Return on Investment of Effective Complaint Management: Synthesis and Research Directions: An Abstract
Customer complaints are inevitable given the complexity of products (service) and the inherent need for human involvement in aspects of service delivery. In today’s competitive, socially networked environment, customers are empowered by technology, their expectations increasing, with the magnitude of complaint effects having increased with the digital age. Complainants now regularly take to social media, review sites, blogs and YouTube to vent their frustration, spreading negative word of mouth (Tronvoll 2007, 2012) which can have damaging effects for an organisation’s brand equity and profitability. Managers know that customer complaints are important. For instance, effective complaint management has confirmed positive links between increased satisfaction, increased loyalty, repurchase intention and subsequent higher company returns in the literature (Casado-Díaz et al. 2009; Fornell 1992; Homburg and Furst 2005) and positive consumer experiences shown to be related to increased loyalty (Moliner et al. 2010; Johnston 2001). However, the return on investment (ROI) or complaint management profitability (CMP) of increasing satisfaction through “good” complaints handling has only received scant research attention.
A critical reason for the lack of literature on ROI and CMP is difficulty attaining data relating to the complaint management function. Organisations do not measure all costs and benefits of complaint handling (Stauss and Schoeler 2004; Stone 2011). Nor can organisations or researchers agree on what constitutes the costs and benefits of complaints and their handling. Unfortunately, given the difficulty attributing a financial value to the benefits, costs are more usually measured, leading to complaints handling departments often being regarded as “cost centres” rather than providing opportunities for increased benefits to the firm (Sandelands 1994).
The purpose of this paper is to explore the literature relating to ROI of customer complaints management to the organisation, identify the potential development on the subject in academia and direct future research with the goal of enhance complaint handling management practices for organisations. This paper reviews the literature on defining “good” complaints handling before reviewing the literature on ROI and profitability of complaints handling. Second, the drivers of ROI and profitability of complaints handling from the literature are highlighted. Finally, the paper concludes by synthesising the findings of the literature and proposes specific research questions to guide future research.