Posted on 15 Sep 09
We’re continuing our conversation in this issue with Lynn M. Thomas, founder of Waltham, Massachusetts-based 21st Century Management Consulting. Lynn has worked with more than 400 insurance agencies and carriers throughout her 20 years of experience. Today we have turned our focus on the importance of valuing client complaints and converting complaints into opportunities to increase loyalty and satisfaction levels.
Annie George (AG): When discussing topics for the newsletter, you suggested covering complaints and the need to view them as goldmines. That’s an interesting take. What do you mean by this?
Lynn Thomas (LT): “First, we need to look at the fact that the insurance industry spends 13 times more to get a client than to retain that client. So, as we discussed previously, it is fiscally prudent to allocate the time and resources to keep your clients [the profitable ones] and one of the best strategies is to pay attention to those who complain and tap into those who are not complaining but may be unhappy.”
Lynn explains that only four percent of clients complain, the remaining 96% just walk away, therefore it’s critical to really take notice of the small percentage that are actually conveying how they feel. “Most clients simply walk away quietly,” says Lynn, “which is easy to do when it comes to insurance. Unlike other industries, it’s easy for a client to leave an agency. He/she doesn’t have to speak to anyone. All he/she needs to do is go to another agency, which will then send a Broker of Record change to the existing agent. There are no exit barriers, so if a client is not happy, an agent may never know it until he/she is gone.
“I love clients who complain,” says Lynn. “We should value clients who are complaining – it’s good news when they speak up. The not-so-good news is unearthing complaints. This is why it’s critical for insurance agents to proactively check in and ask how things are going. By being proactive, you preempt a complaint or prevent a significant problem from occurring.” Lynn explains that if you haven’t spoken to a client for 1-1 ½ years, you should check in; no one is happy for that long. Call them to make sure that everything is going well.
“When someone genuinely complains, look upon it as though he/she is giving you a gift,” explains Lynn. “This gift is free market research as you are learning about what’s not working in your agency. And keep in mind that there are 25 people lining up behind the client who have a similar issue who are not taking the time to complain. So the complaining client is the spokesperson for the other 25 and has valuable information regarding what is happening in your agency.
“A complaint is usually a symptom. If you categorize complaints coming into the agency you will begin to see a pattern. Every root cause generates approximately 20 symptoms, so you first need to gather them, categorize them, and then analyze them.”
AG: How do you handle a client who is complaining?
LT: “You mustn’t take it personally, even if the client is complaining about you. Remember you’re on the same side as the client; this isn’t a contest. Typically what happens is that people look at a complaint as a personal attack and they become defensive, ultimately exacerbating the situation. Just be curious… ask your client why he or she is upset and what you can do to resolve the situation.
“Take the emotion out of the equation. From the onset it’s important to let the client know you want to help him/her… and what you say and how you say it, conveys your intention. Done well, the client will join you in wanting to solve the issue. We have to remember that for a client to complain he/she has to be very upset; most of us are very passive. Things have to be building up before we speak up.”
Lynn proposes that the agency staff view their jobs as more than just selling or servicing, but integrate complaint resolution/recovery. “Most agencies do not train their employees on complaint recovery – in how to wow and delight a client. It seems ironic, but it is much easier to wow a client if something has gone wrong…you have the opportunity to remedy the situation in a pleasant and professional way, and that client will remember how he/she was treated for years to come.”
Lynn underscores the importance of agencies training their employees on complaint recovery. “The adverse consequences of not handling a complaint well, not getting back to the client, are that he or she will tell on average 11 people about the negative experience. In the end it will be difficult for the agency to overcome that negativity. The financial cost to the agency is huge.”
Following are some helpful steps Lynn provides when dealing with client complaints:
1. Be proactive – contact your clients regularly. It costs your agency thirteen times more to replace a client than it would to retain one.
2. Be empathetic and validate the client’s feelings. The more compassion we have, the more kindness and understanding we show, the better. An antagonistic approach will backfire. Don’t talk down to clients; don’t cut them off, and treat them with respect. You can give people what they want, but it is your tone and words that reveal your intentions. If a client doesn’t feel good about the resolution, then you don’t have a positive remedy.
