The Role Of Complaints Handling System In Enhancing Customer Satisfaction

Project and Seminar Material for Business Administration and Management BAM

Abstract

The study’s overall objective is to assess the the role of complaints handling system in enhancing customer satisfaction using First Bank Plc as case study. The study further find out the records of prevalent customers’ complaints in First Bank PLC, investigated the approaches of managers in First Bank PLC in handling customers’ complaints and find out whether retention resulted in all cases after the resolution of customers’ complaint. The research adopted the survey descriptive design and with the aid of convenience sampling method, the researcher conveniently selected eighty (80) participant who are management and staff in First Bank PLC. Self- structured questionnaire was issued to the respondent of which seventy-seven (77) responses were retrieved and validated for the study. The study made use of of descriptive analysis where data from field survey was analyzed using simple percentage, mean and standard deviation presented in frequencies and tables. Findings of the study reveals that: Customers’ opinion on the level of complaints handling system in First Bank PLC is high; Complaint log book has a positive influence on policy formulation in First Bank PLC; Approaches adopted by the manager includes listening to customer complaints, being understanding, and jotting down salient points to gather relevant facts, discussing the complaint and following up with effective solutions was a very effective complaint handling process. Retention resulted in all cases after the resolution of customers’ complaint. The study recommends that o effectively handling complaints from the customer, service provider needs therefore to focus on that particular customer problem to come out with the best and appropriate solution so as to keep him satisfied. To effectively being responsive to complaints, the organization needs to provide guidance to staff on how to respond 47 to and prioritize complaints. They should be aware of internal complaint handling processes including how to assess complaints which may be resolved quickly and those which require investigation.

Chapter One

Introduction

1.1 Background of the Study

Customer complaint is a customer’s expression of dissatisfaction towards a product, service or purchasing situation (Nakibin et al., 2011). Tronvoll (2012) calls it a formal or informal customer report regarding a problem with a product or service. Research has shown that, the way a company handles company complaints can affect its business success in the long term (Robert-Lombard, 2011). Gelbrich & Roschk (2010) assert that poor complaint handling procedures could damage company-customer relationship and cause customer dissatisfaction. It could promote negative word of mouth advertising causing potential customers to refrain from doing business with the company. It could cause low customer loyalty and significantly chances of customer retention. Awara (2010) opines that poor customer complaints handling ultimately cause companies to lose customers thereby losing market share, whilst the recruiting of new customers through marketing promotions cost money, effectively reducing company profitability.

When companies retain effective customer complaint handling procedures, customer attrition is reduced, customer satisfaction is increased, sales figures are boosted and customer loyalty and retention assured (Robert-Lombard, 2011). Various studies have put forward diverse lists of procedures to guide the customer complaint handling process. Gelbrich & Roschk (2010) conducted a meta-analysis of company complaint handling procedures and how they affect future customer response. The study showed that listening to customer complaints, being understanding, and jotting down salient points to gather relevant facts, discussing the complaint and following up with effective solutions was a very effective complaint handling process. Tronvoll (2012) however rejects a stationary procedure, insisting that complaint handling procedures are different in various companies, reaping varying levels of success. Komunda & Oserankhoe (2012) advocates for a comprehensive customer complaints management system, complete with complaint handling procedures, customer satisfaction checks, customer feedback acquisition and customer retention measures.

Every business organization`s success depends on the satisfaction of the customers. Whenever a business is about to start, customers always come “first” and then the profit. Those companies that are succeeding to satisfy the customers fully will remain in the top position in a market. Today’s business company has known that customer satisfaction is the key component for the success of the business and at the same time it plays a vital role to expand the market value. In general, customers are those people who buy goods and services from the market or business that meet their needs and wants. Customers purchase products to meet their expectations in terms of money (Awara, 2010). Therefore, companies should determine their pricing with the quality of the product that attracts the customer and maintains the long-term affiliation.

