MANAGING CUSTOMER COMPLAINTS IN PROFESSIONAL SERVICES
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1 MANAGING CUSTOMER COMPLAINTS IN PROFESSIONAL SERVICES Marek Gnusowski, PhD Poznan University of Economics and Business, Poland 236 Introduction It is important for service providers to get feedback from their customers, particularly after an unfavorable service experience. The main aim of the paper is to conceptualize different aspects of customer complaint management in Professional Service Firms. The Author presents results of a case study of customer complaint management in one of Polish law firms that provides some in-depth insights over the advantages of implementing friendly complaint handling approach. Professional Services The goal of this part, is to develop theoretical propositions that can help further understand the complex phenomenon of professional services. The marketing of professional services is a growing area of interest (Bloom, 1984; Jones, 1997; Lapierre, 1997; Thakor and Kumar, 2000; Hausman, 2003, Reid 2008). Gummesson (1978) identified a series of criteria that distinguishes professional services, including: the service should be provided by qualified people, be advisory, focus on problem solving, the service should be an assignment from the buyer to the seller, and the professional should be independent of suppliers of others goods and services. Moreover, the professions offer services that are highly complex, intangible, highly customized, and are created and delivered by highly qualified personnel (Jones, 1997; Thakor and Kumar, 2000). Because of its high-degree of customer contact, as well as the level of individual judgment required by the professional, this form of service is considered the most intangible (Jaakkola and Halinen, 2006). One of the characteristic of professional services is also a discrepancy in knowledge between service provider and customer. Professionals offer their clients a sophisticated, knowledge-based expertise (Maister, 1993), and the relationships these professionals create with their clients are the medium through which they impart this expertise to solve their clients problems (Reihlen and Apel, 2007, Walsh and Gordon 2010). In professional services, as in most services in general, the reason for the highlighted role of the client is related to the fact that the client provides significant inputs into the production process, making the success of the service heavily reliant on client input (Sampson and Froehle, 2006). One of the commonly cited as the traditional professions, are legal services. Customer Complaint Management Literature Review Most customers feel that complaining to staff when a problem occurs will only cause waste of time. If customers have a problem with service, they will tell their friends and family about their problem rather than the service provider (Eccles and Durand, 1998). These statements should cause considerable stress to operational managers within professional service companies. A well-designed and wellimplemented complaint management/service recovery system may highly influence customer satisfaction and hence loyalty and retention (Berry and Parasuraman, 1991). Complaints in such an approach are perceived in a constructive and positive
2 perspective. They are a way of receiving feedback from customers and a mean for putting into action improvement plans. Moreover, they are a useful way of measuring firm s performance. It is important that the complaint is handled effectively and seriously in a well-developed complaint management system. Operational View on Complaint Management The interest in complaint management, from an operations perspective, is the process by which complaints are handled and customers recovered. The design, planning, control and execution of these processes are core operations tasks (Johnston, 2001). Several factors have been identified to suggest what is meant by a ``good'' complaint management process (Hart et al., 1990; Johnston, 1995; Boshoff, 1997). These include: having clear procedures; providing a speedy response; the reliability (consistency) of response; having a single point of contact for complainants; ease of access to the complaints process; ease of use of the process; keeping the complainant informed; staff understand the complaint processes; complaints are taken seriously; employees are empowered to deal with the situation; having follow-up procedures to check with customers after resolution; using the data to engineer-out the problems; using measures based on cause reduction rather than complaint volume reduction (Johnston, 2001). To sum up, the strategic development of a complaint management system involves analyzing, planning, implementing, and controlling (Gilly and Hansen, 1992). An effective complaint management process can be an important tool for organizations to obtain customer feedback. Such feedback may be very useful in making company improvements that increase customer satisfaction, then loyalty, and finally profit (Powers and Bendall-Lyon, 2002). The operational planning of complaint handling should therefore be treated as any other kinds of strategic planning procedures involving the formulation of goals, needs for resources, and the like (Hansen et al., 2010) 237 Methodology This paper presents results of a one in-depth case study of customer complaint management in one of Polish law firms that was conducted to provide some in-depth insights over the advantages of implementing friendly complaint handling approach. A case study is an empirical inquiry that investigates a contemporary phenomenon within its real-life context, especially when the boundaries between phenomenon and context are not clearly evident Yin (2003). The law firm was purposefully chosen to illustrate that taking customer s complaints into account may contribute to business prosperity. Case Study The legal services sector in Poland has experienced a steady and continuous growth in the past two decades as a consequence of the growth in international trade and the emergence of new fields of practice, in particular in the area of business law. Law firm X was established in It has eight attorneys and 5 paralegals so in Poland it is considered mid-sized law office. The law firm specialize mainly in corporate law (all cases relating to corporate structure, compliance and bylaws) and it offers full legal support for entrepreneurs. The firm has developed good reputation in