3. Apologize…a simple “I’m sorry” goes a long way to remedy the situation. It doesn’t mean that you are admitting any wrongdoing; it’s showing that you relate to the person. It says, from one human being to another, I am sorry that happened to you. It shows that you can walk in his/her shoes. The client is vulnerable to leave but just as easily, he/she can become a promoter, a strong referrer, so this is a key turning point. Become a master who is supremely skilled in handling complaints.
4. Get to the bottom of the problem by asking probing questions. Do not accept the initial response. You may need to wait until the client has completed telling you what happened, but circle back and ask questions to more precisely unearth what occurred.
5. Listen carefully. Sometimes a problem arises that isn’t in your control. It may involve a carrier or an adjuster, but people want to be listened to, they need to vent to someone. Hear them out. Write down what they are saying and repeat it to them. And remember, perception is reality … even if what the client is saying is not accurate. Accept what he/she is saying and make sure that the matter is clearer next time.
6. Thank the client; offer something extra if you can. Explain how you can remedy the situation, what is possible and what isn’t, and be sure to be positive. Thank them for calling you and reinforce that they should call you with any problem or issue that may arise. Also, if you can, give them something extra or offer them something beyond what they’re asking for, it can be the cherry on top of the cake, and represent a big win for you and your agency!
AG: What can management do to encourage viewing complaints as a good thing, as a way of uncovering problems and turning these clients into advocates?
LT: “First, train employees on complaint recovery, analyze the various different ways that clients complain, and what can they do to wow and delight them. Empower the staff to resolve a complaint right on the spot. If you have to transfer the telephone call or you can’t take action within 24 hours, it is already a negative event. If you can solve the problem on the spot, 60% of those complaining clients will actually become a referral source.
“Trust your staff to make a judgment call, to do something extra, go the extra mile. Your staff needs to know that management will always support them up to whatever parameters you have set. If the people on the front line don’t have the authority to resolve issues, diffuse a situation, then the client will think the person has no power, and will feel calling that person is fruitless. The front-line staff needs to resolve 80-90% of the calls to be highly effective. Be sure to always state when you are going to call back and ask for the preferred number to call. We don’t like to wait. Letting a client know when you’ll be calling puts him/her at ease. You are in essence saying, ‘I heard you and I will take action and will stay in contact with you.’”
Lynn also recommends challenging your staff to see how many complaints can be turned around, and cites companies such as Federal Express and LL Bean as masters of handling complaints. “They are really good at disarming people from becoming upset. They give you want you want. They are seasoned. They are elegant masters.”
AG: Why are complaints not addressed properly…isn’t the client always right?
LT: “The client is always right, until he or she has an issue. We generally do not handle complaining clients well. Think about the last time you complained, how were you treated? We are rarely treated well and are trained not to complain.”
Lynn points to Stew Leonard’s, a grocery store in the Northeast and its mantra. “They have a concrete slab at the entrance to their stores. It says: Rule #1: ‘The customer is always right. Rule #2: Refer to rule #1.’ It’s that simple.”
Lynn can’t emphasize enough how important it is to unearth complaints and face them head-on in a professional and empathetic way. “It’s hard to hear if you made a mistake, but it’s even harder to hear that a client is leaving. And if someone is not treated well, he/she will tell others. The effect is damaging to the agency’s current and future growth.
“We should welcome complaints. Tom Peters says we should beg for complaints. Think about it, if you look at most mail order catalogues, if you want to buy something, there is a toll free number, but when you have an issue to resolve or you have a complaint, you have a regular telephone number which will cost you to call. It’s image… it’s saying you are important to me as long as you want to buy my product, but if you have anything negative to say, you pay for the telephone call. That sends a deafening message on how those companies value their clients’ complaints.”
For FREE TIPS on how to handle complaints in your insurance agency, please feel free to call Lynn at 781.899.4210 or e-mail at: firstname.lastname@example.org.
About Lynn M. Thomas
A tax attorney by training, prior to founding her firm, Lynn worked for Arthur Andersen and then as a Private Banker at Bank of Boston. She has been a keynote speaker for many conference and top insurance companies’ agents’ conventions: The St. Paul’s, Selective Insurance, Cincinnati Financial, Utica National, Jewelers Mutual, etc. as well as many top agencies. To learn more about Lynn’s services, please visit: www.21stcenturymgmt.com.