MARKEFING INTELLEGENCE APPMCAFSONS @F UbfigOLECWED €QN$UMER COMPLAENT ENFORM‘ATEON 50% LARGE CORPORATEONS: A. SWDY OF THE MAJOR HOUSEHOLD' APPLIANCE ENDUSTRY: “mm: ‘0): “so Dogma of D. B. A. MICHEGAN STATE UNIVERSITY William Hammad Brannen I 1966 3115515 LIBRARY Miclngan State This is to certify that the thesis entitled "Marketing Intelligence Applications of Unsol1cited Consumer om 1a1 Information for Large_ Corporations, A Stud y of the ajor Household Appliance Industry'l presented by } William Howard Brannen has been accepted towards fulfillment of the requirements for D.B.A. degree mm ”CW 0 Major professor Datefi7zq_zg_/1M_ 0-169 ABSTRACT MARKETING INTELLIGENCE APPLICATIONS OF UNSOLICITED CONSUMER COMPLAINT INFORMATION FOR LARGE CORPORATIONS: A STUDY OF THE MAJOR HOUSEHOLD APPLIANCE INDUSTRY by William Howard Brannen Management can use information feedback from the market to adjust a firm's behavior to its constantly changing market environment. Marketing intelligence is derived from unsolicited as well as solicited information flows from consumer to firm. The purpose of this thesis was to investigate marketing intelligence applications of unsolicited consumer complaint information for large cor— porations. It was hypothesized that unsolicited consumer complaints (a) potentially and (b) actually provide a source of marketing intelligence for marketing management. The basic research design was the descriptive case study method. Studies of the consumer complaint market~ ing intelligence practices of eight selected major house— hold appliance manufacturers provided evidence for testing the above two hypotheses. These studies included (a) structured and unstructured personal interviews with company executives and (b) observation of company records and procedures for processing complaint information. A theoretical background for the study was provided by a functional theory of marketing information and by a review of the available consumer complaint literature. William Howard Brannen Evidence from case study findings was used to ld appliances may be received at several different £3111ces within Company A. Among these places are any (DIFIEice of the major appliance division at headquarters, arlfir office of the Company A executive offices, the former CCDrnpany A offices located elsewhere, and the offices of reEgional vice—presidents. Regardless of the office to WTIZich the consumer makes his complaint, all unsolicited C Company A by the consumer until they are considered clxased by Company A. Retailers and distributors are not ccorisidered to be part of Company A and are therefore not iric:luded in Figure 5. Most unsolicited consumer complaints are received b37 Inail. Therefore the machinery for handling complaints is lDuilt around this medium. For receipt of complaints at Iboints other than headquarters or a district, the COlnplaints are sent immediately, without acknowledgment Of‘ zany kind, to the executive level DFSO sorting office. Although the DFSO serves only the major appliance division fc31‘ most functions, the executive level DFSO acts as a Clieéiring house for all consumer correspondence for the entlire company. By its own initiative in the area, the executive level DFSO sorts and funnels all consumer mail to ‘the proper person. If the complaint is concerned with majcor appliances, the original correspondence is sent 79 Fig. 5.——The structure and flow of unsolicited consumer complaints within Company A l. RECEIPT OF COMPLAINT Any office of Former Company Anywhere major appliance A offices else in division Company A headquarters / Any office of Offices of Any Company A regional Company A executive VP‘s District office I IMMEDIATELY SENT TO 2. SORTING i. .1 1 Executive level DFSO Sorting Office original original 3. ACKNOWLEDGMENT AND ACTION J. / Beefy / Consumer Relations Unit of Product Service DFSO of major appliance Manager of the division at headquarters company district l__4Back to consumerk;__J 4. CLOSING Consumer Relations Unit Product Service Manager (above) closes to own 4_.of district reports on files. closing forms. 5. MARKETING INFORMATION USES 80 directly to the proper Company A district if a district exists for the geographic area in question and if the district can be of help in handling the complaint. In addition, a copy is sent to the consumer relations unit at headquarters. If the major appliance complaint is from a consumer whose geographic area is served by a dis— tributor (not an official part of Company A), the con— sumer letter is sent only to the consumer relations unit at headquarters. No correspondence goes to the distri- butor because Company A feels that the consumer has written Company A and is therefore entitled to a reply from Company A rather than from a distributor of its products. Correspondence is forwarded immediately without acknowledgment by the original recipient for two reasons. First, speed is very important in dealing with a dissat— isfied consumer. Acknowledgment would merely delay the proper handling of the complaint. Secondly, many times the person who received the complaint is not familiar with the specific problem area involved. Therefore, he can do little or nothing to remedy the situation and he may actually make things worse. For example, the pres— ident of Company A probably knows very little about the workings of major appliances. Complaints received by the product departments at the major appliance division are also forwarded to the 81 consumer relations unit. Also, the centralized mail room at headquarters considers the consumer relations unit to be the ”all other” category for all consumer correspon— dence not sent to a specific individual. The responsibility for actually handling major appliance complaints rests with the consumer relations unit of the product service section. To this end, an elaborate system has been set up. ' Complaints are classified into three basic types, namely, executive, regular, and legal. An executive com- plaint is one which is received through some Company A executive to whom the complaint was specifically ad— dressed. A regular consumer complaint is one which does not qualify as an executive complaint and which does not involve legal aspects which would require the advice of an attorney. A legal consumer complaint is one which in the opinion of the consumer relations manager has legal overtones which could possibly involve the company in some kind of legal action. In addition, complaints re- ceived from legal bodies, such as the offices of the attorney generals of the several states, are also treated as legal complaints. The consumer relations manager, who has some law school background, personally handles all legal complaints, but only to the extent that he acts as a clearing house between the consumer and the company attorneys. All mail at Company A is time—stamped, and 82 the time allowed for acknowledging and closing a complaint varies among the three categories of complaints. Complaints received by media other than mail are handled in similar fashion. All complaints are acknowl- edged by the same communication medium which the con— sumer used. After prompt acknowledgment, the complaint must be investigated to determine what action, if any, is war— ranted. To perform this investigation, the consumer re- lations unit works with the product department, primarily through the product service manager of the product in— volved. When it is necessary to investigate in the field, ) the district product service manager is called upon. Marketing specialists, attorneys, and others are called upon according to the nature of the problem. The com— plaint is then closed by the consumer relations unit at headquarters. At the district level, the determination of what is and is not an unsolicited consumer complaint to a manu- facturer is a difficult task because the Company A dis— trict acts as both a wholesaler and as a service and re— pair organization. As can be noted in Figure 5, com- plaints may be received by the district from within the company. Complaints received in such a manner are def— initely unsolicited consumer complaints and are treated as such. ’83 The possibility exists for the district to receive complaints from outside sources. Here is where the pro— blem arises. Communications from outside sources are re— ceived. Which, if any, of these communications are unso— licited consumer complaints to Company A as a manufacturer of major appliances? Definitionally, none would be con— sidered as such if the definition of complaint were ap— plied and the district was considered to be a wholesale and service organization rather than part of the manufac— turer. Regardless of the problems of definition, a very small number of actual complaints are received by the district, according to both headquarters and district personnel. Most of the expressions of consumer dissatis— faction received by the district are about its service operations. Where district offices exist they are listed in telephone directories. Even so, most consumers who express a hard—core complaint write directly to head— quarters. Consumer contacts received by the district include requests for service, requests for information, and other inquiries. If an unsolicited consumer complaint to the manufac— turer is received at the district, no information con- cerning the complaint is forwarded to headquarters unless (a) the consumer was not satisfied and therefore con— tacted headquarters or (b) a service ticket involved in the case was audited by headquarters. Only a negligible 84 number of the small number of complaints received by the district ever get to headquarters. None of the inter— viewed executives felt that the information loss involved was very important. Complaints which the district received from within the company are handled by the district in a manner spec— ified by the mechanically new system for handling con— sumer complaints. This system, which began on March 30, 1964, measures the performance of the district. The sys— tem is built around a closing report which the district must file with headquarters for all consumer complaint correspondence. Analysis made of these reports is dis— cussed in the next section. A closing report is a four— part, pre-numbered form which is sent by headquarters to the district for each complaint. The first part is filled out by the district and returned to headquarters at the close of the complaint. Part two is a carbon of part one for the records of the district. Part three is filed numerically by headquarters until replaced by part one sent from the district. Part four is filed alphabet- ically by headquarters. These closing reports serve as a vehicle for noting classifications (see next section) of complaints for future analysis in addition to pro— viding for automatic control and follow—up of all com— plaints. The three main reference sources to which the 85 district product service manager may turn for help in handling consumer complaints are the Policy and Procedures_ Guide, the Product Service Procedural Guide, and memos and letters from headquarters. One notable exception to complaint handling as de— scribed in the above paragraphs is that all correspon— dence received from Consumers‘ Union is answered by a technical person who has a Ph. D. because consumer re- lations has found Consumers' Union reluctant to believe anyone whose job appears to be in the marketing department. Analyses and Reports Made of Unsolicited Consumer Complaint Data All unsolicited consumer complaints which come to the attention of the consumer relations unit at head— quarters are