Complaints handling and telecommunications in the United Kingdom and Australia
There are a number of things that we know about complaint handling and consumers from the research. We know that complaint handling matters to consumers: the one thing that they do not want when they make a complaint is an additional problem. We also know from the research that failures in customer service affect both the reputation of the company concerned and consumers’ intention to purchase the same good or service from the company. The research also seems to demonstrate that customers who complain are more likely to re-purchase the good or service than those who do not complain, even if their complaint is not resolved. It is worth noting as well here that recorded complaints are only a proportion of dissatisfied customers. The research estimates that there are from ten to twenty-five to fifty problems for every recorded complaint (Van Ossel et al 2003, Welsh Tourist Board (no date), Goodman and Grimm (2005). As TARP (1986: 44) put it, “noncomplaining, dissatisfied customers may not be angry enough to complain, but they often are unhappy enough to switch brands.” TARP itself did specific work on telecommunications in the early 1980s which showed that repurchase intentions ranged from thirty-one per cent for non-complainant to seventy-five per cent for satisfied complainants and forty-three per cent for dissatisfied complainants, indicating that a marketing advantage was created even when the complaint could not be satisfactorily resolved TARP 1986: 44)[1].
So not only can good complaint handling make it more likely that you retain your customers but data from complaints can be used as a source of information to improve your business. This is seen in the ISO standards, as well as in academic work (Johnston (2001: 61) and see also Johnston and Mehra 2002).
These points are, in general, well understood and not controversial. What is striking about the telecommunications industry in Australia, is the extraordinarily high number of complaints received by the Telecommunications Industry Ombudsman over the last couple of years (see Table 1).
Table 1[2]
Year / Complaints2006-07 / 102,463
2007-08 / 149,742
2008-09 / 230,065
09 (2nd half) / 115,531
We can compare this to the UK’s experience, bearing in mind that the UK population is about three times greater than that of Australia and the market is worth about twice as much, on OECD statistics for 2007 (Table 2).
Table 2[3]
Year / Complaints2005-06 / 25,325
2006-07 / 15,044
2007-08 / 16,252
2008-09 / 32,615
There are a lot of comparability issues in relation to this data but, even taking those into account, the difference is striking. The UK regulator, Ofcom, is not happy about complaint handling by telecommunications companies in any event and the higher level of complaints, in a smaller market, is very worrying.
There does seem to be an issue here about complaint handling and customer service in relation to telecommunications as an industry. Work a few years ago found that the handling of complaints by UK telecommunications companies was worse than that of retailers, bank and other utilities. Of this, perhaps the most surprising is the finding in relation to the banks – which are not renowned for customer service in the UK. For example, banks in the UK record about 2 million complaints per annum over the last three years, with the vast majority of them taking over eight weeks to resolve.
Ofcom’s own work has found that telecommunications companies do not handle complaints well and both the TIO and Otelo (the UK equivalent) . As Otelo put it: “it is disappointing that despite [customer service] appearing in every annual report we have produced to date, it remains a real problem for the sector.”
So, there is a problem. What can we do about it? We can divide complaint handling systems into those internal to an organisation and those external to it. I am going to focus more on internal systems because I suspect that this is where the problem lies. An external complaint handler, like TIO or Otelo is just the recipient of complaints that are not resolved at the first level.
We start with setting out some basic principles that internal systems ought to adhere to. This is based on work that I have done in the UK with a colleague but they should be familiar to everyone as there is widespread agreement on the underlying principles, which are reflected in, among other things, industry standards of best practice. I have organised them as five points:
•Accessibility
•Effectiveness
•Fairness and consistency
•Responsiveness
•Organisational ownership and commitment
One important introductory point: the devil is in the detail. I mean this in two senses: we can all agree at a high level on the general principles that inform good complaint handling. We may, however, not agree on how to implement these principles. Ofcom is still arguing with the industry about adopting a common definition of complaints in the UK, unlike in Australia. Secondly, there is often a gap between the top of an organisation and the front line where good intentions do not get translated into action – a fairly common failing of large organisations.
Let us have a look at these in some more detail, with some reflection on where things might be going wrong.
Accessibility encompasses a number of dimensions. These days you assume that everyone allows you to make a complaint via their web-site or at least provides the information on how to do so on the web-site. Some make it easier than others.
