Poor Complaint Response Will Cost Retailers

CDC Software Corporation a hybrid enterprise software provider of on-premise and cloud deployments, announced today that individual retailers are set to lose £4 million each* this year if they fail to respond effectively to their customer complaints.

Market intelligence collated and used by CDC Software and its customers has revealed that up to 96% of unhappy customers do not complain. This is largely because retailers do not make it easy to do so.

 

According to the market intelligence, two thirds of customers that complain are dissatisfied by the process and / or outcome. As a result, 40% don't return to the shop or service provider and take future custom to a competitor. Over half of customers that don't bother to complain simply stop shopping with the offending retailer.

Professor Moira Clark, director of The Henley Centre for Customer Management, Henley Business School explained; "In 2011 customer management is not optional. It is business survival."

Moira Clark continued: "By failing to manage, analyse and use customer feedback, retailers are failing on two counts. At the most basic level they are losing customers. Secondly, they are ignoring the most targeted and up-to-date market intelligence available to them - and it is free."

The latest figures from the BRC-KPMG Retail Sales Monitor has revealed February 2011 as the poorest overall sales growth since the early recession; rising only 1.1% compared to a 4.5% increase in February 2010. It also highlighted non-food goods as those areas most affected by heightened consumer caution. This supports the fact that VAT increases, the on-set of petrol price rises and further budget announcements due in April, has compounded consumer spending in 2011. According to retail customers of CDC Software, consumers are being selective with their purchases - and who they make these from.

Paul Elswood, managing director of CDC Software UK, Ireland, Benelux and DACH said: "Consumers will continue to be dissatisfied unless retailers start to listen and respond to them. The recession has driven most people to reassess their purchasing criteria. Not only do they demand good quality and competitive pricing, they want excellent customer service and the security of after sales support."

Losses Calculation Explained

The CDC Software Complaints Impact Calculator, the online tool used by CDC Software's customers to assess the potential cost of poor customer management, was used to calculate average 2010 customer numbers vs. average 2010 customer revenues from major UK retailers, including Tesco and Debenhams. The averages were 25 million customers and revenues of £3.4 billion respectively.

The Complaints Impact Calculator calculated the average revenue loss to be over £4 million per retailer. The tool provided an in-depth analysis and also a 'risk' scenario. Using these figures, it calculated that an additional £3 million would be at stake if two million customers stopped shopping as the result of an unresolved complaint.

Paul Elswood said, "Given the costs of acquiring new customers - estimated to be ten times that of retaining an existing one - it makes business sense to listen and learn from customers.

"Having the tools and processes in place to capture customer feedback, to make it available for reporting and for Root Cause Analysis will not only help to retain customers, it will help gain new customers. The return on investment will be almost immediate," concluded Paul Elswood.

*Statistics based on 2010 average customer numbers vs. average revenue statistics from major UK retailers including Tesco and Debenhams. The averages were 25 million customers and revenues of £3.4 billion respectively. The final figures were calculated by the CDC Software Complaints Impact Calculator.

CDC Software is hosting an industry roundtable debate on "The Future of CRM" during this year's IQPC Executive Customer Contact Exchange in London. Info: www.cdcsoftware.com.

 

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