The organization should make sure that they are providing full service, equivalent to their monetary value. This will increase the number of customers and holds the long-term relationship between the customer and the organization (Tronvoll, 2012). And the existing customer will help to attract the new customers by providing or sharing the information about the products and services of the companies. Satisfaction means to feel content after what the person desired or wanted. It is difficult to know whether the customers are satisfied with the availability of the product or services. So, giving satisfaction to the customers is not an easy task, for this different factor is needed to be taken into consideration. Nowadays, competition can be noticed between the business organizations and marketplaces everywhere and has been one of the challenging tasks for the competitors. Though it seems to be tough in the growing market, competitors are developing their marketing channels effectively (Komunda & Oserankhoe, 2012).

Globalization has increased competitiveness in the marketing environment, giving rise to the need for companies to adopt diverse strategies to stay competitive. Tronvoll (2012) posits that market competitiveness demands that companies employ measures to influence potential customers and retain existing customers, thereby increasing market share and profitability. To increase market share, Komunda & Oserankhoe (2012) assert that companies must ensure customer satisfaction through counter-measures before sales, during sales and after sales. According to Gruber (2011), one of the most significant counter-measures companies can adopt is customer service, for which customer complaints management is a critical component.

Even when companies put forth their best efforts to serve their customers, customer complaints are inevitable and are a regular part of doing business (Fierro et. al. 2015). Complaint handling systems are the ultimate test for a company’s customer orientation as they strive to create satisfactory resolutions to customer concerns. A company may risk losing previously loyal customers when grievances are poorly handled. This implies that existing levels of customer satisfaction do not offer foolproof protection against the consequences of ineffective complaint handling. Looking at the issue from the other side of the coin, satisfactory handling of customer complaints may likely enhance customer loyalty. Studies have shown high returns on investment in effective complaint handling systems (TARP 1986; Fornell et. al. 2006; Fierro et. al. 2015). Thus many companies are seeking to develop such systems to cultivate loyalty among their customers. In doing so, two distinct approaches have been cited, the first of which involves setting standard procedures to program complaint handling employees on how to deal with customers in specific situations. The second approach takes a more open stance and consists of training and motivating employees to adopt a set of shared values that would likely lead to the desired behaviors. Therefore, this study focuses on the role of complaints handling system in enhancing customer satisfaction, a case study of First Bank PLC.

1.2 Statement of the Problem

There is an increasingly fast-paced competition for excellent customer service amongst banks, handling customer complaints effectively has become a real point for competitiveness. When companies show an inability to deal with customer complaints, customer allegiance could be affected, resulting in high customer turnover and low customer retention. Morrisson & Huppertz (2010) posited that, when companies fail to effectively handle customer complaints, that particular customer could be lost in the process, sparking a chain reaction involving the customer telling at least 27 others, who might also continue to spread negative news about the company involved. Consequently, the loss of one customer could cause a chain reaction where a lot more customers are lost: reducing market share, reducing bank profitability and increasing negative perceptions about the bank.

In light of these assertions, it is imperative that banks perfect their customer handling procedures to avoid the bleak repercussions that come with failure. The challenge here is that, most banks hardly, if not never, assess their customer complaint procedures to find out if it is delivering in terms of handling customer complaints effectively. Due to this, some banks adopt a nonchalant approach to customer complaints, especially if it is related to customer service, oblivious of the latent harm being caused to the bank. Therefore, this study necessitates the need to carry out a study on the role of complaints handling system in enhancing customer satisfaction, a case study of First Bank PLC.

1.3 Objectives of the Study

The general objective of this study is to examine the role of complaints handling system in enhancing customer satisfaction, a case study of First Bank PLC.

The specific objectives include the following:

To examine customers’ opinion on the level of complaints handling system in First Bank PLC.
To ascertain the influence of complaint log book in policy formulation in First Bank PLC.
To find out the records of prevalent customers’ complaints in First Bank PLC.
To investigate the approaches of managers in in First Bank PLC in handling customers’ complaints.
To find out whether retention resulted in all cases after the resolution of customers’ complaint.

1.4 Research Questions

The relevant research questions related to this study include the following:

What are customers’ opinion on the level of complaints handling system in First Bank PLC?
What influence does complaint log book has on policy formulation in First Bank PLC
What are the records of prevalent customers’ complaints in First Bank PLC
What the approaches of managers in in First Bank PLC in handling customers’ complaints.
Has retention resulted in all cases after the resolution of customers’ complaint?

