Complaint Handling System: 6 Telltale Signs You Need an Upgrade

Your company's complaint handling system can be your biggest asset; or your Achilles' heel.

Handling customer complaints in a timely fashion—and in a way that ensures customer satisfaction—increases loyalty and trust. On the other hand, subpar customer service and inefficient complaint management processes make it more likely you'll be remembered for all the wrong reasons.

Plus, if you operate in the financial services industry, there are your compliance obligations to think about—including proving you're treating customers fairly and meeting minimum standards of service.

As firms grow and the volume of complaints they have to deal with inevitably increases, they often deploy Excel spreadsheets, in-house systems or generic complaint handling modules tacked on to other software in an effort to streamline their processes and increase efficiency.

These might work well in the short term. But, in the long run, they often hinder more than they help, for the simple reason that they lack the advanced functionality required to tackle complaints swiftly, effectively and in-line with regulators' expectations.

So, how do you work out whether your complaint handling process is fit for purpose or if it's time for an overhaul?

Over the years, we've found that most firms that consider investing in specialized complaint handling software do so because they're facing similar challenges. Here's a look at the most common signs it's time to rethink how you're handling customer complaints.

Telltale Sign 1: A Growing Complaints Backlog

Imagine you had a leak in your roof.

The leak is relatively minor. So, at first, only a small amount of moisture seeps into your house when it rains, and you can easily collect it in a bucket.

But if you don't empty the bucket, it'll overflow. Regular exposure will also damage your roof further, worsening the leak so more water seeps through. Keep ignoring the leak, and, eventually, the water becomes a big problem.

Complaint handling works in much the same way. When you have only a handful of unhappy customers to deal with, you can probably get away with tracking complaints on a spreadsheet or using a generic bolt-on module (though this is still not advisable, for reasons we'll explain shortly).

But, as you grow and more customers complain—after all, as the mediaeval poet John Lydgate famously put it, you can't please everyone all the time—relying on manual processes becomes unsustainable.

At Aptean, we've found that, once a firm is dealing with around 500 to 600 complaints a year, staying in control of their pipeline becomes a challenge without an efficient and effective complaint handling process in place.

Important action steps and communication milestones (or even entire complaints) get missed and complainants become increasingly frustrated. Before you know it, you're stuck in a vicious cycle. The complaints pile up and your staff have a hard time keeping up. As they fall further behind, even more complaints get added to the pile and the situation spirals.

How a Complaint Handling System Helps Tackle Backlogs

If you're struggling to stay on top of your complaints pipeline, purpose-built complaint handling software can help in four key ways:

• It streamlines the complaint handling process.

Specialized complaint handling software captures complaints from various communication channels and creates a single, unified view—so nothing falls through the cracks.

It also makes it easier to categorize, route and prioritize cases. For example, urgent or complex cases, such as those involving a vulnerable complainant, can get flagged as higher priority and assigned to more experienced complaint handlers.

• It speeds up resolution times.

Does the complaint involve a straightforward or run-of-the-mill issue? The complaint handler can check how such cases were resolved in the past and offer the complainant a similar solution.

This is a win all round. Complainants have their issues sorted more quickly. Your complaint handling process is more consistent, transparent and predictable. And your complaint handlers can clear their to-do lists and have more time to dedicate to sensitive or challenging cases.

• It simplifies collaboration.

By creating a centralized repository and single source of truth, dedicated complaint management software makes it easier for your handlers to work together—as opposed to bolt-on or disparate systems where important details can get lost between teams and tools.

Say a complainant calls for an update. Team members can immediately get critical data about the complaint, including its status, even if they've not worked on it before. Equally, team leaders can monitor individuals' workloads and performance, and use this data to deploy resources more effectively.

• It enables you to continuously improve your processes.

Complaint handling software puts critical statistics at your fingertips, including the number of open complaints, average resolution times, individual team members' performance, and even the root causes of common complaints.

