How to Resolve Customer Complaints As a Small Business Owner

When you do a good job of resolving customer complaints, you’ll do more than fix a problem. You’ll also build customer loyalty and your company’s reputation.

Most small business owners shudder at the thought of getting a complaint from a customer. Navigating customer complaints can be uncomfortable, but the flip side is that resolving them quickly and efficiently can benefit your business.

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Why Effective Complaint Resolution Is Good for Business

Customer complaints don't have to be bad news. They can help you to win more customers and provide insights about where your business might be falling short.

When you think of complaints as opportunities, you can use them to:

Provide cost-free insights into your business. When you strip complaints of the emotions like frustration and anger that sometimes accompany them, you're left with feedback about your products, services, and business practices. While it's true that some complaints are baseless and have more to do with "operator error" than your business or its products, some might be legitimate, exposing an area where you could improve. Your customers' insights can help you to identify areas that need improvement without spending money on customer surveys, focus groups, or consultants.

Build customer relationships and customer loyalty. One study done by the Harvard Business Review based on data from Twitter showed that customers are more likely to continue buying from companies—and might even spend more on future purchases—when customer service representatives personally respond to their complaints, comments, and questions.

Attract more customers. Customers who believe your business addressed their complaint fairly are likely to share their experience with others, and the word of mouth they generate can bring more customers through your door.

Seven Steps for Resolving Customer Complaints

It's easier to address complaints when they're lodged in person or over the phone, rather than in an email, on your website, through social media, or in an online review. You can learn the customer's name, see or hear their tone and attitude, elicit additional information, and respond directly.

Customers don't always voice their complaints directly, however. When a complaint comes in an email, on your website, through social media, or through an online review, it's important to move the conversation to a personal level. Provide a contact name and phone number the customer can use to reach your business directly. (See below for more on responding to complaints received digitally.)

The seven steps that follow do more than correct mistakes. While your ultimate goal is to make things right in the customer's mind, you'll often have to first deflect the anger and frustration customers are feeling to make them receptive to finding constructive solutions.

Regardless of how you receive the complaint, the steps to resolving it are the same.

  1. Talk it over. Give customers the opportunity to fully explain their concerns. Simply allowing customers to vent can sometimes be enough to diffuse a situation, and getting the most complete picture of the problem will help you to solve it.
  2. Practice active listening. To understand the full significance of the complaint, look for cues beyond the words the customer is using. Is a customer who complains about a delivery that didn't arrive on time referring only to a broken promise, or has the late delivery caused inconvenience and disrupted plans? It's important to know the full impact of the problem to empathize with the customer and reach a satisfactory resolution.
  3. Thank the customer and apologize. Thanking the customer for bringing a problem to your attention can help turn down the temperature when customers are angry. It's also a good idea to apologize, even when you don't agree with the customer's point of view. Rather than validating the claims the customer is making, use words that simply acknowledge the customer's feelings, such as, "I understand how you feel."
  4. Find a solution. Sometimes the solution to a customer complaint is straightforward. For example, you can exchange a damaged product or issue a refund to a customer who's been overcharged. When the solution isn't readily apparent, it might be necessary to negotiate a solution. For example, suppose you own a pet grooming business, and one of your groomers nicks a client's dog. Before you offer a solution that you think is fair, consider asking the customer what they want. You might not be able or willing to do what the customer wants, but by giving customers an opportunity to propose a resolution, you'll be able to negotiate a solution acceptable to both of you.
  5. Go the extra mile. Depending on the complaint and the way the mistake affected the customer, you might consider offering an extra perk in addition to what you've agreed upon. Let's return to the grooming service example from earlier. Suppose you agree to refund the cost of the grooming and promise to personally groom the customer's dog on all future visits. The customer is satisfied with the resolution, but you worry that the customer might not want to risk another bad experience and will stop using your services anyway. To ensure that your company gets a second chance at the customer's business, you might offer to groom the dog at no charge on the next visit.
  6. Confirm the agreement. Once you and the customer have arrived at a mutually satisfactory agreement, summarize it verbally. If applicable, follow up with a written confirmation. For businesses that provide services on an ongoing basis, or when the service takes a while to come to fruition, complaints might take some time to resolve. For example, if an advertising agency agrees to resolve an error in ad copy by providing another ad at no charge at a later date, it's wise to document that resolution in writing to avoid disputes and misunderstandings later.
  7. Follow up. Send a thank you note once you resolve the complaint and complete the agreed-upon solution.

When you incorporate these steps into your company's complaint resolution process, you'll be able to address complaints without a lot of disruption to your business.

Responding to Negative Online Reviews, Complaints, and Comments

Many customers are uncomfortable voicing a complaint in person or by phone. Instead, a customer will register their frustration or disappointment by writing a bad review or a negative comment online.

Monitoring social media regularly and responding to online reviews will help you to manage your company's brand and reputation.

Customers can post reviews of your business on numerous online platforms, including:

  • Facebook
  • Twitter
  • LinkedIn
  • Threads
  • Google Business Profile
  • Yelp
  • Trustpilot
  • Better Business Bureau, and
  • Angi.

In addition, sites specifically targeted to your industry might collect reviews. Some examples are HomeAdvisor for contractors, builders, and home repair services; and OpenTable for restaurants.

How to Find Online Reviews About Your Business

Customers can review your business on Facebook only if you maintain a Facebook business page. They can, however, post reviews of your business on many other sites, regardless of whether you maintain an account on the site—and even when you never asked to be listed on the site.

Yelp is one example. Yelp maintains a directory of local businesses that customers can review. You're not required to claim your business listing, but doing so can help you manage the information posted about your company and allow you to respond to reviews.