classified at the time of receipt on the bases of type of complaint and product to which they are applicable. That is, these complaints are fitted into the proper place in a precoded classification system. Some misclassification results from classifying at the time of receipt because the consumer may complain about one thing when she really meant that something else was her problem. However, the consumer relations manager stated that this was a small problem and the amount of misclassification involved was negligible. On the basis of product, each product line is given a numerical code to be used in machine tabulation, analy— sis, and reporting. These product lines are refrigerator, 86 freezer, room air conditioner, range, dishwasher, dis— posall, water heater, combination washer—dryer, washer, dryer, central heating and cooling, television, stereo, and cannot identify or all others (ironers, cabinets, etc.). On the basis of type of complaint, a similar nu— merical coding exists. The coding classifies complaints by area of responsibility into five categories, namely, miscellaneous, product departments, distributor service, retailer service, and general. Numerical coding further subdivides these five broad categories into narrow, more descriptive categories. For example, under product de— partments, complaints are on product quality—in warranty, product quality—out of warranty, and warranty complaints. All unsolicited consumer complaints handled by the consumer relations unit are included in the various re— ports prepared by them. However, some complaints and complaint information are forwarded to product service managers and others in advance of the time when summary reports are prepared. Complaints are not combined in any way with solicited information to form special tabulations. Many types of analysis which have not been performed in the past appear to the author to be at least potentially available through the use of the new closing report sys- tem which uses machine tabulation. For example, product complaints are not presently, but could be, analyzed by 87 price lines. However, the system is newly introduced and a determination of what information can be gained at what cost must be made. An additional point which should be mentioned is that the tabulations and anslyses made by the consumer relations unit may not be suited to the exact needs of all potential users of such information. The consumer relations unit prepares reports by districts on a monthly and quarterly basis. Monthly re— ports show all open correspondence by file numbers. Quarterly reports show the number of correspondences re— ceived for each category of complaint. This report is broken down by district and shows percentage comparisons of each district to the national average. The monthly and quarterly reports are sent to each district product service manager. Summary reports are available within the product service section. In addition, subsidiary reports are sent to the appropriate product departments which are in a position to remedy a particular situation. Reports on special studies are prepared on an unscheduled basis. Marketing Information from Unsolicited Consumer Complaints, and Uses Thereof Briefly stated, useful marketing information has been obtained by the major appliance division from unsolicited consumer complaints. First, the complaint information was used to remedy 88 the immediate situation with the individual consumer who complained. However, more important in the long run may be the uses to which the various kinds of complaint infor— mation are put. These uses better enable Company A to discover and take advantage of marketing opportunities. Consumers may make complaints about a great variety of things. Obviously, not all information from com— plaints has the same marketing use value. Some of the areas in which specific examples were cited of marketing use of complaint information are (a) product planning and design, (b) discovering new marketing opportunities, (c) consumer education, (d) marketing research, and (e) employee morale. Product planning and design examples.——Complaint statistics and correspondence are seen by the product planners at planning meetings. When planning a product, Company A predicts and plans for a certain percentage of service calls. For example, if in the past the company has had trouble with a particular type of door seal (as evidenced by complaints and service calls), then in the planning of a new model, a determination would be made as to how and at what cost the former high ratios of com— plaints and service calls to sales could be corrected by product changes. In every case of product planning, the initial cost of product vs. the number of complaints and service calls received must be weighed to determine the 89 optimum satisfactory product. For reasons of simple eco— nomics, product changes will be made if they can eliminate a design feature which has been expensive to service while in warranty. If it is determined that a product has an inherent design disadvantage which can be altered, Company A will attempt to change the design to eliminate the disadvantage because the company figures that if some of the product purchasers expressed dissatisfaction through complaint, owner survey, etc., then many poten— tial purchasers probably did not buy the product because of the disadvantage. Another product planning example is provided by a design change in automatic home washers. A device was added to filter out the lint which had formerly remained in the clothes. Unsolicited consumer complaints provided one of the important sources in learning about this prob- lem. Merely a single complaint resulted in a slight de- sign change in a dishwasher. The consumer stated that an opening for a hinge fitting was too large. Her small child had stuck his finger into the opening while the mother was closing the top—loading door. In addition to making arrangements with the consumer for the slight injury which resulted, Company A redesigned the hinge opening area to provide a protective shield. An example of a design change which was partially 90 the result of complaints over a long period of time was changing the position of pushbutton controls on ranges, from the front of the range where they are easily acces- sible to small children as well as housewives, to the back of the range out of the reach of small children. The transparent plastic vegetable tray in refriger- ators, considered a desirable feature by many consumers, was abandoned for many years by Company A until a better plastic was developed which did not crack and on which the company received very few complaints. In the range department, complaints were one reason which caused a change in materials from a plasti-glass, translucent material used in trim on some models. As a result of unsolicited consumer complaints, a brake was developed for top-loading automatic washers to quickly stop the tub when the lid was opened. This was necessary to keep hands and arms of users from being injured if they reached into the washer. In answer to an educational call on a consumer who complained that her refrigerator sounded offensive, the company learned that sound frequencies are objectionable to women which are not objectionable to men. In the future, the company used both sexes in testing product noise of the various models. Discovering new marketing opportunities.——A com— petitor had a ”no frost” refrigerator which was high cost operationally according to consumer groups. This 91 complaint was leveled generally at the industry. There— fore electric utility companies discouraged the purchase of ”no frost” refrigerators by their customers in order to avoid complaints about high utility bills. Company A compared operation cost of its ”no frost” refrigerator to comparable models of six major competitors. When the Com- pany A unit proved to be most efficient, Company A used national advertising to promote the low operating cost of its product. By doing so, Company A turned a complaint against the industry into a positive selling advantage. In about 1956 and 1957, the largest number of so— licited and unsolicited consumer complaints received by the refrigerator department were about cracked and broken plastic parts on the inner door. Company A therefore bought a higher priced, more durable plastic and absorbed the additional cost by using the feature as a selling point. The company has found that in those cases where a service contract is sold along with the product, the chances that a complaint will result are substantially reduced. Company A is therefore interested in increasing the sale of service contracts in an attempt to reduce consumer dissatisfaction. Consumer education examples.——Through complaints Com- pany A was made aware of the existence of a warranty prob— lem on transmissions of automatic laundry equipment. The 92 warranty statement did not mean the same thing to company and consumer. When transmission trouble occurred, entire transmissions were exchanged by repairmen rather than attempting to repair the defective part in the home. Under the warranty, parts were free but the consumer was charged for labor in the home to exchange the trans— missions and in the shop to replace any defective parts in the removed transmission. Through a study of consumer complaints of high labor costs, changes were made in the warranty. A company specialist on product performance pointed out that complaints have been used in many cases to help publish better user booklets which explain how to use the product. A special study was done on dishwasher com— plaints. This resulted in the creation of a new in- struction booklet for users. Marketing research and other examples.-—The-market— ing researchers have used unsolicited consumer complaints as a source of ideas such as suggesting areas where fur- ther study and investigation may be warranted and as suggesting kinds of questions which should be asked in the solicited kind of marketing research surveys such as owner surveys. For employee morale purposes, actual complaint let- ters have sometimes been circulated among the management of a product department simply to remind them that their 93 past efforts have not been perfect. Actual complaints have also been used (or misused) to help a manager rein— force a desired decision and convince the rest of manage— ment of the correctness of his position. Company A has never used names of consumers who have complained to make up a list of names for use in marketing research or other purposes. The consumer re— lations manager felt that an attempt to solicit additional information from these persons might give the impression that the complaint had been slighted. Interest in com— plaints is high at model change time, but statements in complaints are treated as tentative hypotheses rather than as facts. Complaint information does have a time advantage over owner surveys and some other communi— cations, but reports from technical personnel usually contain more—specific information. Both solicited and unsolicited complaints do provide useful information which is difficult to obtain in other ways. Strengths and Weaknesses of Unsolicited Consumer Complaints The previous section discussed and gave examples of Huarketing uses of complaint information. Such infor- mEition has been advantageously used. What are some of tile other advantages and disadvantages of complaints as a SOurce of marketing information? Although the number of unsolicited consumer com— Efilaints is relatively small (a minute fraction of a 94 per cent) in comparison to