This means you can double down on your strengths and address the issues that are contributing to your complaints backlog, such as process bottlenecks, training gaps or wider issues like problems in client onboarding or unclear customer-facing documentation.

Telltale Sign 2: Consistently Missed Deadlines

Regulators expect financial services firms to respond to and resolve complaints within specified timeframes.

The Financial Conduct Authority's complaint management rules, for instance, state you must acknowledge complaints within five days of receiving them and send a final or holding response within four weeks.

Similarly, the Australian Securities and Investments Commission (ASIC)'s Regulatory Guide 271 expects firms to reply to a complainant within 24 hours, or one business day.

Consistently missing these deadlines has serious consequences. A record of poor customer service can result in regulators imposing hefty fines for non-compliance.

In a 2020 survey of global executives, respondents said their company's reputation accounted for 63% of its value. And, the quality of customer service was third on the list of factors that contributed most to a company's reputation. So if word spreads about your less than stellar customer satisfaction record, it can put people off doing business with you, increasing customer acquisition costs and hurting profitability.

How a Complaint Handling System Helps You Track (and Meet) Deadlines

Specialized complaint management software has built-in features that make it easier to stay on top of regulatory deadlines and make sure nothing falls through the cracks.

Your staff can get alerted when important dates are coming up, such as the FCA's five-day timeframe—or ASIC's 24-hour timeframe—for sending an acknowledgement. Even better, you can automate these and other routine communications. This eliminates the risk that you'll miss a deadline, no matter how busy your complaint handlers are.

Just as important, letter templates speed up response times and help you ensure you communicate in a consistently clear, compliant way, in line with your brand voice.

The best software also keeps a record of all your communications in relation to current and past complaints, enabling your staff to immediately see what's been said, by who, when and which next steps were agreed with a complainant, even if they haven't dealt with the case before.

Telltale Sign 3: High Customer Churn

The quality of your complaint handling system is directly linked to customer retention. And research suggests that, when it comes to whether your customers stay or go, it's not just the outcome of individual complaints that tips the scales. The entire complaint handling process matters.

Case in point, Huntswood's Complaints Outlook 2022 found that 76% of consumers who feel it's difficult to make a complaint will switch brands. By contrast, 83% of consumers who are happy with how their complaint has been handled end up being more loyal as a result.

The bottom line is that satisfied customers stick around, while dissatisfied customers walk straight into a competitor's arms.

Seeing as the average unhappy customer will also tell nine to ten other people about their negative experience, it's in your best interest to do everything in your power to ensure the former.

How a Complaint Handling System Helps Reduce Customer Churn

Upgrading to a tailor-made complaint handling system helps reduce customer churn by enabling you to optimize every stage of your complaint handling process and, so, meet (and exceed) customers' expectations.

Standardized workflows speed up complaint-logging, guiding frontline staff through the necessary steps and ensuring they capture the right data. The best complaint management software can also integrate with your email client and social media accounts, so customers can get in touch through their preferred communication channel without impacting the quality of your response.

By integrating with other parts of your tech stack, such as your customer relationship management (CRM) and accounting software, a complaint management system also simplifies investigation and resolution.

Complaint handlers can see exactly what triggered a complaint. Some complaint handling software solutions, like Aptean Respond, can even suggest lines of enquiry, based on historical data, which your staff might not consider otherwise. You can also check whether any compensation you've offered the complainant was paid and track the status of other remedial action you've agreed to take, such as updating the customer's file.

Most importantly, good complaint management software enables you to accurately benchmark your performance by integrating customer surveys into the process. This means you'll get valuable feedback about what you're doing well and where you've gone wrong straight from the horse's mouth. In turn, you can implement data-backed improvements to your complaint handling system, instead of relying on educated guesses or, worse, your perceptions.

Telltale Sign 4: High Staff Turnover

Poor complaint handling processes don't just frustrate your customers. They also damage the morale of those who have to deal with said customers on a day-to-day basis: your front-line staff, complaint handlers and team leaders.

