Importance of Customer Complaint Handling Satisfaction for MSMEs in B2B Context

Abstract

Achieving perfection is an ideal far from reality in any sphere of business (Varela-Neira et al., 2010). But the world has come a long way in terms of progress. Systems like 6 Sigma, etc., have brought down the level of quality defects to miniscule level and there are ways to measure and quantify the defect. By this we can take corrective actions to rectify the defects. But when it comes to handling of complaint, if the complaint is not handled to the satisfaction of customer the damage will be exponential and often irrepairable. The biggest challenge is to measure or quantify the damage created by even small or miniscule level of defective product or service. An effort is made here to study the complaint resolution satisfaction and its effect on customer loyalty for micro, small and medium enterprises in business to business context. Primary data are collected by 5 point Likert scale questionnaire and impact of complaint handling on customer loyalty is measured through (a) simple linear regression and analysis of variance and (b) descriptive statistics like frequency and mean. This study implies that satisfactory complaint resolution is a very important factor for continued customer retention.

Keywords

Complaint-resolution complaint-handling complaint-impact post complaint satisfaction loyalty marketing management

Introduction

To succeed in today’s fierce world of competition, every organisation has to deliver their products or services to the complete satisfaction of their customers. This is especially true in the case of business to business (B2B) scenario. As per Kotler, ‘If you leave your customers satisfied, they’ll stick around’.

As per Dawkins and Reichheld (1990), 5% increase in customer retention generated 25%–95% increase of net present value (NPV) across a wide range of business environments.

This is all more relevant in a B2B context where the customers are limited and repeat purchases are made.

Complaint Handling: Relevance

Complaints should be considered as indicators of existing problems in product or process related to the company (Filip, 2013). In general, customers who are unhappy with the product or service will not complain directly but will complain to others and take their business elsewhere. There should be efforts by companies to constantly check feedback from customers to know about their perceptions and stay constantly updated. This will enable the companies to know well in advance about any negative perceptions before any damage is created. Often if corrective action is not taken in the initial stages, it may cause irrepairable damage, thereby affecting migration of customers quietly. If this migration happens, it may be a stage where recovery may be very difficult. In the case of early detection and corrective action there is a chance to regain the customer confidence. This regaining of customer confidence is measured by checking the customer satisfaction levels. We all know that customer satisfaction leads to customer loyalty, which is relevant across industries.

Important Steps in Complaint Resolution Satisfaction

Complaint resolution process may be classified into five sections.

Psychological: This is a very important part which often gets underestimated. Customers want to be heard, especially if they are unhappy about a product sold to them or a service provided that did not meet their expectations. As a first step customer has to be listened attentively followed by empathy and apology.

Corrective action solution: Offer and execute a solution based on a systematic root cause analysis for the complaint occurrence.

Corrective action to avoid future occurrence of complaint: Offer and execute action that would analyse the root cause of the complaint and steps to prevent reoccurrence of the complaint.

Communication to customer: This is a very important step to communicate effectively to customer the steps taken to resolve the complaint. This will convey to the customer that the customer grievance has been taken seriously.

Customer feedback and satisfaction: Customer feedback is to be taken in addition to the above action to ensure that the customer satisfaction is regained on the product or service. This should be updated on a continuous manner. There should be a customer feedback system in place which is updated continuously.

Types of Customer Complaints

Given below are some types of customer complaints:

Product quality or safety, service, workmanship, timing, the way of treatment, costs, shipping errors, employee attitudes, broken promises and misleading advertisements.

Complaint Handling in Plastics Industry

Plastics industry is a sector where the raw materials suppliers have to maintain a supply cycle to a set of regular customers. An important factor is the quality of the product or service. Over a period of time customers do face some quality related issues as 100% perfection is not practically possible in reality.

In such rare cases, the ability or capacity to solve the problem to the satisfaction of customer is very important. In fact this is one of the most important aspects for customer retention.

Now with this background, a research study has been conducted about Importance of Customer Complaint Handling Satisfaction among micro, small and medium enterprises (MSMEs) in India (plastic injection moulding, thermoforming and thermocole business sector, which is again a part of the larger plastic industry).

Research Background and Objectives

According to Hirschman (1970) and Fornell and Wernerfelt (1987), the number of customers who defect due to dissatisfaction, may be reduced if the number of dissatisfied customers is reduced.

Andreassen (2000) suggested that consumer complaint behaviour is an action resulting from the emotions of dissatisfaction.

Research Study Objective

Objective 1: To find the Influence of Customer Complaint handling on Customer Loyalty.

Objective 2: Loyalty of customer after the complaint.

Primary data are collected by a survey among MSMEs (plastic injection moulding and thermoforming and thermocole business sector in India).

Methods

Research Methodology

Impact of complaint resolution satisfaction on loyalty is tested by way of regression analysis and analysis of variance (ANOVA).

Descriptive statistic is used for inferring additional qualitative information from the respondents.

The primary data, represented by below questions are collected by way of survey responses, are compared by Linear regression analysis using IBM SPSS.

