"Most people do not complain. They switch brands and tell their friends bad things about the product," says John Goodman, president of Technical Assistance Research Programs Inc., a local consulting firm that conducted research into the behavior of consumers who encounter defective products and don't bother to complain.
To retain brand loyalty and a positive image with the public, some companies are making it easier for consumers to communicate with them, through toll-free telephone numbers printed on product labels or with ambitious consumer education programs.
The research has burst the complacent bubble of many companies that had assumed that no news was good news. It shows: For every written complaint a company received about a grocery item, according to A.C. Nielson Co. data and supported by TARP's findings, there were another 49 consumers who encountered the same problem but didn't write to the company. Of those 50 consumers, about one-third took the product back to the supermarket, where the manager often offered to replace it with a competing brand. Of those consumers who did not complain, only 37 percent were willing to try the product again. When a customer complained and was satisfied with the response, twice as many, or 70 percent, would repurchase the product. (If consumer complaints were satisfied "quickly, with a smile," 95 percent would repurchase the product, according to Goodman.) Those customers who were satisfied with the way their complaints were handled told four or five people about their positive experience. Those who were dissatisfied told nine or 10 people.
Why are consumers so unwilling to share their beefs with the manufacturer? Goodman found three barriers to the consumer complaint pipelines:
(1) It's too much trouble.
(2) It's difficult to find someone to complain to.
(3) And, why bother, "because nothing's gonna happen anyway."
Goodman adds, "There's this tremendous pool of cynicism out there," and that, he says, is where the telephone connection is important.
The goal for company officials is to humanize their firm, to "deal with people on a one-to-one basis," Goodman explains. Roger Nunley, manager of industry and consumer affairs at Coca-Cola USA in Atlanta, which recently installed a consumer hotline (800 -- GET -- COKE), says consumers appreciate the fact "that there's a warm body in this huge corporation."
"They like the personal touch," adds Pamela Richard, manager of consumer response at Chesebrough-Pond's Inc., of Greenwich, Conn., which installed a toll-free number for its Adolph's Meat Tenderizer three years ago and is phasing in the number on the labels of its Ragu spaghetti sauce products.
Direct communication means a company can determine the exact problem with the product faster than through written correspondence. Richard says that often "the nature of the complaint may not be entirely clear" when consumers write letters.
By telephone, the company can get the best information immediately, she says, including the lot number -- a piece of information the quality assurance department needs to determine if the problem extends to the entire batch manufactured at the same time. When calling, consumers usually have the package in hand. Consumers writing by mail often toss out the offending product -- especially if it is spoiled -- before the company can get the lot number or if necessary, test the product.
When companies install 800 numbers, the quantity of complaints they receive doubles or even triples, says Goodman, while the number of questions may rise three to even 10 times. Nunley says about 10 percent of the 200 calls Coca-Cola has been receiving on its hotline each day since its installation last October are complaints. On the other hand, only two percent of the letters the company receives are complaints.
Goodman contends that both complaints and consumer inquiries can have tremendous marketing implications for a firm. Chesebrough -- Pond's Richard says after the company installed its toll-free number for Adolph's Meat Tenderizer, it quickly realized there was a strong consumer demand for a tenderizer without salt. The company has since introduced such a product, a development Richard terms "pretty significant."
Sara Jo Victors, manager of consumer services for Kraft Inc., Glenview, Ill., says a toll-free number on new products in test markets helps to give the firm quick feedback about what consumers think of it. Recipes, which she says are "extremely important" to the firm, have been modified as a result of consumer questions.
Goodman says that with 800 numbers companies can also learn quickly whether people understand product directions. About half of all problems consumers encounter with products are due to misuse. Goodman notes that Clorox regularly receives letters asking it to improve the taste of its bleach.
(According to Goodman, they misuse Clorox, which contains sodium hypochloride, to gargle. "It will whiten your teeth, but it will also whiten your esophagus," he says. It "burns tissue," according to the Arlington Poison Control Center.)
But many companies have mistakenly assumed that those who complain are all "wild-eyed nuts." They aren't, says Goodman, although, according to TARP senior research associate Arlene Malech, they may as a group be a little older, with a lower income than is representative of the American population or a fixed income. They are people "who have a measured impact by the losses," Malech explains.
Although companies don't like to talk about it, an 800 number can reduce liability expenses. Says Goodman: "We have found that if you can talk to someone on the phone, you can talk your way out of 80 percent of liability claims." He noted one major food firm was able to reduce its liability expenses by $2 million with an 800 number.
About 20 percent of all companies are now aggressively soliciting consumer contacts, Goodman estimates. All companies "are taking a hard look at the success of 800 numbers," says Natalie Bailey, manager of consumer relations for Hershey Food Corp., in Hershey, Pa. Hershey does not have a toll-free number, although on its cartons of chocolate milk it invites consumers to call collect. But Bailey says all letters received by the firm get personalized attention and are sent out within three to five days from receipt. Company audits show 90 percent of the customers are satisfied with the response, according to Bailey.
After Coca-Cola commissioned TARP's "word-of-mouth" study, showing the extent to which frustrated consumers will tell others about their negative experiences with a product, the firm launched a consumer education program. It produced and sent out 120,000 copies of a booklet entitled, "How to Talk to a Company and Get Action." Nunley says the firm sampled 1,000 of those who requested the booklet, and found that 98 percent said they would now contact a manufacturer with a complaint, whereas only 28 percent would have before reading the booklet. Nunley says Coca-Cola was "just astounded" by the success of the program.
Most companies make a refund to a customer with a complaint, either by physically replacing the product, or by sending coupons or cash. Bailey of Hershey says the firm used to send out replacement products, but has switched to cash refunds because of the perishable nature of its products. Often companies send coupons for a different product in its line, especially if a consumer disliked the product that sparked the complaint. If companies, however, refund several times in excess of the price of the original product, they may create the impression, says Goodman, that they're "buying you off."
Some firms have gone even a step further in complaint handling, combining it with telemarketing. Companies have found that a customer once satisfied is a good prospect for buying other products from the firm. "Basically, I solve your problem and show you that my company is a good comapny and stands behind its products -- then you are a pigeon ready to be sold all kinds of other stuff," Goodman says. The TARP study for Coca-Cola showed that nearly 10 percent of customers whose complaints were satisfied now buy more Coke products.
Some firms also interview phone customers about their products, which "comes across as a positive," says Goodman, and is much less expensive than "real" market research.
Richard says that before introducing its Ragu Chunky Garden Style sauce Chesebrough-Pond's sampled customers on its hotline about the kinds of vegetables they might want to see in spaghetti sauce. But she says the data is "really supplemental" to market research data, since it is not a random sample.
Is it worth all the trouble and expense to reach out to consumers? Says Richard: "To keep a Ragu customer, it has to be worth it . . . That person is going to buy Ragu again and again over a long period of time." And brand loyalty, she notes, often is passed on from generation to generation.