A while ago, I had dinner at a new restaurant in Kansas City. I was expecting a delightful evening. Instead, the service was slow, the food was cold and the bill was miscalculated. Rather than just pay and leave, I decided to help this new enterprise. So, I complained. I called for the owner and indicated how disappointed I was with the meal. He said that they were very busy that night and hoped that I would come back again. Fat chance!

A lot of entrepreneurs, like this restaurateur, don’t want to hear complaints. They often ignore them, hoping that they will go away, or they make excuses for them, trying to shift the blame from the company to the customer or to some other cause outside the control of the company.

Complaints can be a bane to an emerging company, haunt the reputation of a firm and be personally embarrassing to an entrepreneur. Yet, the rantings and ravings of customers may be the most important tools in quickly uncovering problems, eventually delighting customers and ultimately ensuring peak performance.

Market Intelligence

Every entrepreneur and every company gets complaints. But only the smart ones see them for what they actually are: blessings. Only complaints can tell you—in a very direct and personal way—what you are doing wrong, what you could do better and what customers actually expect from your product or service. This is invaluable market intelligence.

While some customer complaints may pose unreasonable demands, most allow savvy entrepreneurs to feel the pulse of their customers and gain real insight into the workings of their companies. Jim McCann, the legendary entrepreneur who built 1-800-Flowers into the market leader in its industry, knows this. “If a customer complains,” he says, “he can tell you what’s wrong with your service, what’s wrong with that person, what’s wrong with the process, and you have a chance to fix it. You also have a good chance to go back to that customer and make good by him.”

Believe the Numbers

Research shows that it pays to heed the protests, dissatisfactions, and irritations of customers.

• Of customers who have a bad experience with a company, 26 of 27 fail to report it. So, for every complaint that an entrepreneur hears about, there are a lot more that never reach the right ears.
• About 91 percent of those who complain will not come back without some type of positive response from the company.
• If the company solves the complaint in a timely way, 82 to 95 percent of customers return, and they come back with more loyalty. This is important because it costs five times more to secure a new customer than to retain current ones.
• Unresolved complaints can have a drastic multiplier effect on a company’s reputation. The average person with a complaint tells nine to 10 other people about it, and 13 percent of complainants tell 20 or more people.

Essential Truth

John Chuang, who built MacTemps into a multimillion-dollar enterprise, has recognized an essential truth about complaints. “The important thing to remember,” he says “is that customer satisfaction is won and lost when something goes wrong, not when something goes right. When something goes wrong, that’s when you’re capable of providing outstanding service.”

So, the next time a customer complains to you, do the following:

• Listen. Really listen, without being defensive. Seek to understand why the customer is complaining, and what the complaint says about your people, your processes or your products.
• Respond. And respond quickly. Do something for the customer that shows you want to maintain and strengthen the relationship you have, or want to have, with that person or organization. One effective response is to ask what the customer thinks would be fair to do. You might be surprised by the answer.
• Act. Take corrective action in your own company. If it’s a personnel issue, talk to the offending party. If it’s a process issue, work to improve the process. If it’s a product defect, fix it.

When a customer complains, realize that you’ve been blessed, as surprising as this thought may seem. Someone has taken the time and effort to care enough about your product or service to give you feedback, even if the feedback may not be pleasant to hear. If you listen, respond and act, then this kind of blessing will actually help ensure the success of your company.

In what creative ways have you responded to complaints?