Article by Mohamed Shafeeu Ali
With cooperation from industry, AnswerTeam has undertaken a study on the importance of customer complaint management among airlines. Providing efficient customer service is a critical part of the airline business, but proactively handling customer complaints and responding to poor experiences is essential to enhancing operations, from the perspective of both passengers as well as employees. The airline-specific details of the study have been removed at the request of the client, and we hope that this project summary provides insights for any airline or other business which seeks to optimize their customer relationships.
The impact of strategic mistakes
Researches finds that the negative impact of trivializing customer complaints in the airline industry can break the chain between loyalty and profits. Effective handling of customer complaints, are translated into customers’ brand loyalty which then turn into profits for the airline company. Handling customer complaints must be treated as a sensitive issue, because many customers choose not to stick around to complain, often due to a past experience of firms not willing to handle their complaints. It is easier for them to move on to competitors, and thus resulting in the failure of the business. According to a research by Esteban & Kolsky (2024), only 1 in every 26 unhappy customers complain, while the rest say nothing. Which means there is a high probability that approximately 96% of unhappy customers simply move on to competitors without you knowing what went wrong.
Before we delve into the strategic mistakes the airline companies make in handling customer complaints, it’s important to look at the impact it might have if customer complaints are trivialized.
Impact on the Company
Incurring unwanted costs: mismanagement of customer complaints leads to negative word-of-mouth, which subsequently becomes bad publicity. This often necessitates diversion of resources to counter the negative campaign, which otherwise could have been used for business expansion and enhancement of the customer experience. Marketing researchers often view managing customer complaints as a defensive strategy, focusing on customer retention, in contrast with offensive marketing strategies where the aim is to acquire new customers, which is a more costly endeavor.
Loss of customer loyalty & satisfaction: Customer satisfaction is seen as a key determinant of a customer’s decision to remain loyal to a service provider. Companies that downplay customer complaints risk a rapid loss of their customer base, with the ensuing loss in credibility, image and reputation.
Impact on Employees
Management attitude and conduct of employees: The way airline staff handles customer complaints are a reflection of the management’s attitude about customer complaints. While objective analysis of complaints can be an important factor in service quality improvement, a common mistake is to perceive customer complaints as subjective criticism of the company’s services. This view prohibits development of the much-needed organizational culture that regards customer complaints as valuable feedback, and the motivation for an organizational strategy to handle poor customer experiences.
Strategic Mistakes by Airline companies
Not considering customer complaints as a strategic tool to improve service quality: By adopting a reactive approach, airline companies may prefer to offer an immediate solution to appease complaining customers, leaving the main source of problem unresolved. Subsequently, the same underlying issue continues to manifest in new ways, exacerbating customer frustrations.
When complaints are downplayed, management often do not actively leverage the database of customer complaints to use as a strategic tool for current and future service quality improvement.
Consumers are both sensitive and responsive to their experiences. According to a survey by PricewaterhouseCoopers, 32% of brand loyal customers are likely to discontinue business after just one bad experience with an organization. The good news is that, according to a study by the Harvard Business Review, customer whose complaints were handled in less than 5 minutes are willing to spend more on future purchases. To maintain a positive growth culture, organizations must not trivialize the seriousness of consumer complaints.
Disregarding the importance of communicating customer complaints throughout the organization: It is highly unlikely that a customer complaint emanates from an isolated incident. Instead, it is practical and safe to assume that a complaint as a reflection of a systemic problem in a broader context within the operation of the business. Due to a lack of a communication across the hierarchy, customer complaints typically are not communicated across the relevant departments, in recognition of the individual role each organizational group or team can have to mitigate future complaints.
Equally important is the communication channel between customers and the organization. The presence of a professional, unbiased, and objective way to lodge complaints is key. Lack of cohesive integration within the organization and difficulty in lodging complaints gives a poor impression to the customer that their feedback is not prioritized.
What Airlines Must Do
Investment in service improvement: Researches indicates that it is costlier for firms to acquire new customers than to retain existing ones. The math behind this logic is intuitive. A satisfied customer means fewer complaints and less money to spend on repairing failures. Studies into customer satisfaction regard a quality service as a forerunner to customer satisfaction, which is itself precursor to brand loyalty.
Dynamic Responsiveness: The Airline industry is rapidly recovering from the COVID-19 pandemic. In 2023, global air traffic was at just over 94% of 2019, pre-COVID levels. The travel rebound brings much needed revenue to the industry, but with it, also new competitive threats. From a customer service perspective, airlines typically address customers in a “Direct contact mode” basis. With emerging technologies and innovations in communication channels, customers are becoming more demanding, and thus requiring the airline companies to be more adaptive and responsive to their demands.