[I did my usual thing of checking on a couple of web-sites. For Telstra, make a complaint is right on the front page of their site. For Optus, I couldn’t find it, within a short space of time. I could find it for BT and British Gas, although neither had them on the front page – and BT’s promise to explain how they handled complaints didn’t work!]
Whether the information is clear is another matter. Providers tend to make it easy to submit complaints by not specifying what you have to provide, ie, by just providing a blank form to fill in. Finding out information about how the complaints process is actually going to work, and what you can expect in terms of responses, can be more difficult. This links into the effectiveness question, in particular the ability of staff to respond to a complaint. This is a very common problem with complaint handling systems in telecommunications in that people feel that they are pushed around an organisation, as opposed to getting one person who can deal with their query. This experience suggests that organisational learning is not working.
Everyone would accept that an important part of fairness is objectivity and listening to the complaint. . The listening side is anecdotally often a problem: staff do not listen to the complaint but assign it to pre-planned boxes/categories in their heads.
Responsiveness does seem to be an important problem, especially in the UK. Here Ofcom reckoned that 30% of telecoms complaints were unresolved within 12 weeks, which they estimated worked out as 3 million complaints a year where the complaint was unresolved after 12 weeks (para 4.19). The time limits that you set yourself in Australia are tighter, I believe, and this does not seem to be a major source of problems. According to the TIO, the two biggest problems in terms of complaint handling are the failure to do what was promised (“action undertakings”) and the failure to escalate to the TIO (that will be worrying). The former is also a large part of the customer service complaints, as well as the giving of incorrect information.
Finally, there is organisational ownership and commitment. This was a point that was made to me by the Local Government Ombudsman in the UK – that you could not improve complaint handling in an organisation unless those at the top bought into the idea of effective complaint handling. When I did the first research into the Insurance Ombudsman in the early 1990s, I also tracked company complaint handling systems. For large insurance companies, these were typically run by a woman who “did” complaints, that office was not part of the general business structure. At this point, there was not organisational buy-in.
In terms of external systems, the following principles are generally agreed:
•Accessibility
•Consumer support
•Fairness
•Effectiveness
•Redress
•Independence
•Accountability
The UK system is not a great model to hold up to the world. First, we have two complaint handling bodies: Otelo and Cisas, who split the industry between them. Consumers have never heard of either of these two bodies whereas I suspect that the TIO in Australia has a much higher recognition factor. Because there are two bodies, they spend some time turning people away because they are in the wrong place. For example, about 3,800 contacts for Otelo in 2009 were turned away because the company was not a member of Otelo, about 9% of total contacts. And a load more because they had complained too early. Another point to notice is that, although both Otelo and Cisas are quite open about their own operations, they do not publish the sort of company complaints data that the TIO does. Nor was there any equivalent of the connect.resolve campaign in the UK.
The Australian figures and experience present a paradox to me. If you look at the rules and arrangements which are meant to govern complaint handling, they look pretty good, in terms of substance as well as procedure. The recent record looks pretty poor, even when compared to the UK which is not a beacon of good practice in this area. As I would not buy a cultural explanation (Australians complain more than Brits) my intuition is that the rules are not being implemented or not being implemented properly.
References
Goodman, J. and Grimm, C. (2005) Beware of Trained Hopelessness, TARP, ICCM Weekly, October 20, 2005, revised June 2006, Arlington Virginia
Johnston, R. (2001) “Linking complaint management to profit” Intenrational Journal of Service Industry management, 12, 60-69.
Johnston, R. and Mehra, S (2002) “Best-practice complaint management” Academy of Management Executive, 16, No 4, 145-154.
TARP (Technical Assistance Research Programs) (1986) Consumer Complaint Handling in America: An Update Study Part II.
Van Essel, G, Stremersch, S and Gemmel, P “Customer satisfaction and complaint management” in B van Looy, P Gemmel and R Van DierdonckServices management: An Integrated Approach, London, Prentice hall 2nd edition.
Welsh Tourist Board (no date) Handling complaints successfully available at (accessed 24/06/10)
1
[1]. Although this study could only have been done at the earliest stages of a competitive long distance telecommunications market.
[2]. Source TIO Annual reports and personal communication.
[3]. Source: Otelo, Cisas and Phonepay Plus Annual Reports.