Customer service is a high-stress job to begin with. In a Cornell University study of call center agents, for instance, 87% of the subjects reported “high” and “very high” workplace stress, and 77% reported “high” and “very high” personal stress.

In such a high-pressure scenario, processes that aren't fit for purpose can be the tipping point. If staff feel they don't have the tools they need to do their job properly, they'll feel even more stressed, be less productive and become more likely to call in sick or quit.

Ultimately, this means lower customer satisfaction scores and a greater risk of non-compliance, plus the constant hassle and expense of recruiting and training replacements.

How a Complaint Handling System Improves Staff Retention

The biggest issue with spreadsheets and generic complaint handling modules that are bolted on to other software systems is that they're not designed to meet the very specific needs of the complaint handling function.

Imagine you needed to carry out repairs on your house. If what needs doing is simple, such as fixing a window that isn't closing properly, a set of screwdrivers and a box of screws should do just fine. But if the house needs more extensive work—for example, there's dry rot or a leak—you'll need specialized tools (and the specialized skills to operate them properly).

The same goes in complaint handling, especially in regulated industries like financial services.

While Excel or a bolt-on module may be able to tackle basic tasks, they simply don't have the capabilities to handle complaints efficiently at scale. How can they? Their design isn't informed by a deep understanding of industry requirements. In fact, complaint handling often isn't even their main focus. It's customer relationship management, sales, or whatever other function the vendor's flagship product is designed for.

By contrast, purpose-built complaint handling software has the specific goal of streamlining and optimizing complaint handling, saving time, increasing efficiency and embedding compliance into the process.

Standardized workflows and templates enable staff to gather the right information and route it to the correct team quickly, even if they're relatively junior or complaint-logging isn't their core competence, for example because they're part of the social media team.

Similarly, complaint handlers can access all the relevant information about the complaint from one place, including important dates, instead of having to piece it together from several different sources. And team leaders can continuously analyze performance, adapt and improve.

But complaint handling software benefits other stakeholders too.

Quality assurance professionals, who play a crucial role in ensuring the complaint handling process is as robust as it can be, can evaluate individuals' and the complaint-handling function's overall performance more thoroughly–taking QA beyond just compliance.

Compliance teams can generate reports more quickly and use the software's record-keeping capabilities to evidence and prove compliance to regulators. And, the C-Suite have access to data that enables them to make better-informed operational decisions.

The upshot is that, with purpose-built complaint handling software in place, everyone has the data, visibility and functionality they need to do their job well. And when staff have tools that make their lives easier, instead of complicating things by forcing them to find workarounds, they're more likely to feel fulfilled and stay on.

Telltale Sign 5: A Spike in Complaint Referrals

If ever more complainants are referring their cases to the UK's Financial Ombudsman Service (FOS)—or, if you're in Australia, the Australian Financial Complaints Authority (AFCA)—this usually means one of two things:

1. You're not resolving complaints within the time-limits set out by regulators. Depending on the type of complaint, the Financial Conduct Authority gives firms fifteen business days or eight weeks to resolve complaints. Under ASIC's Regulatory Guide 271, firms have 21 calendar days or 30 calendar days to resolve them.

2. You're not resolving complaints in a way that makes complainants feel they've been treated fairly. Most of the time, this means the complainant either doesn't understand what happened that caused the complaint or disagrees with the reasoning behind your decision.

Whatever the reasons for the spike, complaint referrals are time-consuming, expensive and damaging to your reputation.

In the UK, you pay £750 per case if more than three complaints against you are referred to the FOS in a given year. And that's before you factor in the compensation the FOS will award complainants if it decides in their favor.

AFCA uses a tiered fee structure with a 'user pays' approach. In other words, the more complaints are lodged against you, and the more serious they are, the more you pay.

How a Complaint Handling System Helps Reduce Complaint Referrals

Using complaint management software helps reduce the number of complaint referrals in three key ways.

1. First, intelligent workflows and automations speed up the complaint handling process, so it's easier to respond to and resolve complaints within the timeframes set out by regulators.

