THE IMPACT OF A COMPLAINTS HANDLING SYSTEM ON customer SATISFACTION
1.1 INTRODUCTION TO THE study
A customer complaint is an expression of discontent with a product, service, or purchasing circumstance (Nakibin et al., 2011). According to Tronvoll (2012), it is a formal or informal customer complaint regarding a product or service. Long-term business success can be affected by how a company handles customer complaints, according to research (Robert-Lombard, 2011). Gelbrich and Roschk (2010) believe that inadequate complaint management methods can harm the connection between a company and its customers and lead to customer dissatisfaction. It may result in poor word-of-mouth that discourages potential customers from doing business with the company. It may result in low consumer loyalty and diminish the likelihood of client retention. Poor management of customer complaints, according to Awara (2010), causes organizations to lose customers and market share, while the cost of acquiring new customers through marketing campaigns reduces corporate profitability.
When businesses maintain effective customer complaint procedures, customer churn is minimized, customer happiness is raised, sales numbers are boosted, and client loyalty and retention are ensured (Robert-Lombard, 2011). Diverse lists of customer complaint management processes have been proposed by numerous studies. Gelbrich and Roschk (2010) conducted a meta-analysis on the effect of firm complaint handling methods on future consumer response. The study revealed that attentively listening to client concerns, being empathetic, writing down prominent points to gather pertinent facts, discussing the complaint, and following up with appropriate solutions was a very effective method for handling customer complaints. Tronvoll (2012), on the other hand, disputes the notion of a fixed system, arguing that complaint management procedures vary from company to company, with varied degrees of success. Komunda and Oserankhoe (2012) propose for a comprehensive customer complaints management system that includes complaint processing procedures, customer satisfaction tests, customer feedback collection, and customer retention strategies.
Customer happiness is crucial to the success of every business enterprise. When a business is just beginning, clients always come “first,” followed by profit. Those businesses that are able to fully satisfy their customers will maintain their market dominance. Customer satisfaction is the most important factor in a company's success, and it also plays a crucial role in expanding the company's market value, as recognized by businesses of today. Customers are, in general, those who purchase goods and services from a market or business that satisfy their needs and desires. Customers purchase products that meet their monetary expectations (Awara, 2010). Therefore, companies should determine their prices based on the quality of their products, which should attract and retain customers.
The organization should ensure that its services are commensurate with their monetary value. This will increase the number of customers and preserve the organization's long-term relationship with them (Tronvoll, 2012). And existing customers will assist in attracting new customers by providing or sharing information about the companies' products and services. Satisfaction is the state of feeling content after obtaining what one desired or desired. It is tough to determine whether clients are satisfied with the product or service availability. Thus, providing customer satisfaction is not a simple task, as these various factors must be taken into account. Today, competition can be observed between businesses and marketplaces everywhere, and it has become one of the most difficult tasks for competitors. In spite of the apparent difficulty of the expanding market, competitors are developing their marketing channels effectively (Komunda & Oserankhoe, 2012).
Globalization has increased marketing environment competition, necessitating the adoption of diverse strategies by businesses in order to remain competitive. According to Tronvoll (2012), market competition necessitates that businesses implement strategies to influence prospective customers and retain existing ones, ultimately boosting market share and profitability. To increase market share, Komunda and Oserankhoe (2012) assert that businesses must ensure customer satisfaction before, during, and after the sales process. According to Gruber (2011), one of the most effective countermeasures that businesses can implement is customer service, of which customer complaint management is a vital component.
Complaints from customers are inevitable and a normal part of doing business, even when businesses put forth their best efforts to serve their customers (Fierro et. al. 2015). Complaint management systems are the ultimate test of a company's customer orientation, as they aim to provide gratifying resolutions to customer issues. Poor handling of customer complaints may result in the loss of formerly devoted clients. This implies that current levels of customer satisfaction do not provide foolproof protection against the repercussions of ineffective complaint management. Considering the matter from the opposite perspective, it is likely that a satisfying response to client complaints will increase customer loyalty. Studies demonstrate a significant return on investment for complaint management systems (TARP 1986; Fornell et. al. 2006; Fierro et. al. 2015). As a result, numerous businesses aim to establish such systems to cultivate consumer loyalty. In doing so, two unique ways have been suggested, the first of which entails establishing standard protocols for training complaint-handling workers on how to handle specific customer circumstances. The second strategy adopts a more permissive position and entails training and persuading employees to accept a set of common values that would likely result in the desired actions. This case study of First Bank PLC focuses on the role of the complaints handling system in boosting customer satisfaction.
1.2 DESCRIPTION OF THE PROBLEM
There is an intensifying race among banks to provide superior customer service; resolving client complaints efficiently has become a key competitive factor. When organizations demonstrate an incapacity to address consumer complaints, customer loyalty may suffer, resulting in a high rate of customer churn and low customer retention. Morrisson and Huppertz (2010) theorized that when organizations fail to successfully manage consumer complaints, the customer may be lost in the process, triggering a chain reaction in which the customer tells at least 27 people, who may continue to spread negative information about the company involved. Consequently, the loss of a single customer could result in the loss of a large number of additional customers, resulting in a decline in market share, a decline in bank profitability, and an increase in negative impressions of the bank.
In light of these arguments, it is crucial that banks enhance their customer service practices in order to prevent the dire consequences of failure. The difficulty is that the majority of banks rarely, if ever, evaluate their customer complaint procedures to determine whether they efficiently handle client complaints. Due to this, some banks adopt a cavalier attitude toward client complaints, particularly if they are connected to customer service, blind to the underlying damage being made to the bank. Therefore, it is necessary to conduct a study on the effect of the complaints handling system in boosting customer satisfaction, using First Bank PLC as a case study.
1.3 OBJECTIVES OF THE STUDY
The purpose of this study is to analyze the function of the complaints handling system in boosting customer satisfaction, using First Bank PLC as a case study. Included among the specific aims are the following:
Examine the perceptions of First Bank PLC's customers on the quality of its complaints system.
Determine the impact of the complaint log book on policy formulation at First Bank PLC.
To obtain a list of First Bank PLC's most popular customer complaints.
To investigate the strategies employed by managers at First Bank PLC when managing customer complaints.
To determine whether retention occurred in all instances following the resolution of consumer complaints.
1.4 RESEARCH QUESTIONS
The following are the pertinent research questions linked to this study:
How do customers rate the level of First Bank PLC's complaints system?
THE IMPACT OF A COMPLAINTS HANDLING SYSTEM ON CUSTOMER SATISFACTION