8]

3.2 Objectives of complaint management

Dissatisfied customers communicate their dissatisfaction more often than satisfied customers communicate their satisfaction. Negative experiences are repeated to more than ten people whereas positive ones are only repeated to three people.^[9] A satisfied customer is characterized by a high degree of product and corporate loyalty. In order to assure customer satisfaction the complaint should be handled unbureaucratic, quick and accommodating. A service or complaint management that meets the demands or exceeds the expectations of a customer lead to the fact that customer improves his/her attitude towards the company and abides by the company on a long term basis.^[10]

[...]

^[1] Cf. Mierzwa, M. (2002), p. 21, Schneider, W. (2000), p. 43.

^[2] Cf. Bruhn, M. (2001), pp. 3.

^[3] Cf. Pepels, W. (1997), p. 45.

^[4] Cf. Meffert, H. (2000), p. 145.

^[5] Ibidem.

^[6] Cf. Stauss, B. / Seidel, W. (2002), p. 35.

^[7] Cf. Bruhn, M. / Homburg, Ch. (2000), p. 8.

^[8] Cf. http://de.wikipedia.org, as at 20.08.2006.

^[9] Cf. Töpfer, A. (1999), p. 464.

^[10] Cf. Stauss, B. / Seidel, W. (1996), p. 59.