The £9 Billion Blind Spot: How CRM Falls Short in Complaints Management

In the realm of customer service, customer relationship management (CRM) software reigns supreme. It's the central nervous system for coordinating customer interactions and delivering personalised, contextualised services.

But for all its strengths, CRM technology isn't a catch-all for managing customer relationships. When it comes to complaints, your CRM can’t always provide a satisfactory resolution or prevent future customer-related issues.

The Growing Cost of Complaints

Customer grievances are an area that businesses can’t afford to ignore. Complaints have reached their highest level on record, costing UK companies more than £9 billion per month in staff hours, according to the Institute of Customer Service. And that's just the tip of the financial iceberg.

The £9 billion figure doesn't include the cost of regulatory referrals if complaints escalate to the ombudsman. Nor does it cover the cost of attrition if a customer feels their complaint wasn't handled correctly.

On the surface, this increasing burden doesn’t make sense. 90% of companies with 10 employees or more now have at least one CRM system, according to CIO. How has it become harder to reach quick, cost-effective resolutions?

The problem lies in assuming CRM software coordinates complaints as effectively as a dedicated solution. This assumption is leaving many businesses with a customer service blind spot, which could raise your risk of regulatory referral.

Complaints Need Treating Differently From Customer Service

It's a common misconception that complaints can be managed the same way as general customer service enquiries. But complaints are more complex and emotionally charged. They need a different set of processes to investigate issues, communicate with customers and reach a satisfactory resolution.

One of the fundamental issues with using your CRM for complaints management is the way it captures data. CRM software is customer centric, which is great for building a lifetime record of your client relationships.

However, it’s difficult to differentiate between customer interactions and complaints if you’re using one CRM system to manage everything. And this can impact your customer experience.

While your CRM might seem to cope with the demands of day-to-day complaint handling, an increase in pressure can cause cracks to show. A prime example of this is the Financial Conduct Authority’s (FCA) investigation into the use and terms of discretionary commission agreements (DCAs) in motor finance lending.

When the DCA ruling received media attention, many lenders struggled to deal with a sudden increase in customer enquiries. They could only take a reactive approach, responding to complaints customer by customer.

In contrast, companies with a dedicated complaints management system could set up specific processes for supporting customers with DCA enquiries. A fit-for-purpose solution allowed them to manage the increase in volume effectively.

Moreover, by managing complaints separately, these companies are able to tell the difference between a one-off, account specific issue and something that’s impacting a wider group of customers. In the case of the DCA ruling, they could analyse their database, identify other affected customers and get in touch to start the resolution process.

Proactive Complaints Management Will Cut Costs

The only way to tackle the £9 billion cost of complaints is to get in front of the issue. This means taking a proactive approach to solving customers’ problems. But it’s much harder to understand what’s causing complaints without specialist technology.

One of the critical value drivers for complaints management software is analytics and reporting. The ability to identify trends and perform root cause analysis to nip problems in the bud.

In many cases, analysis can reveal simple fixes that significantly reduce your volume of complaints. For example, clarifying unclear policy wording to make terms and conditions easier to understand.

Moving from a proactive to a reactive approach can also help you take remedial action for issues affecting multiple accounts. There are thousands of problems that can impact customer relationships—from wrongly applied card charges to compromised data.

It's so much easier (and more cost-effective) to take proactive action and put a defined case treatment plan in place than react to an influx of aggrieved customers.

Quick Resolutions Are a Regulatory Imperative

It’s not only the internal burden of complaints management that is costing many businesses. In highly regulated industries, sub-par complaint-handling processes increase regulatory risk.

Mishandling complaints can lead to significant fines and reputational damage—you don’t need us to tell you that. While your choice to manage complaints via CRM may not be causing referrals, it’s not preventing grievances from being escalated to the ombudsman.

In a complex regulatory landscape, ensuring all complaints are properly logged, investigated and resolved within the required timeframes will reduce your risk of referral. It also enables you to identify and address systemic issues before they escalate.

Complaints Reduction Should Be a C-Level Priority

All of the benefits we’ve mentioned make financial, tactical and reputational sense. Yet it can be a challenge for some companies to see the full value of a fit-for-purpose solution for managing complaints like Aptean Respond.

Budgets are stretched in other areas of the business, and senior leaders often see complaints as a negative cost centre and not a priority investment.

But the regulations surrounding customer service and fair treatment are only going to tighten. So, your business needs to ensure you have the best tools in place to navigate these ever-changing frameworks.

To put it simply, reducing the volume and burden of customer complaints needs to be a C-level priority, and that means giving your frontline staff the ability to:

• Identify emerging issues before they escalate

• Improve processes to reduce complaint volumes

• Protect your business from regulatory referrals and reputational risk

• Derive valuable business intelligence that informs strategic decisions

• Specify areas where customers will need further support (such as vulnerability)

Ultimately, it shouldn’t be a choice between CRM and complaints management software. They both serve distinct purposes, and using one to do the other results in a compromise. Ideally, your company should be harnessing the power of both technologies to deliver the best possible customer experience.

Embracing this integrated approach is not just a smart financial decision. It's a commitment to delivering greater operational efficiency, outstanding customer service and safeguarding your reputation.

Want to see how Aptean Respond can help you build a more effective complaint handling function and stronger relationships with your customers? Book your FREE, no-obligation demo to see it in action.