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Solve customer complaints

Turn a negative situation into an opportunity to build customer loyalty.

On this page

  • Put together a complaints handling procedure
  • Use contracts and legal advice to avoid misunderstandings
  • Use customer feedback to improve

When a  customer complains, it provides a great opportunity for you to foster a better relationship with him or her. Even the most dissatisfied customer can become an ambassador for your business, winning new customers for you through word-of-mouth. This means dealing with a customer problem, even if you’re not at fault.

Complaints handling procedure

You should have a complaints handling procedure which welcomes complaints, deals with them straight away and includes staff training.

At the very least your procedure should include the following:

  • listening sympathetically to establish the details of the complaint
  • recording the details together with relevant material, such as a sales receipt or damaged goods
  • offering to fix it - whether by repair, replacement or refund
  • handling the complaint courteously, sympathetically and above all, swiftly
  • appropriate follow-up action, such as a letter of apology or a phone call to make sure that the problem has been resolved.

As much as possible, staff dealing directly with customers need the power to be able to resolve the issue for the customer when a complaint is made. All staff need to be made aware of the ongoing goodwill earned through good complaint processes. The complaint may be a one-off situation due to a faulty product or service but it can also be an ongoing problem which can be traced to a flaw in operations or a problem with one of your providers.

You can also visit the Consumer Affairs Victoria website for information about business and consumer rights and responsibilities.

Contracts and legal advice

Contracts and legal advice can often prevent disputes arising. Contracts allow for clarity of the responsibilities and expectations of you and the customer and as a result, reduce the likelihood of disputes arising as long as everyone works by the contract.

Legal advice may save you from carrying out a promotion or particular business practice that could easily result in a dispute or legal complications. Any expense incurred as a result of obtaining the advice is worth the avoidance of disputes and bad publicity.

Dispute resolution clauses should be written into all contracts to encourage joint problem solving with your customer before a problem turns into a dispute. Key elements to the clause should include:

  • informal discussion of the issue or problem
  • how you will deal with complaints from the very start (who will manage the complaint and how they will do it) 
  • internal negotiation methods (focusing on joint decision making and practical solutions)
  • where to go if you can’t solve it yourself – the alternative way to resolve a dispute such as mediation or assisted negotiation.

Find out about the dispute resolution and mediation services offered by the Victorian Small Business Commissioner.

Visit the Australian Competition and Consumer Commission (ACCC) website for information on how to comply with competition, fair trading and consumer protection laws.

Customer feedback

No business can be successful unless it meets the needs of its customers. One of the essential activities of any business is to find out what the customers want or need and then act on that information.

There are a number of ways businesses can gather relevant information from customers; the methods you use depend on the type of business and industry you are in.

Some useful means of collecting customer feedback are:

  • employees: find out what customers are complaining about, or what kind of service or product they are asking for
  • short surveys: ask simple questions that customers can answer quickly. Include open-ended questions about what kinds of services or goods they want, as well as asking what they think of current goods and services
  • conversations: chat to customers informally to learn about their needs and wants
  • market competitor observation: observe the actions of your main competitor and if the opportunity arises, question their customers discreetly
  • market research:  professional outfits can be employed to ask target audiences about your goods and services 
  • documenting sales: keep records of what is selling well and what is selling poorly 
  • online discussion groups: online discussion groups can provide information about your target market's perceptions.