2. Second, you can take steps to ensure your complaint handling process isn't just fair, but also seen to be fair. You can optimize your customer-facing communications so they're always timely, informative and clear. By referring to previous cases, it's also easier to treat similar issues in the same way, instead of producing wildly different outcomes that may create the impression of unfairness.

3. Third, and most important, complaint handling software helps improve your competence and effectiveness.

You can make more efficient use of your resources, assigning challenging complaints to more seasoned complaint handlers, while smart suggestions help ensure your process is always consistent and compliant, regardless of the type of complaint or the complaint handler's experience level.

At the same time, performance data helps you home in on your staff's training needs. And built-in customer surveys can give you a clearer idea of what your customers like about your complaint handling process and where they think you should make changes.

Telltale Sign 6: Poor Visibility

Perhaps the biggest drawback of using spreadsheets, manual techniques or generic modules within other software systems for handling customer complaints is that the data is inherently siloed and unwieldy.

This is problematic for three reasons:

• It creates operational risks.

There's the risk of human error—88% of spreadsheets contain at least one mistake. There's a risk of unnecessary duplication. And risk of important details or even entire complaints falling through the cracks.

Worst of all, there's a risk you might find yourself on the regulator's bad side, particularly if junior staff go off-script or you're unable to properly document your complaint-handling processes.

• It makes complaint handlers' jobs harder.

When data is siloed, complaint handlers are less responsive and efficient, because they have to spend time tracking down the team or individual who has the relevant information.

A 2022 Forrester report found employees waste an average of 12 hours a week chasing data. Hours they could spend actually resolving complaints and strengthening customer relationships. There's also no guarantee that the information, once found, will be complete, correct or up to date.

• It leads to avoidable issues.

Complaints don't happen in a vacuum. When customers keep complaining for the same reasons, this is often a sign that there are wider problems at play.

Without an end-to-end view of the circumstances that triggered specific types of complaints, you'll likely keep spending time, effort and resources dealing with the same issues over and over, when you could eliminate them altogether.

How a Complaint Handling System Improves Visibility

Specialized complaint handling software brings together all your complaints data in one central, easily-accessible location.

Features such as automated or assisted data capture remove the risk of human error and create a trusted source of information your staff can refer to quickly whenever they need to.

Frontline staff and complaint handlers are also able to see an individual's open complaints and their complaints histories at a glance. This means they can get up to speed quickly and get to work resolving the problem, instead of forcing the customer to repeat their story over and over or passing them off to other colleagues who might be more familiar with the case.

Equally, team leaders and senior managers can see what individual complaint handlers' pipelines and performance look like at a glance and gain a 360 view of the complaint handling function's overall performance, including the areas where there's room for improvement.

Best of all, a specialized complaint handling system, like Aptean Respond, with root cause analysis capabilities enables you to identify the key reasons your customers keep complaining. Armed with this knowledge, you can address the underlying issues your customers keep complaining about, which will help reduce your complaints workload.

Effective Complaint Handling Is Good Business. Invest Wisely.

No firm sets out to treat their customers badly. But it doesn't matter if it's intentional or not. With 33% of customers willing to take their business elsewhere after one bad experience—and 90% ready to do the same after their second—the margin for error is razor thin.

Plus, there's the hit to your bottom line to consider: regulatory fines, dispute resolution fees, higher customer acquisition costs, high staff turnover and reduced profitability.

Can you afford to take these risks?

With Aptean Respond, our web-based complaint management system, you won't have to.

Designed specifically for financial services, Aptean Respond is packed with features that make your staff's lives easier, increase customer satisfaction and make your complaint handling process compliant by default.

Our clients report Aptean Respond has helped them reduce the volume of complaints by up to 75% and shave nine days off the average complaint resolution time. Using Aptean Respond has also helped our clients reduce FOS referrals by 92%. And, of the cases that are referred to the FOS, they've seen 47% reductions in complaints upheld.

Want to find out how Aptean Respond can help your business too? Book a discovery call to see it in action.