Null Hypothesis: Complaint Handling Satisfaction has no influence on the loyalty of customers after complaint occurrence.

Questions have been framed to gauge from the response the customer perception about continuing business after the complaint in two parts:

First part addresses the customer’s response about how the complaint was handled by the company and whether the complaint was resolved satisfactorily.

Second part is about whether customer would continue business or reduce business volume after complaint.

Complaint Handling Satisfaction (3 Questions)

To what extent is customer complaint handling satisfaction important?

Overall, in case after the complaint resolution, would you still be satisfied with the supplier?

Do you feel that even after the complaint, the purchase of the product from this company was a good decision?

Customer Loyalty After Complaint (3 Questions)

After the complaint, did I purchase the product of this company again?

Is it very likely that I will purchase the product of this company again?

Do I intend to remain loyal to this company in the future?

Three questions each on the dependant and independent variables were addressed to the respondents on Likert scale model 1–5 basis. About 270 responses were collected. The inferences are based on the:

Adjusted R² (to determine the extent of co relation)

ANOVA significance test (model fit)

Regression coefficient values (unstandardised values to quantify the impact (Sykes, 1993))

The results of the analysis were obtained by performing relevant statistical tests using SPSS software.

The statistical tools used are linear regression analysis, ANOVA and descriptive analysis (frequency and mean). All the tables (Tables 1 –9) presented in this research article are the relevant outputs from the analysis conducted by the researcher using the primary data for this study.

Table 1.

Model Summary from Linear Regression Using IBM SPSS on Primary Data.

Model Summary^a
Model	R	R ²	Adjusted R²	Std. Error of the Estimate	Change Statistics					Durbin–Watson
					R² Change	F Change	df1	df2	Sig. F Change
1	0.591^b	0.35	0.347	0.73237	0.35	144.029	1	268	0	2.084

Source: Primary data analysis output.

Note: ^aDependent variable: After Complaint Loyalty.

^bPredictors: (Constant) and complaint satisfaction.

Table 2.

ANOVA Conducted on Primary Data Using IBM SPSS.

ANOVA^a
Model		Sum of Squares	df	Mean Square	F	Sig.
1	Regression	77.251	1	77.251	144.029	0.000 ^b
	Residual	143.745	268	0.536
	Total	220.996	269

Source: Primary data analysis output.

Note: ^aDependent variable: After Complaint Loyalty.

^bPredictors: (Constant) and complaint satisfaction.

Table 3.

Regression Coefficients Results from IBM SPSS Analysis.

Coefficients^a
Model		Unstandardised Coefficients		Standardised Coefficients	t	Sig.	Collinearity Statistics
Model		B	Std. Error	Beta	t	Sig.	Tolerance	VIF*
1	(Constant)	–0.344	0.352		–0.976	0.33
1	Complaint satisfaction	0.969	0.081	0.591	12.001	0	1	1

Source: Primary data analysis output.

Note: ^aDependent variable: After Complaint loyalty.

*Variance Inflation Factor (VIF)

Unstandardised coefficient shows a ‘B’ value of 0.969 which indicates that a change of 1 unit in complaint satisfaction will result in a change of 0.96 units in loyalty which is a very high degree of positive influence.

Table 4.

Descriptive Analysis on Q1 Responses Related to Complaint Handling Satisfaction Using IBM SPSS.

Question 1 (CS1)	To What Extent Is Customer Complaint Handling Satisfaction Important?
Value Label	Value	Frequency	Percentage	N	Valid	270
Very low					Missing	0
Low				Mean		4.78
Moderate	3	7	2.59	Std. dev.		0.47
High	4	46	17.04	Minimum		3
Very high	5	217	80.37	Maximum		5
Total		270	100

Source: Primary data analysis output.

Table 5.

Descriptive Analysis on Q2 Responses Related to Complaint Handling Satisfaction Using IBM SPSS.

Question 2 (CS2)	Overall, in Case After the Complaint Resolution, Would You Still Be Satisfied with the Supplier?
Value Label	Value	Frequency	Percentage	N	Valid	270
Very low	1	3	1.11		Missing	0
Moderate	3	43	15.93	Mean		4.31
High	4	87	32.22	Std. dev.		0.82
Very high	5	137	50.74	Minimum		1
Total		270	100	Maximum		5

Source: Primary data analysis output.

Table 6.

Descriptive Analysis on Q3 Responses Related to Complaint Handling Satisfaction Using IBM SPSS.

Question 3 (CS3)	Do You Feel That Even After the Complaint, the Purchase of the Product from This Company Was a Good Decision?
Value Label	Value	Frequency	Percentage	N	Valid	270
Very low	1	15	5.56		Missing	0
Low	2	6	2.22	Mean		3.89
Moderate	3	51	18.89	Std. dev.		1.03
High	4	120	44.44	Minimum		1
Very high	5	78	28.89	Maximum		5
Total		270	100

Source: Primary data analysis output.

Table 7.

Descriptive Analysis on Responses to Q1 Related to Loyalty After Complaint Using IBM SPSS.

