Regardless of the business you have customers and some of them are unhappy. Coping with these customers is an inevitable part of everyday business life and how you deal with them is a predictor of success. Sam Walton said, “There is only one boss – the customer. And he can fire everyone in the company – from the chairman on down – simply by spending his money somewhere else.”

Dealing with an unhappy customer doesn’t always mean the customer is right; however, dealing with customer complaints presents a “moment of truth” in which frontline employees have one chance to provide a lasting impression that your organization really cares about treating them fairly and with respect. The outcome determines your customer’s perception that’s either a positive or negative experience which will ultimately impact your organization’s future business climate.

A study of 3000 business units in 450 companies showed that the top 20% of the business units with high customer satisfaction averaged a 32% return on investment (ROI). The bottom 40% averaged just 14% ROI showing the impact of ensuring customers are satisfied.

There have been several articles/studies about dealing with unhappy customers who, thankfully, voice a complaint. As few as 4% of dissatisfied customers let an organization know of their problem. The other 96% vote with their feet and take their purchasing power with them!

Below are a few basic principles to handle customers voicing complaints.

1.Treat internal employees as external customers. An employee can be defined as an internal customer who can be anyone in the organization. In Tom Peters’ book, Thriving on Chaos, he stressed that it is impossible to get people’s best efforts for issues your organization believes important to their customers if the workers aren’t treated with respect, honesty, and trust.

When employees are satisfied with their treatment, given the right tools to do the job, and supported by management; customers are more likely to have higher perceptions; therefore, they are more likely to continue to do business with your organization. A fast-food chain found that 20% of their stores with the lowest employee turnover rate doubled sales and had 55% higher profits than the 20% of stores with the highest employee turnover rate.

Organizations would best keep in mind that if the external customer is king, then the internal customer is a prince and should be treated with the same courtesy and respect.

2. Select and train good frontline employees. An organization’s “customer-contact” employees are in direct contact with customers. They provide a “moment of truth” about their organization every time there is contact with a customer. They represent the face of the organization – good or bad. The selection of these key people are considered vital by customer-centered organizations.

Frontline employees should be selected from key behavioral characteristics, trained, and retrained. Organizations should remember the turnover statistics sited above and would be well advised to consider that this important training effort should not be curtailed during tough times!

3. Defuse the situation. A few years ago, when training people to visit customer sites, I stressed the concept, “act as if the customer is always right, then back up from there.” What this meant was to defuse the situation and let cooler heads prevail to resolve the situation.

Anger is like a volcanic eruption. We shouldn’t try to interrupt the volcano while it's spewing lava! Once the eruption is over, acknowledge the customer's anger by saying something like, "I know you're angry. I would be, too." If that doesn't calm the customer’s anger, remove the unhappy customer, if possible, from the crowd so he/she can recede without losing face in front of others. If the issue still can’t be resolved, seek assistance but make every effort to be viewed as a customer advocate.

4. Measure your words. Avoid saying anything that sounds like a command or contradiction. For instance, don't say "You must." Say, "I need you to..." (Fear of enraging nicotine addicts is why "No Smoking" signs were replaced by signs that said, "Thank you for not smoking.") Avoid words like "but" and "however" because the unhappy customer will only hear the words that follow. If you have to say "no," then first "put a look of regret on your face or make an 'effort' sound." Say you're sorry you can't do X, then explain why, then suggest an alternate solution.

5. Strive for a partnership. When faced with an unhappy customer, talk about solving the problem together. Make your challenge the customer’s challenge. What are we going to do? Try to avoid handing him/her off to someone else. As an example, if you are on the phone with an unhappy customer, ask for their phone number in case they get disconnected. Then stay on the line until the person is connected to someone who can handle the situation.

In the mid-1980’s a salesclerk at an upscale clothing store experienced a customer wanting to return an expensive evening dress after wearing it to an event and getting a stain on it. When upset about being turned down, the store manager, in the “moment of truth”, stepped in to refund her money. This person with a positive experience went on to spend $100,000 at the store over the next few years and made sure to recommend this store to all her friends.

Dr. Owen Harari, author of Leadership Secrets of Colin Powell, said, “When a customer complains, consider getting down on your knees to offer profuse gratitude because that person has just provided you with priceless advice – free of charge.” Customers are not just buying products and services, but expectations as well. Maybe that’s why many customers become disgruntled. Henry Ford said, “If you satisfy the customer, you win the game.” Isn’t that what we’re all wanting? Create a win-win situation where everyone feels they came out on top.