Robert East, Professor of Consumer Behaviour at Kingston Business School, said it made financial sense for firms to encourage complaints because it helped them to improve their goods and services and could even lead to increased sales.

His review of the latest trends, called 'Analysing Customer Complaining', commissioned by the Institute of Customer Service, found that companies who are adept at monitoring customer satisfaction and are able to put things right can repair the damage, especially as vocal critics are often keen to make positive comments too.

Professor East said: "It appears that those using negative word of mouth are much more likely to produce positive word of mouth. So firms may turn complainers into satisfied customers." He said evidence showed that about half of all negative word of mouth emanates from past customers and about a quarter from current customers. "Firms with customer databases can direct information to most of the people who are airing criticisms and may be able to tailor appropriate messages for past and current customers," Professor East said.

He said companies would benefit from encouraging complaints. "The benefits of good complaint handling are customer retention, reduced negative word of mouth, increased positive word of mouth, market research and, sometimes, increased sales," he said.

"We criticise some of the orthodox thinking about complaining and suggest that, in addition to complaint handling, there should be a more direct focus on defection and word of mouth," he added.

Professor East has produced a checklist to help organisations tackle complaints from customers:

1. Assess the cost of not responding to complaints effectively.

This varies with the nature of the business. Make this public knowledge. Consider alternative actions that will promote positive comments and retain customers.

2. Define procedures and responsibilities.

Keep these simple and supportive. Publicise the procedure to customers, for example with receipts. Train staff to use complaint handling procedures. Arrange staff incentives so that these do not oppose the reporting of complaints.

3. Ensure that reports of complaining are standard agenda items for senior management.

Use additional research such as analysis of customers who defect to rival firms. Remember that complaints partly reflect customers' perceived alternatives, so watch the competition.

Jo Causon, Chief Executive of the Institute of Customer Service, said: "Running an effective complaint handling process will help them establish feedback quickly and enable them to put measures in place to reduce a repeat of the complaint."

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