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Published on Sep 03, 2023


In order to compete effectively in globalized economy, organizations must be customer-focused. Customer relationship management (CRM) is the way to integrate this approach throughout an organization. Many a times organizations are likely to believe that it is function of marketing to have the customer relationship management. In reality it is meant for every one in the organization starting from the security person, telephone operator and accounting department.

Providing good service and then finding a way to leverage the good will created by quality service a company can tie deeply into a consumers psyche and develop a strong business/client relationship.

This paper examines customer complaints as a major source of loosing customers and suggests suitable policy measures to overcome these handicaps. In addition, there is discussion on role of information technology as an enabler of customer relationship management. The paper also develops a model for organizations to follow and summarizes the discussion.

Organizations have realized that retaining customers is more profitable than crating a new customer. It is estimated that a customer for coke for a lifetime will bring an estimated cash flow of Rs 50,000. Therefore, if we loose a customer we not only loose him for present but also future. We have not calculated the cost of satisfied customers references. Though customer relationship is being emphasized by Theodore Levitt in his article on "Marketing Myopia", organizations are yet to understand and implement various customer related initiatives. However, technology as an enabler with very low cost has come to the rescue of organizations to meet ever-changing need of customers.

CRM applications are also useful in gathering information from various business departments and merging them into one file, so that the company representative who takes a customer's call can answer most questions that the customer may have. This avoids the problem of having to transfer customers to other departments. Of course, CRM is a "two-way street," in that it enables companies to use information on a customer's previous purchases to focus their marketing on items of special interest to a particular customer. For instance, a bookseller may send information on new travel books to a travel enthusiast.

Why are the reasons for customer complaints?

Most customers complain because they purchased a product or service with certain expectations, and, for any number of reasons, those expectations were not met. Some of the research done by organizations found the following to be among the major causes of consumer complaints.

Product Service Causes:

• Poor product quality

• Maintenance difficulties

• Inadequate or poor repair work

• Delays in delivery of goods or services

• Failure to fulfill product or service warranties

• Incompetent or discourteous employees

Accounting Causes:

• Billing errors

• Failure to provide timely refunds and adjustments, as promised

Sales Practice Causes:

• Deceptive or inaccurate advertising

• Advertising products that are not available, or are in limited supply

• Misleading or false representations by sales staff

Underlying Causes:

• A wide range of product choices coupled with a lack of information on which to base purchase decisions

• Advanced technology --- complicated product design

• Inadequate, or complicated product instructions

The foundation of customer goodwill is the existence, promotion, and practice of a sound customer relations policy. Such a policy is a formal promise to customers representing commitment to their satisfaction. A customer should not be forced to run from department to department, or individual to individual to get satisfaction. The policy should spell out specifically how, when, where, and who handles complaints or questions.

One person within the company should have ultimate authority and responsibility for customer relations. In a small firm, it may be the owner, while in a large organization it may be a customer affairs executive. It is important that the person designated be readily available, and authorized to act on behalf of the company in all customer relations matters. The organization may want to consider incorporating a commitment to a third party dispute resolution mechanism into customer relations policy. Even if organization follows and carries out a sound customer relations policy, there still will be some complaints that are difficult to settle, and a few customers whom the company cannot seem to satisfy. Alternatively, we may consider offering resolution through a third party mechanism on a case-by-case basis. An independent and neutral third party will act as a mediator, helping organization and customers communicate to reach an understanding. In the event that an agreement is not reached, organization should be prepared to offer arbitration. Arbitration is a process where a neutral person listens to both sides and makes a final decision based on fairness and equity.

Complaint Handling Procedures

Complaint handling system, which is structured from customer relations policy, must operate simply, effectively, and quickly. Speed is essential in responding to customer dissatisfaction.

Customer should be assured that organization care and that prompt remedial action will be taken to resolve any reasonable problem. A sound complaint handling system should include the following essential procedures:

Screening And Logging -- There should be a formal procedure for recording the date a complaint is called for attention, along with a record of pertinent information. For example, the type of product or service; manufacturer/brand name; model name/number; date of purchase/contract; warranty expiration date; salesperson; cost of product/service; date problem occurred; and a description of the problem should be listed. This will allow organization to exercise control, and assure proper follow-through.

Investigating -- customer's explanation of a problem can provide much information. Nevertheless, to assure we have all the information needed for a thorough review of the facts involved, by:

Researching in-house records on the customer;

Requesting receipts, or other records;

Inspecting the product, or service performed; and

Following-up with the customer for any necessary additional information.

Acknowledging -- When organization cannot resolve an issue immediately, it is important to let customer know that the matter is receiving attention. Prompt acknowledgment will set customer at ease, demonstrate that organization care, and begin the process of preserving goodwill. Whenever possible, tell customer how long it will take to complete action on the complaint. If there is further delay, be sure to advise customer why, and when organization expect to have an answer.

Formulating A Solution -- solution must be consistent with established customer relations policy and should take into account a number of important criteria. organization should consider:

Contractual and/or warranty obligations;

The customer's expectations;

expectations of the customer;

The cost/benefit of alternative solutions;

The probability and cost of customer seeking redress in some other way;

The comprehensiveness and fairness of solution;

ability to perform the solution; and

What to do if the customer rejects solution.

Responding -- The response should be clear and appropriate. The customer must understand the response, and the response must address the issues raised in the customer's original complaint.

We should avoid "stock" language and form letters when an individual response is needed, and refrains from using excessive technical jargon. An explanation of decision may preserve the goodwill of customer, even if the decision itself is adverse.

Following-Up -- Contact customer following response to verify whether or not the matter has been resolved satisfactorily.

If customer is unhappy with response, organization should refer the matter to a third party dispute resolution mechanism for assistance.

If we intend to seek the assistance of a third party, be sure to give the customer a name and telephone number of the person, or office to be contacted.

The follow-up step is critical to ensure the effectiveness of system. While organization may never satisfy everyone, this contact will provide direct feedback, and can be extremely valuable in making customer relations the best possible.

Management should monitor complaint-handling procedures to ensure that complaints are being handled properly, fairly, and promptly. Analyze complaints as a basis for reviewing customer relations policies and operating procedures, and for evaluating product or service quality.

Reference :, 2004.
Indian security Market Review 2008, by NSE, India.

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