Establishment of a clear path to lodge complaints: While channels of communication may differ between organizations, the primary objective to receive feedback remains paramount. Studies suggest that establishing a department/section exclusively to handle customer complaints is key to success for large organizations. Instead of routing a complaint to a specific relevant department, a central department can obtain a holistic view of the nature of complaints and formulate change strategies. Maintaining an organization-wide view helps to ensure a systematic reduction of problem situations can be implemented. To be sure, when specific departments deal individually with complaints, the resolution can only be at the department level, without the broad level of cooperation and support across the organization that is needed to affect sustainable change.
Cultivation of managerial commitment to resolving customer complaints: A top-down approach to resolving customer complaints is essential. A top-down directive ensures that organizational departments and teams are diligent. Making issue resolution a standard throughout the enterprise fosters a culture of improvement, specifically with the aim to improve and optimize the relationship between customers and the organization. A standard of this type can come in the form of regular internal reports on the number of complaints received and the timeframe it took to settle the matter, and begins with documentation of the mission, vision and goals of a dedicated program to implement a customer-responsive culture.
Routine feedback assessment: It is also essential to proactively carry out surveys about the services of the business instead of waiting for customers to complain. Airline competition is particularly intense, and many customers are highly sensitive their experience with their chosen carriers. Surveys can help to identify potential risk issues from churning customers, and hence give a better view on consumer grievances as they are trending.
A Systematic Approach to Complaint Management
Research by Liang (2009), employed an economic concept known as the “Exit-Voice” paradigm, theorized by Albert Hirschman in 1970. “Exit” illustrates the withdrawal of an economic agent from a service, such as quitting a job, discontinuing a brand, or emigrating from a country. This is a response by the economic agent based on a “bad” experience from the market which leads to looking for better options. Similarly, the “Voice” is the act of expressing the dissatisfaction through complaints or protests and attempts to reform the organization through those expressions. In this way, customers are volunteering themselves to help improve the quality of service rather than simply abandoning it. This cooperation can be highly valuable, and from a cost perspective, customers provide this service for free.
Based on the Exit, Voice, and Loyalty paradigm, a systematic approach to complaint management can be applied to manage customer complaints in the following ways:
- Exit:
Understanding Reasons for Exit: Airlines should actively track and analyze data on customer churn, such as cancellations, no-shows, and declining bookings. This will help identify the reasons behind customer dissatisfaction and potential “exit” behavior.
Minimizing Exit: Implement strategies to address the identified reasons for customer churn. This could involve improving service quality, addressing pricing issues, enhancing communication, and streamlining the booking and check-in processes.
- Voice:
Encouraging Voice: Airlines must develop simple, multiple channels for customers to easily voice their complaints or concerns. These could include online feedback forms, social media platforms, dedicated customer service lines, and in-person interaction with staff.
Active Listening and Response: Ensure that customer feedback is actively listened to and addressed promptly. This involves acknowledging complaints, providing solutions or compensation, and implementing changes based on customer suggestions.
Customer Engagement: Regularly engage with customers through surveys, focus groups, or social media polls to gather feedback and understand their needs and expectations, to help proactively address issues before they escalate.
- Loyalty:
Personalized Service and Community Building: Strive to provide personalized service to frequent flyers, such as recognizing their preferences, offering upgrades, or providing priority access to services. With the exception of low-cost carriers, many airlines carry out these activities through loyalty programs. More than just frequent flyer miles or upgrades, the loyalty programs offer an opportunity to foster a sense of community among customers through association with social media groups, exclusive events, or personalized communication, to create a sense of belonging and connection.
- Data:
Leverage emerging technologies: Key to unlocking customer relationship potential is the judicious use of a broad range of data points collected throughout the sales and operational journey. Data analytics in particular can be leveraged to identify patterns in customer complaints and predict potential issues before they arise. Data itself would be insufficient without proactively communicating with customers about potential delays, disruptions, or changes in services to manage expectations and minimize complaints.
Conclusion
A well-implemented customer complaint management program is essential to enable airlines – and any major business – to remain competitive and ensure a top value offer. It enhances customer satisfaction by addressing issues promptly, which can lead to increased loyalty and repeat business. Resolving complaints effectively also prevents negative word-of-mouth and potential damage to the airline’s reputation, maintaining a positive brand image.
A centralized and streamlined complaint collection system, with accompanying analysis and development of resolution plans, improves operational efficiency by identifying recurring issues and enabling proactive problem-solving. Airlines with robust complaint management systems experience higher employee morale, as staff are empowered to resolve issues independently within established guidelines. This empowerment fosters a customer-centric culture throughout the organization.
Proper compliant handling ultimately drives continuous enhancement of service quality and improvement of the overall customer experience.