sales, complaints are received in sufficient quantity to permit a fair breakdown of the data. However, some of the subgroupings resulting from the breakdown are so small that changes in the number of complaints within such subgroupings are not considered to be numerically significant. While complaints may be received in sufficient quantity, the data received is not quantitative in nature. Such quantitative data must be received from technical personnel who supply product quality reports. Besides the fact that many consumers are unable to write in such a way as to be easily understood by anyone, many of the Company A executives are technically trained people who find it difficult to understand communications which are not phrased in their particular technologies. Complaints are sometimes cloaked with emotion. This does give the company some idea of the depth of feeling that consumers have, however, this expression of emotion is less useful for marketing purposes than would be a complete and specific statement of the facts of the Ibroblem. Some executives felt that the number of complaints Ccould not be used as an accurate index of the level of ClOnsumer satisfaction because various factors besides the aJnount of consumer dissatisfaction affect the level of Qconsumer complaints. For example, the Company A districts receive more service calls but fewer complaints in summer months, supposedly because people are not willing to take the time to write letters during nice weather. The con— sumer relations unit did a study which showed that con- sumers of some parts of the country, New Jersey and Cali- fornia for example, were much more prone to make com— plaints than other consumers. Also the number of com- plaints tends to rise as the amount of publicity Company A receives from executive speeches and other sources rises. Company A executives who commented on the subject agreed unanimously that complaints are almost always valid. They consider the complaint to be valid even if in fact nothing is wrong. The mere fact that the con— sumer thinks that something is wrong makes the complaint valid. Consumer complaints are not the first information received about a subject in most cases. However, com— plaint information is received and made available prior to many other forms of consumer information. Approxi— nuately one third of the complaints received are within tile one year warranty period. For present uses, speed is C30nsidered to be adequate. The most important uses of Sllch information are for product planning and design. For these purposes, complaints are quite often one of several SCD‘urces of information used by the company. Complaints ENDint out areas where further investigation may be 96 warranted and enable the company to make friends while becoming aware of the problems of consumers, however, not all consumer dissatisfactions reach Company A via this voluntary medium. Company B Company Organization and Marketing Background Company B is an operating division of a large cor- poration. The major household appliances manufactured and sold by the division include refrigerators, freezers, refrigerator—freezer combinations, clothes washers, clothes dryers, dishwashers, food waste disposers, elec- tric ranges, and room air conditioners. The division also makes coin—operated washing machines, commercial ice cube makers, and commercial and automobile air con— ditioning. The chief executive of the division is the vice president and general manager. Reporting directly to him are the following seven managers: general sales manager, personnel manager, director of purchasing, chief engineer, d:irector of reliability and quality control, works man— aéger, and controller. The executive committee of the di— ‘Vfi_sion is composed of the general manager and his seven innnediate subordinates. These same eight individuals QOmprise what is known as the reliability and quality con— t1‘01 committee. The service manager whose domain in— QCludes unsolicited consumer complaints, reports to the k 97 general sales manager. A customer relations department, whose complete title is product performance and customer relations department, reports to the service manager. The customer relations department is composed of two full- time men and two full-time women. The organization is structured on the basis of functions rather than on a product—line or some other basis. For example, customer relations handles consumer complaints for the entire di— vision and the reliability and quality control department performs the inspection task for the entire division. Company B appliances are sold to consumers from independent retailers called dealers. Independent and company—owned sales headquarters located in thirty cities throughout the United States sell to the dealers. These sales headquarters are supplied directly from the plants and are called zones if they are company—owned. Company B is in the long—term process of replacing all private units with company—owned operations. Each sales zone has a service representative who contacts the dealers. In— Stitutional and other sales may vary from the channel of dzistribution outlined above. The Stated Company Philosophy toward Consumer Complaints The divisional service manager stated that the Qcompany objective in handling consumer complaints was, ”customer satisfaction of our products, our service, and Char dealer organization.” Company B executives state 98 that anyone who writes a consumer complaint to them is one of their customers and that this represents an oppor— tunity for the company in customer relations. In summary, the company takes the public relations approach toward consumer complaints. Closely—related Consumer Satisfaction Information Solicited by Company B Company B does not rely entirely upon unsolicited consumer complaints. The company takes the initiative in a number of different ways in order to learn of consumer satisfaction. Among the company—initiated sources of in- formation are user surveys, the five—year letter survey, the dealer panel, ”pink sheet" reports from zone repre- sentatives contacting dealers, weekly reports of sales representatives, magazine and newspaper advertisements asking for complaints, and telephone surveys on dealer service. User surveys.-—The typical Company B user survey is a mail questionnaire survey of persons who have purchased Company B major appliances within the past three to six mcniths. User surveys are usually conducted once a year fOr each product or product grouping. Solicited complaints received via user surveys are Sférit to customer relations for remedial action if in the OPinion of the marketing research people such complaints ir1‘Volve situations which on an individual basis can be Clorrected by customer relations. 99 Five—year letter survey.——This mail survey is very similar to the user survey with the exception that the sample is drawn from owners who have purchased within the past five years. Dealer panel. Company B selects a panel of dealers on a geographic basis, and on the somewhat biased basis of ability to maintain good records. This panel reports work orders on service rendered for products in warranty and the products represented by the dealer panel consti— tute a twelve to fifteen per cent sample of total Company B products in warranty. Dealer panel records are main— tained centrally on punched cards. ”Pink sheet” reports.——These postal card report forms are used by zone representatives to report to head— quarters concerning complaints made by dealers when con— tacted personally by the representatives. Actually this device, which is addressed to the general service manager, is used more for the purpose of making the dealer think his complaints are being heard so that the salesman can get an order. Gaining marketing information is a sec- Cnidary purpose. Weekly sales reports.——Every Friday each sales rep— IWesentative, whether he had any major problems or not, is I‘equired to send to headquarters a weekly report which S‘tates any major problems of the week. Magazine and newspaper advertisements.——A recent rmagazine advertisement asked the question, ”Did you ever lOO hear of anyone who had trouble with a Company B product?” In response directly traceable to this national magazine advertisement, Company B received between one—hundred and one—hundred and fifty letters of complaint. In a Detroit experiment, which was duplicated in a few other cities, Company B placed a newspaper advertise— ment which asked, ”How is Company B service in the Detroit area?” The telephone number listed in the advertisement received seven or eight phone calls. Telephone surveys on dealer service.——In metropol— itan areas, telephone surveys are conducted on an irrigu— lar basis to check on the level of dealer and franchised ) service. Much of the actual work on marketing research sur- veys such as those mentioned above is performed by the corporate level marketing research organization. For example, the corporate level performs such functions as sample selection, questionnaire design, mailing, editing, tabulating, and report writing. At the Company B di— visional level, the marketing research department submits IDroblem areas for investigation, performs some survey Iwesearch, and most importantly synthesizes marketing re— Seearch results for management as problems related to 342cumulated results arise. New device committee.——Company B also has a new Cievice committee which receives unsolicited consumer <30mplaints which also contain suggestions of product g lOl change. This committee is more of a legal protection than a means of dealing with marketing information. Handling of Unsolicited C0nsumer Complaints Major household appliance complaints may be received by corporate level offices, by Company B zone offices, or by any office of Company B headquarters. All unsolicited consumer complaints as well as requests for literature and other consumer correspondence, are handled centrally by the customer relations department. As was previously stated, this four—person department is a part of the service department. Figure 6 on the following page illustrates the paths which complaints take from the time they are made to Company B by the consumer until they are considered closed by Company B. Retail dealers and distributors are not considered part of Company B and are therefore not included in Figure 6. Most complaints are received by mail. Therefore the machinery for handling complaints is built around this medium. Consumer complaints received at the corporate level aaud at zone offices are forwarded to the customer re— :léitions department. Likewise, complaints sent to other Crffices in the Company B division are forwarded to cus- ‘tCDmer relations. The customer relations department also receives all consumer mail not addressed to specific 102 Fig. 6.-—The structure and flow of unsolicited consumer complaints within Company B l. RECEIPT OF COMPLAINT Any office of Corporate level Any Company Company B offices B Zone headquarters Office 2. SORTING SENT TO Company B centralized mail room at headquarters 3. ACKNOWLEDGMENT AND ACTION Customer relations Customer relations department at manager at zone headquarters level For investigation if necessary Back to consumer 4. CLOSING Customer relations department (above) closes to own files i 5. MARKETING INFORMATION USES Zone customer relations <______.manager reports on closing forms executives elsewhere in the division. Not all consumer correspondence is of the complain variety. Requests on where to get service, parts, etc. are not considered complaints by Company B even though 103 they recognize that such requests indicate a lack of dealer identification, etc. Company B calls an unsolicited consumer complaint letter a "registered“ letter and classified such letters into four categories: 1. The corporate letter is one sent to the corporate level of the large corporation. 