No matter what business you’re in, dealing with unhappy customers can be tedious, time consuming, and a distraction from more important business objectives. However, there are benefits to being a so-called “canary in the coal mine.” Customer complaints actually provide important feedback for any company; likewise, the alternative (ignoring unhappy customers) is never a good long-term strategy. By creating a process for managing and responding to customer feedback, you will help to ensure the health of the business and manage potential risk.
Why should legal care about customer complaints?
As the company’s in-house lawyer, your involvement in managing the customer complaint process is critical for a number of reasons. By taking a proactive role with customer complaint management, the legal team will be better positioned to help:
- Reduce the company’s annual litigation expenses
- Limit (and possibly prevent) inquiries from regulatory agencies, especially for companies in highly-regulated industries
- Avoid reputational damage on social media
- Increase overall customer satisfaction
- Promote the company brand
- Channel product design feedback for product improvement purposes
- Build relationships with key stakeholders within the company
Designing a complaint management system
An effective consumer complaint management process should achieve two key objectives: (1) ensure customer satisfaction with the company’s complaint resolution so customers are more likely to champion your company, and (2) mitigate the company’s overall risk and exposure with efficient escalation paths to identify and resolve key issues.
The legal team is often tasked with designing and implementing this process, beginning with a complete review of the customer experience - from start to finish - from the customer’s perspective. It is particularly important to track the source of complaints (e.g., new or repeat clients), as well as the channels by which complaints are made, such as by submitting feedback on your website or in person with a store manager.
In order to meet the customer where they are in the complaint process, multiple functions within the company should be involved, including product design and engineering teams, supply chain and manufacturing, quality management, and customer-facing support teams. Essentially, any stakeholder who touches the customer journey should be engaged in any effort to improve it by responding to complaints.
A comprehensive complaint management program typically includes 4 core elements:
Special considerations for regulated industries
Certain types of complaints will require special attention from the legal department. Depending on the product offering, there may be reporting requirements imposed by applicable federal and state regulatory agencies with regard to consumer complaints received by the company. In this situation, the company may need to create additional processes to help with compliance.
Support from outside counsel
Responding to customer complaints can become a time consuming and unwieldy cross-departmental project for in-house counsel to manage. Having the support of effective outside counsel can not only help reduce the company’s risk exposure, but also, allows in-house counsel to focus on more important, revenue generating projects for the business.
Effective outside counsel will:
- Understand your business and available resources
- Respond to complaints with efficiency (without running up billable hours)
- Prepare scripted responses as a line of first-defense
- Serve as a gut-check for matters, with an understanding of your current spend, litigation, industry trends, and PR risks and trends
- Coordinate with Risk Management and Insurance Brokers
If you would like help with building and/or managing a customer complaint management system, Scale offers alternative fee structures and tech solutions to seamlessly integrate into your workflows. Please contact Heather Cantua at heather@scalefirm.com or Kim Griffin at kgriffin@scalefirm.com.
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Heather Cantua is a Partner with Scale’s Fintech & Financial Services practice group. She regularly advises companies of all sizes on a range of compliance issues, including lending, real estate, and consumer protection matters, as well as on risk management issues.
Kim Griffin serves as Counsel on Scale’s Litigation team. She brings over 20 years of law firm and in-house experience to her startup and mid-market clients. Kim routinely helps with a wide range of legal issues, including commercial and strategic transactions, litigation, privacy, and compliance.