1.5 Significance of the Study

The research aims to fill some of the knowledge gaps identified in the literature and it is significant as it presents the satisfaction with complaints handling system from customers’ point of view in banking industry in Nigeria which is hardly found in the literature. This research has the potential to assist banking industry to gain an understanding of how complaints handling processes may affect their customers’ level of satisfaction. Likely, this research will be significant to the field of organisational learning as the outcomes will inform banking industry to improve their service delivery approaches towards enhancing customer satisfaction. The outcomes from this study will stimulate managerial action for improving practice of complaints handling in service delivery industry.

1.6 Scope of the Study

This study is centered on the role of complaints handling system in enhancing customer satisfaction which takes the case of First Bank Plc limited of Nigeria. It is conducted on the ground that customer satisfaction is a key driver of business improvement among service based organization. Complain handling procedures and system for doing it leads to improved service delivery. This study focuses on investigating how the First Bank Plc has strived to ensure customer satisfaction through complaint handling. This forms the scope of this study which will take the customers and the employees as the unit of analysis.

1.7 Limitation of the Study

The researchers encountered slight constraints while carrying out the study. The significant constraint was the scanty literature on the subject owing that customer satisfaction through complaint handling discourse is vast thus the researcher incurred more financial expenses and much time was required in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size covering only First Bank Plc in Lagos State. Thus findings of this study cannot be used for generalization for other states within Nigeria. Additionally, the researcher will simultaneously engage in this study with other academic work will impede maximum devotion to the research. Howbeit, despite the constraint encountered during the research, all factors were downplayed in other to give the best and make the research successful.

Chapter Five

Summary, Conclusions and Recommendations

5.1 Summary of the Findings

The research adopted the survey descriptive design and with the aid of convenience sampling method, the researcher conveniently selected eighty (80) participant who are management and staff in First Bank PLC. Self- structured questionnaire was issued to the respondent of which seventy-seven (77) responses were retrieved and validated for the study. The study made use of of descriptive analysis where data from field survey was analyzed using simple percentage, mean and standard deviation presented in frequencies and tables.

5.3 Conclusion

In Nigeria, some companies see the potential benefits of effectively handling customer complaints and the First Bank Nigeria Limited is not an exception. Incorporated as privately operated banks in 1894 with a mission to, amongst other things provide excellent value to customers, First Bank Nigeria Limited’s drive to serve customers has been unflinching, influencing the adoption of several customer service and customer relationship management practices. At some point in their operations, every organization has to deal with dissatisfied customers, some of who may make complaints. How the company handles the complaint resolution process would determine whether the customer is retained to the company or not. Customer retention is an important factor to consider is dealing with customers and conducting business to satisfy customers. When companies deploy customer complaint logbooks, the process of complaint resolution is further enhanced. The customer complaint logbook serves as a record of the complaints and recommendations of customers that when factored into policy decisions, can improve the company’s customer service operations and public image.

Findings of the study reveals that:

Customers’ opinion on the level of complaints handling system in First Bank PLC is high.
Complaint log book has a positive influence on policy formulation in First Bank PLC.
Approaches adopted by the manager includes listening to customer complaints, being understanding, and jotting down salient points to gather relevant facts, discussing the complaint and following up with effective solutions was a very effective complaint handling process.
Retention resulted in all cases after the resolution of customers’ complaint.

5.3 Recommendation

Improve service delivery performance by responding quickly. In order to respond quickly to any customer complaints, every customer should be treated equally.
The job of handling customers on a regular basis demands certain skills. The company must first ensure that the right people with the right skills and attitudes are employed for customer service.
To effectively handling complaints from the customer, service provider needs therefore to focus on that particular customer problem to come out with the best and appropriate solution so as to keep him satisfied.
To effectively being responsive to complaints, the organization needs to provide guidance to staff on how to respond to and prioritize complaints. They should be aware of internal complaint handling processes including how to assess complaints which may be resolved quickly and those which require investigation.
To all the workers, the complaints should be acknowledged promptly. Complainants and, if applicable, the person who is the subject of the complaint, should be kept informed of progress and the outcome of the complaint. Complaints should be addressed promptly in order of urgency and staff should be aware of any target timelines for resolving complaints.

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