2. The executive letter is one sent to any specific Company B executive at headquarters. 3. The public relations letter is one which is not addressed to a specific individual but is sent to ”public relations,” the ”complaint department," etc. 4. The zone letter is any complaint letter sent to the zone level. The customer relations department sends the consumer a same day acknowledgment of the receipt of the letter. The acknowledgment tells the customer that the matter is under investigation at headquarters or that headquarters has referred her letter to the zone and that she will hear from them. The customer relations man at the zone level (if a zone is involved) very quickly receives copies of the (a) unsolicited consumer complaint letter, (b) closing report form, and (c) acknowledgment letter from headquarters. If the complaint is to be settled at headquarters, the customer relations department gets nec— essary information from other departments and handles the complaint. 104 When the complaint has been settled, it is closed to the files of the customer relations department at headquarters. The closing report form is a four—copy preprinted form used to insure closing control by head— quarters. The completed form shows (a) what happened to cause a complaint, (b) how the complaint was settled, (c) whether or not the consumer was made happy. If a complaint is not closed within ten days, a ”ten day form” is used for follow—up. To insure uniform handling of complaints, Company B has a detailed manual on the topic. This manual is used by both headquarters and the men in the field. The i manual describes the entire handling process and utilizes flow charts on procedures to be followed at each step. The manual shows how to score letters by sales zones. Scoring is the assigning of code numbers for mechanical tabulation. Analyses and Reports Made of Unsolicited Consumer Complaint Data All unsolicited consumer complaints are coded for mechanical tabulation and are printed out on a tape which contains the explanatory code. The basic tabulation of complaint data is by dealer and by service supervisor. The card deck is maintained for the period covering the past twelve months. Tabulations and cross-tabulations are on the bases of zone, service supervisor, dealer, 105 what caused the complaint, how the complaint was settled, how the complaint could have been prevented, and whether or not the customer was satisfied. The tabulation of the past three years uses model numbers, but prior tabu— lations are by product line only. Solicited and unsolic— ited consumer complaint information are not combined. The print out or report is sent on a quarterly basis to zone sales managers, and zone service super— visors. At headquarters the reports are made available to customer relations, the service manager, the general manager, the sales manager, and the reliability and qual- ity control committee which is composed of the same peo— ple as the executive committee. Marketing Information from Unsolicited Consumer Complaints, and Uses Thereof The marketing uses of consumer complaints at Com- pany B seem to be influenced by the fact that complaints are handled by customer relations which lies within the service department. Uses of complaint information in the service area are noticeably present. The two areas of greatest use of complaint information are dealer and zone improvement and product improvement. In the dealer and zone improvement area, complaints have been used to catch an unfit dealer at an earlier time than would be possible by relying on sales data. Complaints are used as a zone performance control by 106 plotting zone against zone for number of unsolicited con— sumer complaints per 1,000 products in use, or in war— ranty. Complaints are also used in developing the dealer— principal technical training program and the dealer— principal customer relations program. In the latter program, actual complaint letters are used at the meet— ings. Consumer complaints are used as an indication of product performance by reliability and quality control, however, this is not considered to be strictly a market- ing area at Company B. According to the service manager, ”Design will be changed a long time before we ever get r the letters.” Therefore the limited area of product im— provement which is affected by complaints deals mainly with reliability and quality control. However, Company B has also used complaint information in the area of ser— viceability of the product. For example, if the company can save money on servicing the product by a design change, based upon unsolicited consumer complaints about high service charges, the change will be made. The relay switch of the refrigerator was relocated from the back to the front to avoid the necessity of moving the appliance to replace the relay switch. This change saved time and money and reduced consumer complaints about high service charges, scratched floors, etc. Company B does not solicit other kinds of market— ing information (use them as a panel, etc.) from consumers 107 who have complained. The company does however survey a sample of consumers whose complaints have been closed as a check on the consumer satisfaction with the closing. The limited area of use of consumer complaint in— formation may be due to the nature of the information itself and to the organization structure of the division; however, the attitude of protecting information consid— ered to be confidential cannot be overlooked. When the researcher commented that Company B was somewhat more protective with its information than some competitors, he was informed that information did not flow freely within the company itself. The general company rule is that nobody is given information unless and until he needs such information. Strengths and Weaknesses of Unsolicited Consumer Complaints The advantages and disadvantages were expressed in reference to the ways in which Company B uses complaint information. Company B does receive a sufficient number of complaints to indicate service levels and the most advantageous use made of such information is strengthen- ing the dealer organization. Generally, all complaints are considered to be valid by Company B. The company follows up all letters of complaint to check the validity. This is done either at headquarters through the customer relations department 108 or in the field by service supervisors and zone customer relations managers, depending on where the complaint can be validated. One individual in the customer relations department has done some preliminary research on how representative complaining consumers are of all consumers. The incon— clusive results were not available. Company 0 Company Organization and Marketing Background Company C is the household appliance division of a large corporation. In addition to other brand names, it markets the following products under the Company 0 brand: refrigerators, freezers, gas and electric ranges, automatic and wringer washers, gas and electric dryers, room air conditioners, dishwashers, garbage disposers, and dehumidifiers. The chief marketing executive of Company C is the vice president and sales manager. The general service manager reports directly to him and the customer re— lations department composed of a manager and four girls, is directly subordinate to the general service manager. Technical service and field service also report to the general service manager. The manager of the customer re- lations department has responsibility for handling all unsolicited and solicited consumer complaints. Retail dealers who sell Company C products to 109 consumers are supplied by either the company-owned whole- sale organization called zones or by independent distri— butors who in turn are supplied directly from the factory. Service is performed by the sellers, and in addition by service contractors (independent appliance servicing organizations) in metropolitan areas. Company C also performs service for the metropolitan area of its head— quarters. The field sales and service organization is built around a regional manager assisted by one or two regional representatives and aided by service supervisors. Institutional sales differ from the above channels. The Stated Company Philosophy toward Consumer Complaints Unsolicited consumer complaints are regarded as opportunities by the customer relations manager who stated that most complaints are not really product com— plaints but are human problems in the dealer areas of selling, delivery, and servicing and in the consumer area of using the product. He stated further that the company objective in handling complaints is, ”to see to it that all products are made to operate according to design in support of our warranty and service policies to the extent that good business practices are used for the benefit of corporation, distributor, dealer, and user.” This means that in practice the company may at times extend itself beyond the limits of its expressed warranty. 110 Closely—related Consumer Satisfaction Information Solicited by Company C The company takes the initiative in a number of different ways in order to learn of consumer satisfaction. Among the company-initiated sources of information are the consumer survey of recent purchasers, service ticket analysis, consumer sentries, consumer panels, and placing of new products in homes. Survey of recent purchasers.-—This consumer survey is conducted periodically (not every year because of bud— get limitations) for each product or product grouping. In these surveys, questions concerning consumer satis— faction do result in solicited complaints from consumers. These solicited complaints are turned over to the cus- tomer relations manager for handling where they are treated in the same manner as unsolicited consumer com— plaints. The above type survey is the only marketing research done by Company C's marketing research staff on the subject area of consumer satisfaction. Other surveys do at times touch on this area. Service ticket analysis.——The service department keeps track of the volume of replacement parts on the various models. From a sampling of the service contrac— tors and distribution points, the service department at headquarters gets service tickets for all service per— formed on products in first year warranty. By knowing product sales for an area from dealer sales reports which 111 enable dealers to get compensated for warranty, the ser— vice department can find that service for any product in any area is a certain percentage of sales. These service ticket percentages are then discussed at the monthly quality control meetings. However, the service department statistician warns that service ticket infor— mation may not represent the actual product situation because of human elements in the diagnoses of servicemen. Consumer sentries.—-These independent, outside home economists are given products to use in exchange for their comments about the products. Consumer panels.——This term, as used at Company 0 refers to the group of persons brought together to com— pare Company C and competitive models for product fea- tures. Products in homes.—-Company 0 products are also placed in homes of company personnel. The company execu— tives feel that this is a biased source of information. Products have also been placed in homes in very humid areas of the country to test performance under such con— ditions. 