3 their community, through changing their approach to complaint handling. 238 How the Firm Used to Handle Complaints An Old Approach The company lacked of systematic approach to complaints handling and did not recognize the importance of customer complaints at a strategic level. The complaints were not managed and tracked in a consistent manner. Single complaints were viewed in a negative manner. Employees allowed their customers to file only handwritten complaints (no phone or s), which caused the discomfort of complaining. Above barriers made it difficult for the customer to receive a satisfactory resolution to their complaint. Above caused, that most customers felt that complaining to staff only caused annoyance and waste time. The owners, who just received few complaints felt tempted to believe that their customers were generally satisfied and loyal. However, in 2010, they found out that some of dissatisfied consumers were just switching to a competitive firm without voicing a complaint, so they lost the opportunity to gain insight on what may have caused the dissatisfaction. Moreover, they realized, that the way customers are treated, when they make a complaint, often make or break the relationship they have with the organization. Because the legal market in Poland is very competitive, they decided to compete by the new approach to handle complaints and executed the complaint management system. They convinced their customers that complaints are welcome and that they will be handled seriously. The New Complaint Management Approach After the change, complaints have been looked at in a constructive, positive and professional perspective. The law firm X has built a positive and proactive approach to complaints culture, in which employee's value the free feedback received from customers. Complaints are useful for getting nearer the customers and understanding them better. The complaint management system in the law firm was designed not only to satisfy customers, but also to be easy to use by employees. The starting point was to give staff members the authority to deal with complaints and to encourage them to use it. This resulted in employees feeling greater control and experiencing less stress in their roles within the company. Moreover, one of the employees was assigned solely to investigate and resolve complaints, which is not common in the industry in Poland. After changing the approach, the law firm X has started to track all the complaints. In the last four years, altogether they had 546 legal cases. 43 customers had filed a complaint (7.87%) in that period. 32 of the complaints were handled positively (74.41%). Once the new framework is in place value has been added to organizational performance. The complaints are treated as a way of measuring performance and allocating resources to deal with the deficient areas of the business. Conclusion The interest in complaint management in Professional Services, from an operations perspective, is the process by which complaints are handled and customers recovered. A complaint provides an opportunity for service recovery, followed by a chance to educate the customer, strengthen loyalty and evoke positive word-of-mouth comments. Hence, the successful resolution of complaining behavior may significantly
4 affect the success of a company. Main processes within this subject are: having clear procedures and ease of use of the complaint process, staff understand the complaint processes and are empowered to deal with it, providing speedy and reliable response, check with customers after resolution. References Berry, L.L. and Parasuraman, A. (1991), Marketing Services: Competing Through Quality, The Free Press, New York, NY. Bloom, P. (1984), Effective marketing practice for professional services, Harvard Business Review, September/October, pp Boshoff, C.R. (1997), An experimental study of service recovery options, International Journal of Service Industry Management, Vol. 8 No. 2, pp Eccles, G. and Durand, P. (1998),"Complaining customers, service recovery and continuous improvement", Managing Service Quality: An International Journal, Vol. 8 No. 1 pp Florin, N. (2014), Employee and Customer Satisfaction through the Efficient Call Management Centre: An Overview, Journal of Applied Management and Investments, Vol. 3 No. 3, pp Gilly, M.C. and Hansen, R.W. (1992), Consumer complaint handling as a strategic marketing tool, The Journal of Product and Brand Management, Vol. 1 No. 3, pp Gummesson, E. (1978), Towards a theory of professional services marketing, Industrial Marketing Management, Vol. 7 No. 2, pp Hansen, T., Wilke, R. and Zaichkowsky, J. (2010),"Managing consumer complaints: differences and similarities among heterogeneous retailers", International Journal of Retail and Distribution Management, Vol. 38 No. 1 pp Hart, C.W.L., Heskett, J.L. and Sasser, W.E. (1990), The profitable art of service recovery ', Harvard Business Review, July-August, pp Hausman, A.V. (2003), Professional service relationships: a multi-context study of factors impacting satisfaction, re-patronization, and recommendations, Journal of Services Marketing, Vol. 17 No. 3, pp Jaakkola, E. and Halinen, A. (2006), Problem solving within professional services: evidence from the medical field, International Journal of Service Industry Management, Vol. 17, pp Johnston, R. (1995), Service failure and recovery: impact, attributes and process ', Advances in Services Marketing and Management: Research and Practice, Vol. 4, pp Johnston R., (2001), Linking complaint management to profit, International Journal of Service Industry Management, Vol. 12 No. 1 pp Jones, O.J. (1997), Responding to the challenge: a professional services perspective, Facilities, Vol. 15 No. 3/4, pp Kaur, R. (2013), Consumer Behavior towards Mobile Phone Usage: A Case Study of Muktsar District, Journal of Applied Management and Investments, Vol. 2 No. 1, pp Lapierre, J. (1997), What does value mean in business-to-business professional services?, International Journal of Service Industry Management, Vol. 8 No. 5, 239
5 240 pp Maister, D. (1993), Managing the Professional Services Firm, The Free Press, New York, NY. Powers, T.L. and Bendall-Lyon, D. (2002), Using complaint behavior to improve quality through the structure and process of service delivery, Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behavior, Vol. 15, pp Reid, M., (2008), Contemporary marketing in professional services, Journal of Services Marketing, Vol. 22 No. 5 pp Reihlen, M. and Apel, B.A. (2007), Internationalization of professional services as learning a constructivist approach, International Journal of Service Industry Management, Vol. 18, pp Sampson, S.E. and Froehle, C.M. (2006), Foundations and implications of a proposed unified services theory, Production and Operations Management, Vol. 15 No. 2, pp Thakor, M.V. and Kumar, A. (2000), What is a professional service? A conceptual review and bi-national investigation, Journal of Services Marketing, Vol. 14 No. 1, pp Walsh, K. and Gordon, J.R. (2010), Understanding professional service delivery, International Journal of Quality and Service Sciences, Vol. 2 No. 2 pp Yin, R.K. (2003), Case Study Research, Design and Methods, Sage, Thousand Oaks. MANAGING CUSTOMER COMPLAINTS IN PROFESSIONAL SERVICES Marek Gnusowski Poznan University of Economics and Business, Poland Abstract It is important for service providers to get feedback from their customers, particularly after an unfavorable service experience. The main aim of the paper is to conceptualize different aspects of customer complaint management in Professional Service Firms. Furthermore, a case study of customer management in one of Polish law firms shows that taking customer s complaints into account may contribute to business prosperity. Moreover, the study indicates directions for future research, basing on an analysis of the literature of management of professional services. Keywords: service management, professional services, customer complaints
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