Effective Customer Relations -- BBB Advice on Customer Service and Complaints

December 04, 2008

Why Customers Complain

Most customers complain because, for a host of different reasons, the expectations they have when purchasing a product or service are not met. Better Business Bureaus consistently find the following causes behind the majority of consumer complaints they handle.


  • Poor product quality;
  • Maintenance difficulties;
  • Inadequate or poor repair work;
  • Goods/services delivery delays;
  • Failure to fulfill product or service warranties;
  • Incompetent or discourteous employees.


  • Billing errors;
  • Failure to provide timely refunds and adjustments, as promised.


  • Deceptive or inaccurate advertising;
  • Advertising products that are unavailable or in limited supply;
  • Misleading or false representa- tions by sales staff.


  • Wide-ranging product choices with a lack of information for making purchasing decisions;
  • Complicated product design;
  • Poor product instructions.

The foundation of customer goodwill is the practice of good customer relations. Your policy is a promise that you are committed to customer satisfaction.


  • Encourage your customers to express their concerns?
  • Solve problems quickly and conveniently?
  • Cover your business’s advertising, sales promotions, displays, selling methods, pricing, warranties, deliveries, returns, refunds, etc.?
  • Properly train your employees in customer relations matters?
  • Conform to federal, state, and local laws and regulations?

While all staff may have complaint handling responsibility, one person within your company should have ultimate authority for customer relations. This person should be available to act on behalf of the company in all customer relations matters.

Display your customer relations policy in your advertising and post it in your place of business. Also, provide a copy of this policy with your sales receipts to guard against misunderstandings and encourage customers to approach you for assistance if needed.


Follow These Essential Procedures:

  1. SCREEN & LOG IN: Start a formal procedure for logging the date a complaint is received and a record of pertinent information;
  2. INVESTIGATE: Take down the customer’s explanation, research in-house records on the customer, request receipts or other records, and inspect the product or service;
  3. ACKNOWLEDGE: If possible, tell a customer how long it will take to satisfy a complaint, especially if a delay could occur;
  4. FORMULATE A SOLUTION: Any solution should conform to your established customer relations policy and take into account contractual and/or warranty obligations, customer expectations, your company’s expectations, a cost/benefit analysis, your ability to deliver on your decision, and the prospect that the customer may reject your solution and seek redress to an outside source;
  5. RESPOND: Make sure your response is clear, appropriate, and avoid “stock” or technical jargon. A respectful explanation of even an adverse decision can often preserve customer goodwill;
  6. FOLLOW-UP: After your response, contact your customer to make sure the matter has been satisfactorily resolved.


The following questions can help you evaluate your company for its strengths and weaknesses in promoting greater customer satisfaction:

  • Do you have a formal, written customer relations policy
  • Does the policy cover all aspects of the business that directly relate to the customer, such as advertising, sales promotions, displays, selling methods, servicing, warranties, pricing, deliveries, returns, refunds, complaint handling, etc?
  • Does your policy state a commitment to using a third party dispute resolution program for unsettled complaints?
  • Is the policy clear and easily understood at all levels of the organization?
  • Is the policy effectively communicated to the entire organization?
  • Does management monitor and enforce the policy?
  • Is the policy consistent with applicable federal, state, and local laws and regulations?
  • Are there any practices, attitudes, or understandings that appear to be in conflict with existing policy?


  • Are complaint handling procedures clearly understood by all employees?
  • Has a person been designated to supervise complaint handling activity?
  • Are there clear, written procedures for screening and logging, investigating, acknowledging, resolving, responding to, and following-up complaints?
  • Is there a known procedure for referring unsettled complaints to a third party dispute resolution mechanism?
  • Do the procedures cover complaints by mail, by phone, online, or in person?
  • Have you considered installing an 800 telephone number or online complaint form to aid in customer service and complaint handling?
  • Are there management controls to ensure that complaints are processed according to policy and procedures?
  • Do the controls ensure prompt handling and settlement of complaints within a reasonable time frame?
  • Are communications to customers handled in a helpful and courteous manner and can you ensure prompt and complete answers to customer questions?
  • Has there been any analysis by management of past complaints to identify patterns, trends, and causes?
  • Does the manner of complaint handling represent the best interests of the company, as well as its customers?


