Phase 1 - Return on Investment of Effective Customer Complaints Management: Private Sector Organisations
In part of Phase 1 the research team studied the complaints management processes of two private sector organisations analysing de-identified and aggregated complaints data from these groups. Hypothetical scenarios where then used to measure the Return on Investment (ROI) of effective customer complaints management with the help of the data provided by the organisations and estimates derived from previous research. The ROI calculations for the hypothetical scenarios showed that the greatest ROI occurs when there is extended benefit generated from the customer complaints management process.
Extended benefit includes such things as improvements of the organisation’s people, process and products, and includes benefits such as customer satisfaction, customer retention, increased Customer Lifetime Value, positive Word-of-Mouth and greater staff satisfaction.
This study makes an important first step in delivering a framework to assist organisations to verify once and for all that complaint departments are not merely ‘cost centres’.
On the contrary, the positive ROI illustrations in this study clearly indicate the substantial financial returns to the organisation when effective complaints management is delivered, particularly when extended benefit is generated.
Watch the video below explaining the research and the research outcomes for private sector organisation.
Phase 2 - Return on Investment of Effective Customer Complaints Management: Public Sector Organisations
The second phase of the research, which was completed in June 2020 found that public organisations can generate a significant return on investment when complaints are managed effectively. The research highlighted that these organisations need to take account of social costs and benefits, as well as pecuniary costs and benefits in assessing the effectiveness of their complaints management practices.
This new research, which analysed the complaint practices of three public sector organisations, is an extension of research completed in 2018, which provided guidance on measuring the ROI of effective complaints management for private organisations. The report noted that while customers usually have the option of exiting from their commercial relationships with private sector organisations, this is typically not possible when a public sector organisation is involved.
The research involved reviewing de-identified complaints data from the three public organisations, as well as focus groups and in-depth interviews with complaints staff and complainants. From this work, an algorithm was produced, which included providing monetary valuations of social benefits and costs. Hypothetical scenarios were then used to compute the ROI of effective complaint management, with the help of the data provided by the organisations and estimates derived from previous research. Interviews with complainants highlighted the onus placed on perceived fairness and respect in the complainant’s evaluation of post-complaint satisfaction, and reiterated the need to consider the social implications of effective complaint management.
Head of the research team, Professor Tania Sourdin said: “This research demonstrates that public organisations need to look further than the financial return on investment (ROI) of managing complaints well, and actively measure the social return on investment (SROI) as well. Social returns, such as increased customer trust in the organisation and enhanced perceptions of fairness and equity, are important outcomes of improved complaint handling, and as such need to be a part of the ROI calculation.”
Armstrong C, Carlson J, Sourdin T, Watts M, Dean A, (2017). ‘Demonstrating Return on Investment of Effective Complaint Management’. Proceedings of 2017 Academy of Marketing Conference. Hull, England.
Armstrong C, Carlson J, Sourdin T, Watts M, (2019). ‘Return on Investment of Effective Complaint Management: Synthesis and Research Directions’. Conference of the Academy of Marketing Science. Vancouver, Canada.