UK: Complaint Handling | The Importance Of A Strategic Approach To Complaint Reduction

Last Updated: 8 October 2015
Article by Nicholas Kemp

Complaint reduction should be a priority for every firm. A robust and structured complaint reduction strategy can deliver many advantages, for example:

  • The customer experience is improved as issues which could have caused complaints are identified and resolved.
  • The morale of front-line staff can improve if they are given the knowledge and skills to resolve customer concerns before they become complaints.
  • The potential to reduce reputational risk through the identification and elimination of common complaint causes, leading to less likelihood of negative regulatory or media activity.
  • A potential reduction in complaint processing costs as incoming volumes, ombudsman referrals and re-worked complaints decrease.

In our experience, not all firms have a fully co-ordinated approach to complaint reduction meaning the impact of any current reduction activity may not be delivering its full potential.

The purpose of this blog is to consider the component parts which form a) the foundation of a successful complaint reduction strategy and b) the complaint reduction strategy itself.

Setting the foundations

In order to reduce complaints a firm must first understand its complaint population. Accurate complaint identification is critical especially if the follow-on improvement activity is to be correctly focussed. For more information on this please refer to our blog on 'implementing the complete FCA complaint definition'.

Complaint identification should be supported by an intuitive complaint categorisation process.  Staff, who log complaints, should be given categorisation options which are intuitive, clear and easy to understand and are not duplicated (or else there is a risk of data fragmentation). The categorisation options also need to provide  the business with useful and tangible information about the complaint – e.g. what actually went wrong. The options need to be set at a level of detail which is reasonable for the user to know at the point of entry. Where the complaint logging system has  tiered complaint categories, i.e. Primary, Secondary and Tertiary, they should ideally adhere to the following logic:

What area of the business went wrong?  > Which part went wrong? > Why did it go wrong?

Robust root cause analysis, with engagement and accountability for remedial and improvement activity at a senior level across all business areas, enables firms to focus on issues which are causing real customer detriment.

A successful complaint reduction strategy

There are three pillars to any successful complaint reduction strategy.

1. Senior accountability for delivering the strategy

There should be a firm-wide culture to reduce complaints. This culture needs to be driven by senior management with targets for complaint reduction success metrics and customer satisfaction scores agreed at an executive level. Targets should be challenging but achievable with appropriate controls to ensure they do not drive or encourage the wrong behaviours.

2. Using root cause analysis intelligence to best effect

Accurate complaint identification and categorisation should lead to more accurate intelligence becoming available for areas of the business which make customer-impacting decisions, e.g. risk, product development, etc. This can be used to inform future decisions to ensure they are tailored (as far as is commercially possible) to minimise complaints. For example:

  • A credit card provider's RCA MI illustrates that if it reduces the credit card limit for a population of customers, the firm can expect 60 complaints per 1,000 affected accounts.
  • Deeper analysis of this data identifies that half of the complaints were not in relation to the reduction of the limit itself but the manner in which the reduction was implemented, e.g. the customer had insufficient time to make alternative arrangements, only one notification of the reduction was sent, etc.
  • This intelligence can then be used to inform and improve how any future limit reductions are implemented. This could not only reduce the number of complaints but also provide an improved customer experience.

3. Staff knowledge and empowerment

Things unfortunately will go wrong even in the best run business. Sometimes these problems and their causes are not promptly communicated to front-line staff. This can lead to customers' queries escalating to complaints because staff are unable to provide a satisfactory explanation and response.

Firms should consider implementing a robust mechanism which promptly informs all front-line staff of any issue which may lead to complaints and provides them with information on the cause of the problem, what the firm is doing to rectify it and how to recompense any impacted customer.

Summary

By taking a strategic approach to complaint reduction firms can ensure that their financial and resource investment in this area delivers the greatest benefit to customers.

Further, with the FCA publishing all complaints data from June 2016, meaning all complaints received by a firm and not just those closed after the third business day will be published, any reduction activity could mitigate the reputational risks this may present.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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