Research Proposal: The Importance of Complaint Management in the Service Industry and its Effect on Profitability

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Introduction

Aim & Objectives

The aim of this research is to determine the effect of complaint management on the profitability of a company. The objectives will be fulfilled by proving the hypotheses stated later in the proposal.

Purpose of the Study

The word “complaint” has all types of negative connotations associated with it. Nobody likes to be in the position where their work is criticised and complained about. It may suggest that an employee did not offer the best service to the customer or it may have been a failing of the company has a whole. Employees of a company may feel like the customer has criticised their work and as a result, may either ignore the complaint or attempt to solve the problem themselves without involving the manager. The customer may want to speak directly to the manager if their issues have not been resolved to their expected standard. The manager might try to blame the person responsible for the problem that caused the complaint.

The above is an example of the way most employees and companies may deal with the complaint. The customer may become frustrated that their complaint as gone unanswered and no one has taken responsibility and actively tried to put things right. Bad customer service results in customers never dealing with the company again. They may move to a competitor and also pass their experiences of the company with their friends, and as a worst case scenario, the media.

What do I mean by “complaint” and how does this fit in with “complaint management”. The FSA (2011) defines a complaint as 'Any expression of dissatisfaction, whether oral or written, and whether justified or not, from or on behalf of an eligible complainant about the firm's provision of, or failure to provide, a service'.Companies will put a substantial amount of resources in marketing their service to draw customers in. However, an unsatisfactory customer experience will detriment the effectiveness of the company's marketing strategy. This is where the concept of “complaint management” comes in. It is a way in which company's can effectively manage their complaints and ensure each complaint is managed to a consistent standard.

I am currently employed as an adjudicator for the financial ombudsman service (FOS) and is the reason why I am interested in this area. As part of my job, I see the results of when customer's complaints about regulated companies have not been dealt with appropriately. This has had negative impact on the profits of the company as I would recommend the company should pay the customer financial compensation and distress and inconvenience awards. Usually by the time the complaint has been passed on to the FOS, the damage has already been done For example, the Financial Services Authority (FSA) has recently fined the leading banks RBS and NatWest £2.8m for poor complaint handling (Telegraph, 2011). But what does this mean for companies who are not regulated and have a choice ...