Most small businesses don't have the resources to monitor the many sites that collect reviews. Alternatively, you can choose to monitor the sites that your customers are most likely to visit, or you can hire an online reputation management service to do the monitoring for you.

How to Respond to Online Reviews

You should respond to online reviews whether they're good or bad. Acknowledging positive reviews boosts your reputation as a company that cares about its customers. Use the opportunity to thank the customer and reinforce your commitment to customer service.

Rather than addressing the details of a negative review online, use your response to encourage the customer to contact you directly. As noted earlier, it's much easier to resolve a customer complaint by talking it over person-to-person.

Because online reviews rarely provide a customer's contact information, you'll first have to post a written response. Your response should:

  • address the customer by name using the name provided even if it's an online handle
  • be respectful
  • thank the customer for their feedback
  • apologize for their experience
  • assure the customer that you want to find a solution
  • ask the customer to contact your company directly so that you can resolve the issue
  • include the name and phone number of the person charged with handling the complaint, and
  • include the name, title, and company name of the person who posts the response.

Remember that others besides the complaining customer will be reading your posted response, and they'll likely form an opinion about doing business with your company from it.

How to Take Down Online Reviews

Each website has its own policies for managing reviews. As a general rule, none allow you to remove reviews directly. Even when a review is fake, you'll usually have to go through a process of flagging it and alerting the site administrators, who'll decide whether to take it down.

Reporting fake reviews. Most websites post their procedures for reporting fake reviews. You'll need to specify the review you want to be investigated and detail the reason you think the review is fake. Some platforms require you to provide evidence in addition to describing the reason you believe the review is fake.

How can you spot a fake review? Fake negative reviews often omit details describing what was wrong with the experience or item. They often include many exclamation points. Many websites will allow you to see other reviews the reviewer has posted by clicking on their names. If a competitor is behind the fake review, chances are you won't find other reviews by that same reviewer, or, more tellingly, you might find that a single reviewer has posted negative reviews only about other businesses in your industry.

Requesting a bad review be removed. Websites will never remove a bad review just because you disagree with it. You can request a negative review be removed only when it doesn't comply with the posting policies of the website where it appears.

Yelp, for example, will consider removing a bad review when you can show that the reviewer had a conflict of interest, the review doesn't describe the customer's experience with the business, or when it includes offensive language.

Keep in mind that a bad review won't necessarily turn customers away. Nobody's perfect, and many customers are skeptical of businesses that have only good reviews.

When it comes to online reviews, the saying, "The best defense is a good offense," applies. By encouraging customers to post reviews about your business, the good reviews will outweigh the bad. Consider including a link to online websites like Google Business Profile on your website, advertising, electronic receipts, and other marketing collateral, with a message such as, "Tell us how we did."

Best Practices for Keeping Customer Complaints in Check

You can minimize complaints by instituting policies and procedures that make the terms and conditions of your sales clear at the outset.

Here are some strategies to employ:

Create a customer complaint procedure. Your policy should include guidelines for documenting and reporting complaints, your policy on response times, and the procedure for solving problems.

Create a return or exchange policy. Institute a clear and reasonable return or exchange policy for the products you sell. Include the time frame allowed and conditions under which products can be returned or exchanged. Post the policy prominently in your store, on your website, and on your sales contracts and receipts.

Use written contracts when applicable. When you provide services, such as catering, construction, and graphic design, use a written contract to clearly define the work you'll perform. By detailing the scope of the work to be performed (and, in some cases, what isn't included) in your customer agreement, you'll avoid misunderstandings that can later lead to customer complaints,

Implement a process for flagging repeat problems. Sometimes a complaint signals a larger problem with your company's products, services, or operations—a problem that potentially affects other customers. By tracking complaints, you'll be able to evaluate and address broader issues where your business might be falling short and fix problems before they become customer complaints.

Do's and Don'ts for Handling Customer Complaints

You might not be able to resolve every complaint to the customer's satisfaction, but you can keep dissatisfied customers from sullying your reputation, or worse, filing a lawsuit in small claims court by treating each complaint with respect.

Don't ignore customer complaints. Ignoring customers who complain can escalate problems and cause even more disruption to your business. Customers who believe they weren't treated fairly will tell others about their experience and discourage other customers from doing business with you.

There's also the chance that a customer who believes they didn't receive the products or services promised will seek a resolution in small claims court. By addressing complaints at the outset, you'll have control over the resolution and avoid the time and expense of a court proceeding.

Don't deny there's a problem. In many cases, customers want nothing more than an acknowledgment that they were inconvenienced, disappointed, or disrespected. Minimizing or denying the problem outright will only serve to worsen the situation.

Don't make it difficult for customers to complain. Transferring a complaint call from one team member to another—and forcing a customer to repeat their complaint to two or more people—adds to customers' frustrations and makes them less receptive to resolutions.

Do respond to complaints quickly. Ideally, you should respond to customer complaints within 24 hours. When you take more than a week, you'll have a tough time earning the customer's trust.

Do train customer service representatives and give them the authority to resolve issues. Dedicate team members responsible for handling customer complaints and give them the authority to resolve issues, including using their judgment to make exceptions to your policies.

Make Complaint Handling a Standard Operating Procedure for Your Small Business

When a customer complains, it's usually a last resort. Typically, they've already tried to resolve a problem and the company hasn't responded. By the time they complain, the issue that caused the problem in the first place is compounded by aggravation and anger.

By putting procedures in place for resolving customer complaints, you can address customers' concerns when they're first brought to your attention and take full advantage of the opportunities a complaint presents.

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