112 Handling of Unsolicited Consumer Complaints Complaints may be received by Company C at company- owned zone offices, by the corporate level, and by the Company C headquarters. Complaints made to a zone are handled there if possible and no word of such complaints is received by Company C headquarters. Complaints ad- dressed to either the corporate level or the Company C division are in effect sent to the same building and centralized mail room. Such consumer complaints, along with other consumer correspondence such as requests and complimentary letters, are forwarded to customer re— lations. Figure 7 on the following page illustrates the paths which complaints take from the time they are made to Company C by the consumer until they are considered closed by Company C. Retail dealers and distributors are not considered part of Company C. Complaints to them are therefore not included in Figure 7. Consumer complaints on appliances received by any Company C zone office are handled at the zone level. Complaints to a specific executive of Company C or the corporate level, to the corporation or division, or to any office of either, are sent without acknowledg— ment to the customer relations department. Nobody else in the organization answers such consumer mail. Not .all correspondence from consumers is of the complaint 113 Fig. 7.——The structure and flow of unsolicited consumer complaints within Company C 1. RECEIPT OF COMPLAINT Any office of Any office of Any Company C corporate Company C headquarters level Zone Office 2. SORTING Centralized mail room at headquarters 3. ACKNOWLEDGMENT AND ACTION j? 'Back to consumerl Company C customer relations department at headquarters - 3 Field Service Supervisor and/or For investigation Distributor—Zone if necessary Service Manager [Back to consumer / 4. MARKEEING INFORMATION USES Distributor—Zone Service Mgr., Service Office, Field Service Supervisor, Distributor—Zone Principal, Quality Control, Regional Sales Mgr. 5. CLOSING 4’ Company 0 customer relations department at headquarters l 6. OTHER MARKETING INFORMATION USES 114 variety. However, requests and complimentary letters are treated as complaints for ease of handling. Company C classifies complaints as executive and regular based upon whether the complaint was addressed to a specific company executive or simply the corporation. Both kinds of complaints are treated the same; however, in the executive complaint the company recognizes the fact that all persons handling the complaint are acting as personal representatives of the executive to whom the complaint was addressed. All design suggestions received from consumers are sent to the patent attorney of the company. After prompt acknowledgment by the customer re— lations department, the complaint must usually be inves- tigated to determine its validity and what action will be taken. If the investigation takes place at headquarters, the customer relations department may call on any part of the organization for information and assistance. If the complaint requires field investigation, this is done by the field service supervisors or the service manager of the distributor or zone. The system of handling complaints incorporates the use of a seven—copy complaint form. The form is not pre— coded. It contains blank space upon which the customer relations department can place whatever pertinent infor- mation was contained in the letter. It also has space 115 for information on the product, model number, serial number, installation date, dealer, and service company. The distribution point (independent distributor or com- pany zone) service manager receives two copies of the form. About half of the space on the form is blank space for his reply to the customer relations department. It states, ”Reply—-Note: No case will be considered closed unless you have personal knowledge that necessary cor- rective measures have been taken and completed.” Others receiving a copy of the form are the service office, the field service supervisor, the distributor—zone principal, product quality control, and the regional sales manager. When the unsolicited consumer complaint has been settled to the satisfaction of the customer relations manager, the complaint is closed. Company C does not employ a company manual to insure uniform handling of complaints. Memos and bulle- tins are used to accomplish this task. For the most part, complaints are treated individually both in their han- dling and in the marketing uses thereof. This explains why copies are sent to all the managers mentioned above, and why in Figure 7 the Marketing Information Uses section comes prior to the Closing section. This is explained further in the following sections. 116 Analyses and Reports Made of Unsolicited Consumer Complaint Data Company C tabulates unsolicited consumer complaints each month by distribution points (zones or distributors) and by product. The tabulation for the entire division is derived from information which appears on the owner complaint follow-up form for each distribution point. The tabulation is strictly numerical. It does not clas— sify complaints by type, cause, etc. This monthly numer- ical summary report does show for each product and each distribution point the year-to-date sales, year—to-date complaints, complaints of the past month, year—to-date per cent of complaints to sales, and age of open com— plaints for present and previous month. Open complaints are grouped in 1—30 days old, 30-60 days old, and over 60 days old. All open complaints of 30 or more days are negative factors in the evaluation of field service per- sonnel. Customer relations sends copies of the monthly numerical summary report to the vice president of the division, the sales vice president of Company C, the regional sales managers, to engineering, and to product managers. These product managers are assigned to promote a product or product group by product design, planning, and other staff marketing activities. In lieu of a written report on the topic, unsolic— ited consumer complaints are discussed each month at the quality control meeting. In this way, the information is 117 available sooner than it would be from a formally pre- pared report. In attendance at these meetings are prod— uct engineers, manufacturing people, product service technicians, the general service manager, the technical service manager, quality control, the chief inspector, purchasing, and design. In addition to the above analyses of unsolicited consumer complaints, those complaints which are solicited on surveys are handled and analyzed by customer relations and such analyses are presented to marketing research and to the advertising agency. Marketing Information from Unsolicited Consumer Complaints, and Uses Thereof The fact was mentioned in the previous two sections, of this paper that unsolicited consumer complaints are handled and analyzed at Company C on an individual basis. This non—bureaucratic, informal, individual ap— proach also applies to marketing information and uses of complaint data. Marketing information uses take place both before and after the closing of the complaint. How— ever, no rigid system exists to insure that such infor- mation is used. Before the closing, the distribution of the seven—copy complaint form does convey the essence of tile stated complaint to the distribution point service Tflanager, the service office, the field service super— visor, the distributor—zone principal, product quality 118 control, and the regional sales manager. However, until the reply section of this form is completed by the inves- tigator, the validity of the complaint is unknown to all potential users of the information. Until that time, a potential user of complaint information knows only what the consumer says is wrong with product, service, etc. After the investigation and closing, the user can be more certain of the validity. Specific marketing uses of complaint information are (a) as part of training program materials, (b) for product quality control purposes (used in a broad sense as part of marketing), (c) for control and evaluation of distribution point performance, and (d) for finding and correcting individual specific problem situations. This last use is probably the most important at Company C. Training program.——A portion of the training pro— grams for Company C and distributor personnel is con— ducted by the customer relations manager. Complaints are used for program development and for topic materials of the customer relations portion of these training sessions. Product quality control.——This is considered a mar- keting use here because the term is used broadly to in— clude more than the simple inspection function. It in— cludes insuring that product performance in use is accord— ing to design. Unsolicited consumer complaints reviewed at the monthly quality control meetings provide infor— mation for this use. 119 Control and evaluation.——The monthly numerical sum— mary report mentioned in the previous section reports the number of total complaints and open complaints by age of complaint for each distribution point (distributor or company zone). These figures are converted in the report to percentage of current sales for use in evaluating dis— tribution point performance. Individual specific problem situations.--The find- ing and correcting of individual specific problem situ— ations is probably the largest use numerically, and one of the most important marketing uses of consumer com— plaint information. The variety of marketing uses applied on an individual basis at the point where the problem situation exists (not company wide) includes discovering that a serviceman needs training in a cer— tain area, finding inadequate parts inventories at ser— vicing organizations, and nearly every other conceiv— able type of problem situation involving people in the sale, delivery, servicing, or use of the product. Most problem situations involve people problems rather than product problems, according to the customer service man— ager. Company C does not use complaining consumers as a source of solicited information beyond the necessary investigation to validate the complaint. The marketing research department reports receiving no useful infor— mation for marketing research survey purposes from the 120 customer relations department. Strengths and Weaknesses of Unsolicited Consumer Complaints The previous section discussed and gave examples of marketing uses of complaint information. Such infor— mation has been advantageously used, particularly on the individualistic basis. The Company 0 customer relations manager sees potential disadvantages in using complaint information on a tabulated rather than an individualistic basis. He states that the number of complaints is mean- ingless unless it is stated in terms of sales. And even then, consumer complaints cannot be meaningfully tabu- lated by kind of complaint because the person doing the tabulating does not have enough information from the consumers' letters. The customer relations manager treats every complaint as a real and valid problem that must be solved, but he says he really doesn't know if a specific consumer complaint is valid. Complaints, al— though a fraction of a per cent of current sales, are received in sufficient quantities to permit more extensive tabulations if such tabulations were desired by Company 0. Complaints are used as a supplementary source of market— ing information at Company C. 121 Company D Company Organization and