Unlocking the financial potential in customer complaints
Fintech institutions and businesses often dread customer complaints, seeing them as a sign of failure. However, what if these grievances could be a hidden treasure?
According to Dr. Janelle Barlow, President of All Out Performance and author of A Complaint is a Gift, customer complaints could be the competitive advantage your business needs — especially in today’s rapidly evolving fintech landscape. This was the focus of her talk, Turning Critics into Advocates, held on September 23, 2024, at Discovery Primea, Makati, and hosted by Management Strategies.
The event, attended by senior leaders from various sectors, including fintech institutions, real estate, telecommunications, and hospitality, explored the powerful notion that customer complaints are more than just problems to solve. They can be a rich source of insights and revenue if addressed with the right approach.
Fintech institutions need not fear silence
In the digital age, especially among fintech institutions, silence can be more damaging than complaints. Many customers avoid voicing their concerns because they fear the repercussions or believe nothing will change anyway. Dr. Barlow cited an example from the healthcare industry: many patients hesitate to complain to their doctors, fearing worse treatment as a result.
This same logic applies in the fintech industry, where customer trust is paramount. Customers of fintech institutions who experience issues with payment processing, online transactions, or loan approvals might choose to remain silent — and simply walk away from a competitor.
Studies show that 50% of dissatisfied customers never return after a bad experience, and this is particularly true among fintech institutions, where reliability and speed are critical.
However, Dr. Barlow revealed a surprising twist: 60-70% of customers who have their complaints resolved satisfactorily end up purchasing five times more than they initially would have. For fintech institutions, this means handling complaints well can lead to a higher lifetime value for customers, whether through additional transactions, premium services, or higher engagement.
“If you solve their concerns instead of over-apologizing, they’ll actually come back to repurchase five times more,” Dr. Barlow said. “This is the power of complaint handling, not just in customer satisfaction, but in the language of revenue and results.”
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Data-driven solutions for fintech
In the financial technology sector, data is king. Dr. Barlow emphasized the role of big data in turning complaints into actionable insights. Access to real-time data about customer behaviors, transaction history, and common pain points can speed up the resolution process significantly.
Fintech companies, already at the forefront of data analytics, have an edge in using this information to prevent complaints before they arise. By monitoring transaction issues, user behaviors, and even social media mentions, companies can address problems before customers feel the need to complain.
Moreover, artificial intelligence (AI) and machine learning (ML) algorithms can categorize and analyze complaints to uncover patterns, allowing fintech firms to make system-wide improvements.
“Access to every data point can address the root cause of customer complaints and help businesses understand them beyond face value,” Dr. Barlow noted.
This approach can also enhance fairness, one of the critical elements Dr. Barlow mentioned. When customers feel that their concerns are treated fairly, even if the problem isn’t fully resolved, they are more likely to trust the company again. In fintech, fairness can mean transparent fee structures, timely responses to transaction issues, and clear communication about loan approvals or denials.
The financial benefits of listening
Handling complaints properly can lead to significant financial benefits, particularly in fintech, where customer retention is far more cost-effective than acquiring new users. Dr. Barlow highlighted a striking statistic: retaining just 5% more customers can increase profits by up to 95%.
In the highly competitive fintech space, companies spend millions on customer acquisition through marketing, sign-up incentives, and onboarding bonuses.
Yet, focusing on customer retention, especially through effective complaint handling, offers a far greater return on investment. When fintech companies resolve complaints quickly and fairly, they can turn even the most dissatisfied customers into loyal advocates, reducing churn and increasing profitability.
“Most companies spend half of their revenue attracting new customers,” Dr. Barlow revealed. “But retaining even just 5% of your customers can lead to up to 95% profit increase.”
Turning critics into advocates
Dr. Barlow shared three key strategies for turning fintech critics into advocates. First, companies must widen their customers’ tolerance zone by actively listening and showing empathy. When users of digital banking apps or e-wallets feel understood, they are far more likely to remain loyal even after a glitch or delay.
Second, speed is essential. Fintech thrives on quick, seamless transactions, and customers expect rapid responses when things go wrong. Dr. Barlow emphasized the need for speed in complaint handling, which can be achieved through real-time data access and automated solutions powered by AI.
Finally, fairness is key to winning back dissatisfied customers. In fintech, fairness translates to transparent policies, prompt dispute resolutions, and ensuring that users feel valued, regardless of the issue.
In conclusion, behind every complaint lies a potential goldmine, especially in fintech. Companies that embrace complaints as a gift will find not just satisfied customers, but also a new avenue for revenue growth.
The question remains: are you ready to listen and unlock the financial potential in your customers’ concerns?
This Press Release has also been published on VRITIMES