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How a Mishandled Complaint can Cost You Your Reputation and Thousands of Dollars

Written by Ian Renton on 23/01/2014 5:36:00 AM 0 Comment


When it comes to retaining customers, all businesses fit into three categories or a mixture of these three. 

  1. They do whatever it takes to retain their best customers and actively seek customer retention and referrals by doing such a great job and having a policy geared towards customer retention.
  2. They do nothing. They h­ave no firm policy to retain more customers. Whatever happens just happens.
  3. Other businesses stick rigidly to rules and will only do what is required by law to satisfy a complaint. This policy is more of a customer prevention policy.

A recent Rockefeller study revealed that 68% of customers left their supplier because of perceived indifference on the part of the business. This is not unusual as most businesses have no customer retention policy. This is why their customers feel indifferent towards them and are easily lured away by competitors which may present a special offer or simply just advertise to them.


You should take advantage of this fact by using your Bartercard membership to lure members away from their existing supplier towards your business. There are thousands of members keen to spend their trade dollars and if they are not loyal to their current suppliers as this survey suggests they are not, then you have a great opportunity to expand your business. 

We all know of some businesses that fit into Category 3.  Rather than try and retain their customers, their policies end up preventing customers from doing business with them.

Well, last April, I had an encounter with a Category 3 business. I had actually been using this plumbing service for several years. They would service my hot water system when needed. A few years ago, they installed a new hot water system for me so I have been a good customer for them for many years.

This company is not cheap but they call me 30 minutes before they arrive so I can meet them and let them into my home. I had been happy with them but simply had never bothered to check out other options. Well, one weekend, our hot water ceased to be hot so we got them in to look at the hot water system.

The serviceman could not see anything really wrong. He gave the system a thorough clean and easily got the hot water working again. A week later the hot water shut off again so we got this company in again. The plumber could see nothing wrong. He was easily able to get the hot water working again. Even though this service was free, the cost of our time is not free so it was absolutely essential that this company fixed the problem this time. In effect, we were giving them a second chance to fix the problem.

They didn’t. A week or two later, the hot water stopped working again. This time we went to an alternative supplier and to our pleasant surprise they found a faulty part and replaced it. We have had hot water ever since.

The next thing we did was go back to our original supplier. We have pursued them so far unsuccessfully for a refund. They have been slow to respond to phone calls and seem reluctant to give us a refund. To date, the matter remains unresolved.

So what did this original plumbing company do wrong?

(1) Their employee was unable on two occasions to diagnose a problem and fix it. If you hire staff to service customers, you had better make sure they have the skills to do so. This was the company’s biggest problem. I am sure they wish that the second plumber was employed by their company.

(2) They handled our request for a refund very poorly. By hesitating, they have immediately lost any chance of further business from me. I had spent thousands of dollars with this company. They were my go to guys for any hot water problems.

(3) Their reputation is now trashed. Not only would I never use this company again but I would also recommend others don’t use this company either.

Solving complaints is not about saving money. It is the opposite. It is about exceeding your customer’s expectations.

This is what should have happened:

  1. A refund should have been forthcoming within 24 hours.
  2. We should have received a phone call from the owner or a senior manager apologising for failing to fix the problem.
  3. In a last gasp effort to retain my business, I should have received a plumbing voucher to use their services again for free up to a given threshold.

Now, as it turned out, we were in need of a plumber a couple of months later as we experienced a leak under our sink. If we had been given a voucher, we probably would have used the original company again.

Most businesses are totally confused about handling complaints. It is not about who is right and who is wrong. It is about recognising the lifetime value of a customer and doing everything in your power to keep your customers. It is up to seven times easier to keep a customer than it is to acquire new customers.

Don’t let your ego get in the way of retaining your customers. Customer retention will increase your profits in the long run.

This story has two implications for Bartercard members.

(1) As I have always said, you must treat your Bartercard customers with the same level of service and appreciation as other customers. For my business, I actually treat many Bartercard customers better than I do my cash paying customers as many are larger and hence, more profitable. Bartercard members are also a great source of cash referral business. If my Bartercard customers are unhappy, then my referrals will stop.

(2) Do not take any customers for granted unless they are unprofitable to keep. Your Bartercard customers need to be retained just as much as your cash customers. This means following the four basic ingredients to retaining these customers.

  1. Delivering high quality products and services
  2. Deliver exceptional service. This includes fast and effective handling of complaints
  3. Thank and recognise your clients
  4. Market your products and services effectively, innovatively and regularly.

You can use several Bartercard members to help you get better results from c) and d) above.


Ian Renton
Managing Director
Australian Christmas Cards
Phone: 1800 226 202 or 02 9631 3366

Ian Renton is the owner of four businesses, Australian Credit Stationers, Australian Christmas Cards, Renton's Labels and Renton's Printing. His businesses provide account stickers, Christmas stickers, corporate Christmas cards and e-cards, corporate birthday cards, thank you cards, calendars, fridge magnets, custom labels and general printing to thousands of businesses in Australia and New Zealand.

Ian's ideas on debt collection whereby the next sale is just as important as the collection of the debt have been featured in The Australian Financial Review.

Ian is the author of Debt Collection Made Easy, an easy guide to collecting your money quickly and efficiently as well as a thorough look at the local court system and how it can be easily used to collect money yourself at minimum cost to you.

His next book about Customer Retention is due to be published in 2014.

Ian Renton is also the writer of his fortnightly ezine, SmallBizTips, now read by approximately 10,000 subscribers and his monthly printed newsletter, Customers For Life.

Here are the individual links in the order that they appear:


Topics: reputation management, handling complaints, complaints

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