Question 1 (AC1)	After the Complaint, I Purchased the Product of This Company Again
Value Label	Value	Frequency	Percentage	N	Valid	270
Very low	1	9	3.33		Missing	0
Low	2	13	4.81	Mean		3.89
Moderate	3	56	20.74	Std. dev.		0.99
High	4	112	41.48	Minimum		1
Very high	5	80	29.63	Maximum		5
Total		270	100

Source: Primary data analysis output.

Table 8.

Descriptive Analysis on Responses to Q2 Related to Loyalty After Complaint Using IBM SPSS.

Question 2 (AC2)	Is It Likely That I Will Purchase the Product of This Company Again
Value Label	Value	Frequency	Percentage	N	Valid	270
Very low	1	8	2.96		Missing	0
Low	2	15	5.56	Mean		3.82
Moderate	3	73	27.04	Std. dev.		1.01
High	4	96	35.56	Minimum		1
Very high	5	78	28.89	Maximum		5
Total		270	100

Source: Primary data analysis output.

Table 9.

Descriptive Analysis on Responses to Q3 Related to Loyalty After Complaint Using IBM SPSS.

Question 3 (AC3)	Do I Intend to Remain Loyal to This Company in the Future?
Value Label	Value	Frequency	Percentage	N	Valid	270
Very low	1	4	1.48		Missing	0
Low	2	19	7.04	Mean		3.83
Moderate	3	73	27.04	Std. dev.		0.97
High	4	96	35.56	Minimum		1
Very high	5	78	28.89	Maximum		5
Total		270	100

Source: Primary data analysis output.

Results

Objective 1: Results and Discussions from Linear Regression Analysis

Model Summary

ANOVA

Regression Coefficients

Model summary and ANOVA test indicate significance level of 0.000 which means that the model is fit for comparison between the said variables.

Hypothesis result: The significance F value ‘0’, which proves null hypothesis wrong, that is, The Complaint Resolution has an impact on Customer Loyalty afterwards.

Comparing the ‘Complaint Handling Satisfaction’ with the ‘Loyalty after complaint’ the regression results indicate a positive value of adjusted R² value of 0.347.

This means that complaint satisfaction has 34.7% influence on loyalty of customer.

Objective 2: Results and Discussions from Descriptive Statistics

Complaint Handling Satisfaction

Over 97% of the respondents feel satisfactory handling of complaint is of high to very high importance. The high mean value of 4.78 in a Likert scale of 5 gives high emphasis on the importance of complaint resolution.

Around 83% of customers feel that after resolution of complaint they would continue business. However, 17% feel less loyal and given a choice would switch to other suppliers. Here also the mean value of 4.31 indicates that satisfactory resolution of complaint is important for overall satisfaction of customer and thereby retention of business.

Here, 72% customers would forgive the supplier for the quality defect after satisfactory resolution of the complaint; 28% would be cautious and express an erosion of trust due to the occurrence of complaint regardless of resolution. A relative lesser mean of 3.89 shows erosion of trust after complaint.

Loyalty After Complaint Resolution

Though 71% customers say they continued business after complaint, 29% have stopped or reduced business. This shows that damage is already reflected. Though complaint has been resolved, the negative impact on business is 29%.

Around 36% of customer already decided to reduce business and look for alternate supplier despite complaint resolution. This means that in addition to the loss already reflected, the customer still may look for alternate business and thereby further loss.

In the response, 36% customers say they intend to shift loyalty to other suppliers. This means if immediate corrective action and efforts to restore faith are not taken, the future business may drastically be affected. This response to this question underlines the fact established in previous question about the erosion of business due to complaint.

Managerial Implications

100% complaint avoidance is desirable but practically impossible. Hence it is important to immediately address the complaints when they occur with swift and quick corrective action to control the damage.

The corrective action should ensure customer satisfaction for effective damage control.

Any customer complaint has a potential to damage the trust of the customer resulting in severe loss of business and efforts to be taken to not only to regain confidence but also to ensure non-occurrence in future.

Finally, customer complaints should be viewed as challenges and converted from threat to opportunity.

Conclusions

From Our Linear Regression Analysis Results

Customer Complaint Handling Satisfaction plays a very important role in continuing loyalty.

Satisfactory complaint resolution influences loyalty to an extent of 35% for continued future business.

Any change in customer complaint resolution satisfaction by 1 unit affects the loyalty by about 0.97 units which is very high influence.

From the Descriptive Statistics of Frequency and Mean

As high as 97% of respondents stress the importance of customer handling satisfaction as important for continued business.

Though 72% of customers would resume business after satisfactory complaint resolution, 28% customers expressed erosion of faith and trust and would look for other choice.

Timely and appropriate resolution of complaint is a damage control to retain at least the 72% who have expressed continued loyalty.

Over 36% of customers expressed they would either switch or reduce buying after the complaint.

Footnotes

Declaration of Conflicting Interests

Funding

The authors received no financial support for the research, authorship and/or publication of this article.

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