Marketing Background Company D manufactures and sells a complete line of major household appliances under the Company D brand name. In addition, the firm manufactures a wide variety of major household appliances for a large retailer. This case study specifically excludes the private label portion of Company D's business. All consumer complaints received by Company D on private label products are for— warded to the retailer with no acknowledgment or action by Company D. These complaints are considered to be those of customers of the retailer about products of the retailer. Company D claims to be the only major household appliance manufacturer with a vice president in charge of customer quality and service. This department of cus— tomer quality and service, employing over 600 persons, is divided into (a) customer assurance, (b) parts sup— ply and (c) field service and service development. The customer relations department, which is also part of cus— tomer quality and service and handles all consumer cor— respondence for the company, works closely with the above three parts of customer quality and service. The cus— tomer relations department is staffed by three men and four women. In the organization described above, Company D 122 considers the customer relations department to be a part of a total concept of customer satisfaction. Later in this case, an attempt is made to show how the consumer complaint activities of the customer relations department fit in with the product life cycle analysis of the cus— tomer assurance people and with the service evaluation and control activities of the field service and service development people. Company D appliances are sold to consumers from independent retailers called dealers. These dealers are supplied by sixty-three (63) independent distributors and ten (10) company branches which operate in the same man— ner as independent distributors. Branches and distri— butors are supplied from the factories. Institutional and other sales vary from the channel of distribution outlined above. Thirty-nine field service representatives admin- ister Company D‘s service interests throughout the coun— try. Under a new program of manufacturer franchised Service, Company D franchises dealers and service organi— zations. Company D also has a new warranty servicing program. This program places a Company D representative at each distribution point in charge of in-warranty ser— vice administration. The actual servicing is however per— formed by whomever the customer chooses. These two new programs are mentioned later in connection with complaints. 123 The Stated Company Philosophy toward Consumer Complaints Breifly stated, the objective of Company D in han— dling unsolicited consumer complaints, and in much of the customer quality and service activity, is customer satis- faction after the sale. Company D executives state that the product is not really sold until the first service call or other contact by dealer or distributor after the sale. The customer relations manager says that his theoretical objective is to work himself out of a job by finding and eliminating the causes of consumer dissatis—_ faction. Closely—related Consumer Satisfaction Information Solicited by Company D Company D does not rely entirely upon unsolicited consumer complaints for consumer satisfaction information. In fact, unsolicited consumer complaints are merely one small part in the comprehensive program at Company D. Both the (a) field service and service development and (b) customer assurance portions of the customer quality and service department are actively seeking consumer sat— isfaction of Company D service and products. Customer assurance conducts extensive customer sat— isfaction research throughout the entire product life cycle. The customer assurance program may be divided roughly into four areas, namely, (a) preliminary explo- ration, (b) pre—production check, (c) production controls, 124 and (d) follow—through with the users. Customer assur— ance views its product life cycle activities in terms of the preventive requirements of (a) taking the pulse of the customer, (b) feeding customer specifications into the product cycle, (c) customer field test, and (d) audit product to customer specifications, and the corrective requirement of taking corrective action where necessary. The purpose of the preventive action is to minimize the need for corrective action although corrective action is a continual process. Unsolicited consumer complaints fit into this picture in the ”pulse taking" phase and in the corrective phase. The consumer satisfaction information solicited by the customer assurance program is described briefly be- low. These activities include test city service call analysis, out—of—warranty reports, purchaser surveys, special studies, field testing by home economists, the key personnel product interchange program, and other user testing. In addition, the field service and service de- velopment people perform a continuous service survey, engage in service auditing, and perform periodic service rating of distributors. Company D distributors also engage in soliciting satisfaction information from con— sumers. Such distributor efforts are sometimes published in the outside Company D house organ for service people. Test city service call analysis.——This is a contin— uous survey of all service tickets for all Company D 125 service in eighteen test cities. This represents a five per cent sample of Company D‘s service market. Service incidence data is provided. Out—of—warranty reports.——These reports are re— ceived on all major products and are based upon a sam— pling of owners who are surveyed about such topics as availability and cost of out—of—warranty servicing. Purchaser surveys.——A sampling of recent purchasers is personally interviewed about ninety days after pur— chase. These recent purchasers are asked their likes and dislikes about product features and the product in gen— eral. These same persons are again interviewed a year r later to discover if any changes in opinion have taken place. Special studies.——Included in this category are~ group discussions with potential purchasers and surveys with users of competitive products. Also included here are topics studied for current interest such as life expectancy, plastics, door closings, etc. Field testing.—-The field testing done by home economists, some of whom are engineers, takes place in the early product concept stage of product development. These-home economists test product performance of mock—up models under various conditions of use. Key personnel product interchange program.—-This program which provides new models to wives of management 126 has resulted in some worthwhile suggestions. Other use testing.—-Products are placed in homes for customer use testing. These customers are then inter- viewed about a variety of things concerning the product. Customer assurance also maintains a field team of cus- tomer service engineers to solve problems and get product performance information. Service survey.——In this survey, a return post card asking about the in—warranty service is sent to every customer who has an in—warranty service call. Names are secured from claims to Company D for parts. Service audits.—-These unannounced audits are con- ducted at least once a year in each distributor's area. Customers who have had recent service calls are telephoned and interviewed. The customer assurance manager says that this technique, and some of the others mentioned above, often uncover ”icebergs” or things which were not quite bothersome enough to talk over with the serviceman or write about to the company. Service ratings.--Distributors are rated monthly by the service development department on the level of service performance. Distributors also perform their own surveys on service. All complaints of consumers received through the solicited means mentioned above are, in theory at least, forwarded to the customer relations department for han— dling. 127 Handling of Unsolicited Consumer Complaints This portion of the paper shows how unsolicited consumer complaints are handled for purposes of taking care of the immediate complaints. Later sections deal with analyses, reports, and marketing information ob- tained from complaints. Major household appliance complaints are received by Company D at headquarters, at other plants, at an affiliate company, and at Company D branches. All unso— licited consumer complaints, along with certain other consumer correspondence, are handled centrally by the customer relations department. Figure 8 on the following page illustrates the paths which complaints take from the time they are made by the consumer until they are closed out by Company D. Retail dealers and distributors are not considered part of Company D. Complaints to them are therefore not in— cluded in Figure 8. Complaints received by a Company D branch are handled at the branch level. Complaints to a specific executive or to the corpo— ration at headquarters, any other Company D plant, or to the affiliate company concerning any aspect of Company D major appliances are channeled through the centralized mail system, without acknowledgment or action by the original recipient, to the customer relations department. Nobody else in the company answers such consumer mail. 128 Fig. 8.-—The structure and flow of unsolicited consumer complaints within Company D 1. RECEIPT OF COMPLAINT Any office of Any other The Company D Company D Company D affiliate branch at headquarters plant company 2. SORTING \\p SENT T0 1 Company D centralized mail system at headquarters 3. ACKNOWLEDGMENT AND ACTION J/ Back to consumer Company D customer Service manager relations department \ of Distributor at headquarters ’7 or Branch For investigation if necessary ___1 Back to consumer 4_______ 4. CLOSINGir \/ Customer relations Distributor or Branch department (above) 47______.Service Mgr. reports closes to own files on customer satisfac— tion report 1 5. MARKETING INFORMATION USES Executives forwarding complaints to customer relations may ask for and receive notice of action taken to close out the complaint. The customer relations department 129 classifies complaints into three types and has three sim- ilar report forms to be used in handling the three types. The three are executive, initial, and recontact. An executive complaint, sometimes called a presidential, is one addressed to the president or chairman of the board of Company D. Such complaints are answered by personal letter. An initial complaint, calling for a form-letter reply, is one which does not qualify as an executive com— plaint. A recontact is a complaint on which the consumer is rewriting the company within ninety days of the orig— inal complaint. Customer relations acknowledges the consumer com— plaint upon receipt, sometimes via telegram in the case of executive complaints. The acknowledgment tells the consumer that the complaint is under investigation at headquarters or has been referred to the service manager of the distributor in her area. If the complaint is re— ferred to the distributor, the distributor is sent within twenty-four hours a copy of the consumer letter and two copies of either the initial, executive, or recontact customer satisfaction report. One copy is for the files of the distributor and the other copy is to be returned completed to customer relations within two weeks. An additional two partial copies of the customer satis— faction report are retained for the files of customer re— lations. 