A willingness to offer compensation as soon as customers demand it does not guarantee their loyalty, or improve market share. More than 2,000 UK consumers were asked about their response when products fail or service levels drop below expected standards, and whilst they admit to complaining, the idea that Britain is driven by a compensation culture has been exposed as a myth.
According to data, published at the start of National Customer Service Week (#NCSW) by the Institute of Customer Service, just 17% say their default position is to seek compensation. Many, however, voice their grievances in an effort to let the company know what they had done wrong (35%). Some just want to receive an apology (20%) and – more altruistically – others want to help improve the way organisations work (19%).
Although 83% of organisations readily pay compensation, the data suggests that after experiencing a problem only 38% ‘will definitely use the organisation again’. One in three people also claim that it doesn’t stop them from ‘discouraging other people from using the company.
“British Business must be careful not to fall into the trap of confusing compensation for customer service,” says Jo Causon, CEO of the Institute of Customer Service. “Both UK plc and public services need to be aware that providing good customer service does not just mean offering a financial fix for mistakes made. If organisations continue down this path they face the very real risk of harming their future prosperity by creating an expectation of compensation. The long term solution lies in building strong relationships with consumers and meeting their demands for speed, convenience and choice.”
The importance of focusing on long-term solutions, rather than a quick fix, is emphasised by more than half the respondents claiming they ‘felt better’ after raising a complaint. Respondents aged 18-44 are also more inclined to complain ‘to get things of my chest’ than consumers aged 45 or over. The suggestion is that younger shoppers are more inclined to voice dissatisfaction with poor customer service.
These latest results correspond with the Institute’s flagship research on customer satisfaction in the UK, the UK Customer Satisfaction Index, which found that 25-34 year olds are the least satisfied of any age group. They go on to show that just 1% of 25-34 year olds say they are ‘too embarrassed or shy to complain’ and 65% are happy to tell other people about the problems they faced.
Postcode guide to customer satisfaction
Customers in Sheffield are the most likely to raise a complaint (85%) and their counterparts in Edinburgh are the least likely to do so (63%). Those living in Southampton are the least likely to seek compensation (22%) and consumers based in Leeds are most likely to overlook a drop in customer service standards (49%).
Service goes social
The research shows that the 25-34 age group is the most likely to use social media (45%) to lodge a complaint. However, across all age groups one in four now see social media as the ‘official route to make a complaint’ although 45%t still think the quickest results will be achieved by telephone.
The findings chime with wider research conducted by the Institute, which demonstrated the key is being able to deliver a truly integrated communication platform, where customers have the choice of how and when they communicate with an organisation. This means that individual staff members must be empowered to make instant decisions, as customers increasingly demand an immediate response.
Causon concludes: “We are now operating in a relationship economy, with elements such as social media playing a bigger role and requiring significant investment and attention. As younger generations become consumers, they will take to social media in increasing numbers, putting the customer service capabilities of businesses in all sectors under severe strain. If businesses do not adapt to the changing environment and try to deal with complaints simply by offering compensation at every opportunity, many may struggle to maintain their current customer base.”