Paying for complaints

I’ve written about this several times over the last 20-something years, but it looks like it’s time to do it again. I’ve explained this to several people recently, yet so many others still don’t understand the phenomenon.

Tom Raffio took over as CEO of Northeast Delta Dental back in the ‘90s. They had so many problems, they didn’t know what to fix first. Tom is very astute. Unlike others, he didn’t fix the easy ones first or the cheapest ones. He wanted to prioritize fixing the problems that bothered his customers the most, but how could he find out what they were?

Like many companies, they had a complaint system, but it wasn’t providing very useful information. He decided to give it a shot of adrenaline. They contacted their customers offering a $25 reward for complaints.

Imagine paying for complaints! Twenty-five dollars was worth a lot more 30 years ago than it is today. There would be no hassle. Customer service might ask questions to ensure they fully understood the issues, and the check was on the way.

Those checks flew out the door at first, but they quickly understood which issues were most troublesome to customers, the ones that got the most complaints, and those were the ones that got fixed first. Customer satisfaction improved dramatically, and they started taking market share. They kept improving and getting more customers as a result.

They sell dental insurance to companies for their employees. This strategy was so effective, they reached nearly 100% market share in the markets where they’re licensed to operate. In order to keep growing, they had to start selling to the general public, but they needed name recognition. Many of us had never heard of them. That’s why they bought the naming rights to the ballpark in Manchester among other things. In fact, they developed an entire campaign to go after individual markets.

They even developed a new product line, “Delta Vision,” providing insurance for some eye maladies. Like our teeth, many health insurance companies don’t cover many eye expenses (e.g., prescription eyeglasses, etc.), and those can be quite expensive.

That’s how you run a company when you want to make money. Admittedly, Northeast Delta Dental is a nonprofit, but they still have to make money to stay in business.

What does your company do? I know of one health club that doesn’t like complaints. When members complain, the management threatens to cancel their memberships. As a result, they don’t get a lot of complaints, and they think they’re doing a fine job. On one level, this sounds like a brilliant strategy: Get rid of the trouble-makers. Problem solved.

But the members complain to each other and anyone else who will listen. Let’s say there’s no hot water some mornings. Few things will get your attention like a cold shower, and of course, we want to let everyone know about our miseries. I understand social media have a lot of unfavorable information about this outfit. They buy a lot of advertising, but they can’t buy enough to overcome all this negative word of mouth. It’s far more believable.

Yes, I know, none of us like to hear complaints. What so many of us fail to understand is people with legitimate complaints aren’t trouble-makers; they’re trying to tell us how to make more money!

It’s a very competitive world. Whoever becomes the best at satisfying their customers tends to get more and more of them. Discouraging complaints doesn’t make our lives better; it creates an illusion that our customers and competitors don’t share, and they’re more than willing to use it to our disadvantage. Why give them such an opportunity?

So, if your business isn’t growing by leaps and bounds, why not make an effort to find out why? Start by finding out what bothers existing customers. It’s really hard to keep a secret nowadays. What bothers existing customers might be stopping new customers from buying.

Northeast Delta Dental customers willingly tell their friends, even brag about, how good this company is. The other company’s customers also willingly tell their friends how bad this club is. Which strategy do you think would be the most profitable?

Ronald J. Bourque is a consultant and speaker from Salem. He has had engagements throughout the U.S. and in 12 foreign countries in Europe and the Far East. He can be reached at RonBourque@myfairpoint.net.