130 The customer satisfaction report mentioned above has spaces for the following information to be filled in on all four copies at the customer relations department: customer's name and address; distributor and field repre— sentative number and name; product name; origin, due, and closed dates, complaint code, and factory recommendations. The portion of the report to be completed by the distri— butor provides space for additional identification data about product and dealer, action, customer reaction, and service history. If a complaint can be handled entirely at head— quarters, the customer relations department calls upon any portion of the company for the necessary information. Upon settlement, the complaint is closed—out to the files of customer relations at headquarters by the return of a satisfactorily completed customer satisfaction re- port. Company D does not use a manual as such, but the procedures for handling unsolicited consumer complaints are spelled out in sufficient detail in writing to insure uniform handling. Analyses and Reports Made of Unsolicited Consumer Complaint Data The customer relations department maintains the unsolicited consumer complaint files for a period of two full years in addition to the current year. All consumer 131 complaints are number coded by kind of complaint. This coding is done after the complaint has been investigated. Until a year or two ago, this numerical coding was used for the routine computer analysis of unsolicited consumer complaints. Complaints are still given the numerical codes, and the codes are used for special tabulations, however, the routine computer tabulations have been dis— continued. The reason given for discontinuing these regular computer tabulations was that the quantitative information derived was essentially a duplication of information provided in the test city service call anal— ysis. However, complaints are being analyzed and reported in several ways. Of major importance are the special studies which customer relations performs on a routine basis for cus— tomer assurance. Such special studies of complaints take place either when the customer relations manager notices something unusual which may be of interest to customer assurance, or when customer assurance is working on a particular problem and desires a tabulation of consumer complaints on the problem area. A report on overdue complaints is prepared and sent to the service development department for each distributor- principal. In addition, these reports are sent to the Company D field representative of the area and to the distributor—principal service manager. Consumer 132 complaints are also reported for each distributor by dealer and by cause. This report is used in meetings with the distributor. In addition, each distributor reg— ularly receives a complaint to sales ratio report. A report listing the number of unsolicited consumer complaints per month by product is sent to each of the product divisions. From this numerical report, the di- viskms may, and quite often do, ask for more details re— garding such things as a rapid rise in number. That is, if the numerical report warrants further investigation, customer relations is asked to supply the reasons behind the numbers. In addition to prepared reports, the cus— tomer relations manager has extensive personal communi— cations with the product divisions and the customer assurance department. Marketing Information from Unsolicited Consumer Complaints, and Uses Thereof Company D does derive useful marketing information from unsolicited consumer complaints. The marketing information derived appears to fall into the following broad areas of marketing application, namely, control and evaluation of the marketing and service programs of the manufacturer, control and evaluation of dealer and service agency performance, control and evaluation of distributor (Or branch) performance, customer education, training, and customer assurance programs in product development. 133 Manufacturer marketing and service.-—In general, Company D uses the reduction in the number of unsolicited consumer complaints accompanied by an increase in sales to indicate that the quality of its products and market- ing programs is improving. A similar general indicator is the increase in the number of complimentary letters the company receives from consumers. Specifically, com- plaints have been used as a measure of the effectiveness of two relatively new programs. These two programs are the franchise service program and the new warranty ser— vice program. The ratio of consumer complaints to sales has been reduced in those areas where either or both of these programs have been introduced by Company D. Dealer and service agency performance.--Company D executives feel that the mere fact that the customer relations department has in existence a program for han— dling complaints and keeping account of them has improved the level of performance of dealers and service agencies. Through unsolicited consumer complaints, Company D finds out about dealers and service agents who need to be up- graded or replaced. Distributor (or branch) performance.——The service development department rates each distributor (and branch) on a quarterly basis. Distributors are graded on the basis of a possible one-hundred per cent. Factors which combine to make up the one—hundred per cent are distri— 'butor performance in the areas of warranty, parts, 134 training, dealer contacts, literature, complaints, and quality of service. Customer complaints, worth a pos- sible total of six points, are scored by the service development department on the basis of information for- warded from the customer relations department. A dis- tributor receives four points for handling complaints within the prescribed time period and two points if his complaint to sales ratio does not exceed a prescribed figure. A score of under five points is considered un— acceptable for complaints and a total score under eighty per cent is considered unacceptable performance. Score results are discussed in meetings with the distributors and in some actual cases distributors have been discon- tinued for low performance. Consumer education.--Unsolicited consumer com- plaints have been used by Company D to discover areas of needed consumer education and to rewrite owner manuals. Training.——Several field service representatives of Company D have received a portion of their training in the customer relations department. In addition, the ser— vice training department recognizes that a ”nice" cus- tomer; ie., one who never complains, also never comes back. Service trainers therefore go to field service representatives, who are aware of complaint areas, to get materials for training programs. Customer assurance programs.-—It has already been mentioned that the customer assurance department is in 135 close contact with the customer relations department and that customer assurance routinely requests special tabu- lations of consumer complaints from customer relations. Such routine special tabulations enter into the customer assurance program at two points; namely, the ”take pulse” phase and the corrective phase. Unsolicited consumer complaints are one of the means used by Company D to take the pulse of the customer in order to draw up customer specifications which can be fed into the product cycle. Company D defines a customer specification as, "a state— ment representing a summary of customers' complaints, desires and/or requirements which is supported by docu— mented evidence showing sources, magnitude and severity of the item.” This is a major use of consumer complaint information. Complaints are also used as a guide to necessary corrective action to be taken. An example of the use of complaint information for corrective action is provided by the use of a special tabulation of complaints to determine that the covering material used on the racks of dishwashers needed to be changed. Complaints are also used for manufacturing quality control purposes. Product suggestions received from con- sumers by customer relations are passed along to the engineering departments of the product divisions. Com- pany D has solicited some additional information from persons who had complaints. In addition to the normal 136 investigation of complaints, the customer relations de- partment sent out a mail questionnaire asking consumers how satisfied they were with the handling of their com- plaints. This survey took place about four years ago and lasted for nearly a year on a continuous basis. Strengths and Weaknesses of Unsolicited Consumer Complaints Company D does use consumer complaint information advantageously for those purposes mentioned in the pre— ceeding section. Company executives did state that the area of use was somewhat limited by certain disadvan— tages of this kind of information. One disadvantage cited was that the consumer tends to blame the product and the manufacturer for her dissatisfaction with the dealer. Also, consumer complaint to sales ratios must be used with the reminder that people in some areas of the country, particularly the New York area, are more prone to complain than are others. Consumer complaints are generally regarded to be valid by Company D. In the field, the check on validity is made by the distributors or branches. If the con— sumer does not have a valid complaint in the opinion of the customer relations manager, he will tell her so. However, this does not mean that Company D will not go to reasonable lengths to satisfy a customer. A final disadvantage is that as a source of market— ing information, the elaborate computer tabulation of 137 complaints by kind of complaint proved to be a duplication of the information received on the test city service call analysis. The test city survey has the advantage of larger numbers. However, complaint information continues to be used in a meaningful way as a part of Company D's total program of customer satisfaction. Company E Company Organization and Marketing Background Company E, probably best known for its range prod- ucts, manufacturers and/or markets a relatively complete line of major household appliances for the kitchen. Its products include a complete line of free-standing and built-in gas and electric ranges and ovens, refrigerators, dishwashers, and garbage disposers. Other products are ventilation hoods, sinks, and cabinets. About a year ago, the structure of Company E's ser- vice organization was changed to establish the consumer service division. This division is a major unit of the company. The consumer service division is composed of the quality control, service, and the replacement parts departments. The service department and the consumer correspondence section, which reports to the replacement parts department merely for purposes of supervision, are directly involved in the handling of unsolicited consumer complaints. The home service department, a home economics 138 department, is also directly involved with some types of 1 complaints although home service is a part of the sales division. The main channel of distribution for free—standing ranges is from manufacturer to retail dealer to consumer. The main channels of distribution for built—in ranges are (a) from manufacturer to builder who sells the appliance as part of a house, apartment, etc. and (b) from manufac- turer to distributor or company branch to retail dealer to consumer. Other Company E products may be sold through any of the channels described here. Company E uses fifty warehouses and ten branch offices to help sell and r distribute the products from its nine plants. Company E holds its dealers responsible for ser— vicing the product. A dealer may discharge this service responsibility by employing his own service department or by contracting for service with an outside service agency. The Stated Company Philosophy toward Consumer Complaints The two stated objectives of Company E in dealing with consumer complaints are (a) to take care of the con— sumer’s problem situation so that the appliance is work— ing properly and (b) to make good use of the data pro— vided by complaints so the company will know where it stands product—wise. In the handling of complaints, Com- pany E attempts to answer the consumer as soon as possible 139 in order to provide an easy solution to the problem be- fore the consumer becomes too irritated. The president himself, using answers supplied by the consumer corre— spondence section, answers many consumer letters addressed to him. Closely-related Consumer Satisfaction Information Solicited by Company E Company E does not rely entirely upon unsolicited consumer complaints for consumer satisfaction information. The company takes the initiative in soliciting such in- formation in the following ways: warranty service re- cords and parts returns, product life tests in labora— tories, field tests in consumers' homes, personal inter— views with new product purchasers, service ticket anal- ysis, private label store panel audit, mail survey ques- tionnaire of new purchasers, and other surveys at irreg- ular intervals. Warranty service records and parts returns.