In the long run, business profits are tied to a company’s ability to satisfy customers. This being the case, the following findings from a summary of recent studies conducted by Technical Assistance Research Programs, Inc. (TARP) of Arlington, Virginia, should be sobering to any business owner:

  1. About 50% of the time, customers who have a problem with a product or service are not likely to tell a company about it;
  2. Between 50% to 90% of these “silent critics” will probably take their future business to a competitor;
  3. Even when a customer does complain, one out of every two will not be thoroughly satisfied with the company’s efforts to solve the problem;
  4. Dissatisfied customers typically tell between eight to 16 other people when they have had an unsatisfactory experience with a company;
  5. Negative information has twice the impact of positive information on purchasing decisions;
  6. Word-of-mouth is one of the most important factors influencing a customer’s decision to buy from a company;
  7. It costs between two to 20 times as much to win a new customer as to retain an existing one who has a complaint.

As the TARP studies show, complaints are one of your most important business opportunities; often returning five dollars in revenue for every one dollar spent on complaint handling. The guidance and suggestions found in this brochure can help your business formulate complaint handling policies and procedures that can help you retain customers who would otherwise be lost.


Since 1972, most Bureaus throughout the United States have promoted and offered third-party arbitration for consumer-business disputes. This alternative to court is expedient, more cost effective, consistent with most state laws, and confidential.

Arbitration is a legally binding process that begins when both parties sign an agreement permitting the arbitrator to conduct a fact-finding hearing and make a final decision. With no formal rules of evidence, the arbitration hearing uses informal procedures and allows consumers to present their own cases.

If necessary, the arbitrator or designated expert will inspect a product or service performed. After determining the facts, the arbitrator renders a decision, which can be in favor of the business, the consumer, or some compromise solution. This decision will not go beyond the original remedies as stated in the arbitration agreement.

While a great many consumer-business disputes can be resolved by arbitration, it is important to recognize that some issues lie outside the scope of the arbitration process. For instance, claims seeking consequential damages are typically excluded from the BBB arbitration process.

Issues that usually cannot be arbitrated through the BBB include:

  1. Personal injury and property damage claims;
  2. Allegations of fraud or other violations of criminal law; and
  3. Any other issues not arbitrated under state laws and regulations.

When You Deal With BBB Accredited Businesses:

In addition to sponsoring arbitration services, many Better Business Bureaus offer special programs to encourage conscientious complaint handling and dispute settlement. BBB Accredited Businesses are committed to handle complaints according to procedures established by the BBB.

For disputes that are not resolved through the BBB's conciliation process, the BBB may encourage or require BBB Accredited businesses to submit unresolved complaints to binding arbitration as final settlement.

The BBB always strives to put companies in touch with concerned customers to work out solutions before those customers are lost. Telephone referral and mediation help solve problems quickly, without much paperwork.

In those few cases where a mutually acceptable solution is not reached, the BBB provides a professionally trained and certified arbitrator, who will listen to both sides and render a final, binding decision.

BBB Accredited busiensses may display a logo and distribute brochures explaining the program to their customers. These items promote a company's participation in the Better Business Bureau and inform customers where and how to communicate their concerns.

More information about BBB accreditation is available on the BBB website.  CLICK HERE to learn more.


Recognizing that unresolved complaints pose a threat to consumer confidence and the climate of the American marketplace, the Better Business Bureau (BBB) has dedicated itself to playing a leadership role in the resolution of consumer-business disputes.

According to various national polls, the BBB is the most recognized and most used third-party complaint handling mechanism in the United States.

The BBB believes consumers and businesses alike are best served if they can resolve their disputes independently. However, if the matter is not resolved, the BBB will attempt to bring about a resolution by facilitating two-way communication between the parties through mediation.

Should these informal efforts to settle the dispute fail, the BBB can offer arbitration.