Posted: 15th March 2021

It's obvious to point out that over the last year firms have had to adapt quickly to find new ways of working to continue serving and supporting their customers. Many organisations rightly pushed initial customer contact online; focusing front line resources on those who are most vulnerable. Few will argue that this trend has resulted in an improved customer experience. The Institute for Customer Service Index for 2020 revealed the lowest levels of customer satisfaction since 2015, with the way complaints are handled being highlighted as a shortfall.

A plausible assumption is that consumers have been more understanding of the challenges that businesses are facing due to Covid‐19. However, as lockdown restrictions ease, that patience is likely to run out. Customers expect firms to have implemented the necessary operational changes to overcome their resourcing challenges and return to the required standards of customer service. As the Customer Satisfaction Index shows, while customers are understanding that things will go wrong, it is how complaints are handled that matters.

So, what lessons can firms take from the last year to ensure they are delivering complaints excellence at a time when rebuilding trust really matters?

1. Firms need to show understanding because customers are complaining when it matters to them

While data from the FCA revealed that complaints in H1 2020 were at their lowest levels since 2016, with firms receiving just 2.96m complaints (including PPI) compared to 6.10m in the last half of 2019. Figures from the FOS indicated a slight increase in the overall number of non‐PPI complaints and the data found that, in the first six months of 2020, there were 76,624 non‐PPI complaints filed by customers, slightly more than the 75,887 lodged in the previous reporting period.

Part of this increase was due to a significant rise in the number of insurance complaints. Travel insurance complaints, in particular, surged by 500% from Q4 2019‐20 to Q2 2020‐21, as many families found themselves cancelling or cutting short their summer holidays.

Complaints about credit cards also rose. According to the FOS, new complaints increased by 26% (to 3,828) in Q2 2020/21 when compared to the same period in 2019/20. The spike came as more and more consumers turned to credit options to help them overcome the financial challenges brought on by Covid‐19. This trend is likely to continue in 2021.

At the core of many of these complaints will be a sense of injustice and urgency. Customers are still making complaints when it matters as further travel chaos expected to continue, and pressures deepen on household finances. Empathy, fairness and efficient service will be critical to rebuilding customer relationships and lead to greater retention for firms as data from our Complaints Outlook 2021 report found that 80% of customers stay with their provider when complaints are resolved within the first two days.

2. Customers want to engage with businesses that reflect their values

Now more than ever customers are looking to engage with businesses and brands that embody their values, feelings, behaviours. Delivering excellent complaints experience help firms show that achieving good customer outcomes is important to them. One way to do this is by looking after customers when they need it most.

Complaints teams will need to become more skilled at identifying signs of financial or emotional distress as a rising number of households have been experiencing vulnerability and financial difficulty for the first time as the full effect of the pandemic is felt.

We are already seeing an increasing number of businesses put more effort into understanding the different circumstances that could make a customer vulnerable. Some of the UK's largest financial services and insurance firms have been partnering with appropriate charities to give their customer-facing staff first‐hand insight into the issues that are being exacerbated due to Covid‐19.

However, despite the increasing recognition of vulnerability as an area of focus for firms, our research found that 8% of the firms still do not provide training in identifying and dealing with vulnerable customers wh an additional 9% only provide training with some of the time. The impact of this is that 100 of the 500 complaint handlers we surveyed either do not feel equipped or only feel somewhat equipped to identify vulnerable customers who are complaining.

3. Switching is on the rise - complaint handling can help firms retain customers

Ofgem recently published findings from a series of interviews held with energy customers in the UK that highlighted financial concerns relating to Covid‐19.

The interviews found that one in eight people (13%) were falling behind on paying household bills and that consumers would rather opt to reduce their energy (55%) and credit card use (56%) than defer payment for it. The data also showed that the number of consumers considering switching suppliers is on the rise, with 23% of consumers actively considering a change.

While financial incentives and better deals are a key driver for customers switching, customer experience plays a major role in customer retention. Consumer perceptions data from Ofgem in April revealed a significant trend of declining customer satisfaction with the outcome of complaints, from 71% in Q4 2018 to 58% in Q2 2020. This highlights a commercial opportunity for firms that are willing to change tack.

At a time of increasing financial and emotional pressure, a well‐managed complaints process will help providers to retain customers. Having well trained, experienced call handlers in place to support increasing numbers of contacts can and will reduce customer attrition rates.

The way that complaints are handled allows firms to demonstrate to customers that they have their best interest at heart at a time of difficultly. As we continue facing the challenges of Covid‐19, firms that put complaints excellence at the centre of their operations, providing fair and good outcomes, will be able to win customer trust and earn long‐term loyalty. Again, highlighted by our research, 17% more customers will recommend the firm to others if they feel valued when making a complaint.

For more actionable insights on how to improve complaints handling, download our Complaints Outlook 2021 report today.

Zein al bader

Zein Al-Bader

Director of Financial Services