——This information is a by—product of dealer claims for parts used to service products that are in warranty. Warranty service records are maintained by product and by kind of complaint. The service department tabulates the replace- ment parts to sales ratio. Warranty service records and parts return information have the disadvantage of lagging several months behind production. Product life tests.--These accelerated laboratory tests are performed by quality control. 140 Field tests.--Company E places approximately one hundred units of new products in homes of consumers for testing in the field. Personal interviews.-—For new products, the con- sumer service division personnel call at homes of per- sons who purchased the product during the first three months of sale in order to get consumer reaction to such new products. Service ticket analysis.——This is a continuous survey of all service tickets for all Company E service in three cities Where Company E branches are located. Private label store panel audit.——One hundred retail stores serve as a panel for sampling the service and replacement parts requirements for the major appli- ances which Company E manufactures for a large retail chain. The information received from this source is also applicable to Company E branded products in so far as the Company E brand is similar to the private label products. Purchaser survey.--A mail questionnaire is included in a certain percentage (limited to about 25% for budget— ary reasons) of the products shipped by Company E. Re— turns from this purchaser survey are no longer tabulated on a regular basis because the responses to the questions did not vary significantly over time. However, Company E continues to send the questionnaire because the company secures useful information concerning individual 141 situations and the statistical tabulation can be performed when desired. If consumer complaints accompany purchaser survey returns, such solicited complaints are handled along with unsolicited consumer complaints. Other surveys.-—The manager of the consumer service division reports that other surveys dealing with consumer satisfaction are made on an irregular basis. He is currently planning such a special survey of consumer sat— isfaction. Handling of Unsolicited Consumer Complaints This portion of the paper shows how unsolicited consumer complaints are handled for purposes of taking care of the immediate complaints. Major household appliance complaints are received by Company E headquarters, at other Company E plants, and at Company E branches. Figure 9 on the following page illustrates the paths which complaints take from the time they are made by the consumer until they are con— sidered closed by Company E. Retail dealers and distri— butors are not considered part of Company E. Complaints to them are therefore not included in Figure 9. Com— plaints received by a Company E branch are handled at the branch level and complaints received by any plant other than headquarters are handled at the point of receipt. In neither case is any information concerning the com— plaint normally forwarded to headquarters. 142 Fig. 9.--The structure and flow of unsolicited consumer complaints within Company E 1. RECEIPT OF COMPLAINT Company E Any other Company E headquarters Company E plant branch SENT TO 2. SORTING Centralized mail system at headquarters i \ Resorted by secretary To specifically of consumer service designated division addressee 1. Consumer correspondence section, or 2. Service department, or 3. Home service department 3. ACKNOWLEDGMENT, ACTION, AND AUTOMATICALLY CONSIDERED CLOSED BY COMPANY E Consumer correspondence section, or Back to Service department, or consumer . Home service department, or Other addressee aided by investigation of consumer correspondence section For investigaf165\‘\sg if necessary PLUMH 1. Dealer 2. Company E field service rep. 3. Company E Back to consumer g_____ salesman \V \/ 4. MARKETING INFORMATION USES 143 Consumer complaints and other correspondence ad- dressed to a specific Company E executive at headquarters are sent by the centralized mail system to the addressee. The addressee may at his own discretion forward a con— sumer complaint to the consumer correspondence section, the service department, or the home service (home eco- nomics) department for complete handling or for assist— ance in securing an answer. This statement is also true when the original addressee is the consumer corres- pondence section, the service department, or the home service department. That is, if one of these three departments feels that another of the three departments could better handle the problem, the complaint may be forwarded. All consumer correspondence, including unsolicited consumer complaints, not addressed to a specific indi- vidual is usually sent by the mail room to the consumer service division. A secretary in the consumer service division then resorts the complaints according to whether they can best be handled by the consumer correspondence section, the service department, or the home service de- partment. For example, all complaints concerning food would be sent to the director of home service for han- dling. The consumer correspondence section, employing the time of two and one half persons, answers most of the 144 consumer complaint letters and prepares answers for other persons such as the president. An attempt is made to answer all letters within three days. In answering letters of complaint, the consumer correspondence section uses individually—typed form letter responses for routine problems and individual letters for other problems. The same procedures are used by the service department and the home service department, both of which answer com- plaints about their own subject areas. If field investi- gation of the validity of the complaint is necessary, this is done first by the retail dealer, then by the Company E field service representative accompanying the dealer personnel, and finally if necessary by the Com— pany E salesman accompanying dealer personnel. Com- plaints received with solicited information such as survey returns are handled in the same manner. Company E uses no forms, other than copy machine duplicates of consumer letters and company responses, in the handling of complaints. Company E does not normally follow-up to get feedback information concerning the satisfactory completion of the problem situation solution. Only when the consumer is not satisfied and writes again to the company does Company E learn of the inadequacy or nonperformance of a promised solution. However, if Company E service people were involved in the field in- vestigation of a complaint, the consumer call would be 145 recorded on the work report of the service representative. Company E normally assumes a consumer complaint to be closed when the company responds to the consumer. Company E does not use a company manual to describe complaint handling procedures. The present procedures are well-established and have evolved over a long period of time. A subsidiary of Company E uses exactly the same procedures as Company E for handling complaints. Company E personnel set up the system for the west coast appli- ance producer. Analyses and Reports Made of Unsolicited Consumer Complaint Data Over a period of five years, Company E used about five different systems for handling, analyzing, and re— porting unsolicited consumer complaint data. The present system was devised about three years ago. Under the present system, all three places where complaints are handled, ie., the consumer correspondence section, the service department, and the home service department keep daily records of consumer complaints. These daily records are forwarded to the quality control department of the consumer service division where the information from the above three departments is combined with other unsolic- ited complaint information from dealers, distributors, salesmen, etc. This combined information is then com- bined on a monthly basis by model, product, date of 146 complaint, and kind of complaint. This combination re- port is kept in the quality control department of the consumer service division. That is, no distribution is made of the written report itself. However, the data from such reports is used at the weekly consumer service meeting. The weekly consumer service meeting, at which consumer satisfaction with Company E products is the main topic of discussion, is attended by the president, the vice president of sales, those sales product managers whose products are scheduled for discussion, represent- atives from production and engineering, and the manager of the consumer service division. The use of complaint information in this meeting constitutes the principal use made of the data. Any detailed analyses performed on the above data are done by the quality control portion of the consumer service division. One quality control man has responsi— bility for each product. This individual analyzes both solicited and unsolicited information for his particular product. The consumer service division also calculates the consumer complaint to sales ratio for model, product, date, and kind of complaint. No other regularly-scheduled reports are made of unsolicited consumer complaint data. The director of home service reports that if she feels that an excessive number of complaints have been received on a particular topic, she will send a special report on 147 the matter to the director of merchandising and the director of new products. Suggestions from consumers for the improvement of the product, regardless of where in the company such sug- gestions are received, are sent to engineering, and some— times to sales if product design is involved- Consumer complaint information is also distributed on an individual basis at the time of handling the com- plaint. Copies of individual complaint letters are some- times sent to sales and to engineering. Copies of all Company E responses to consumers are sent to the Com— pany E salesman of the area where the consumer resides. Marketing Information from Unsolicited Consumer Complaints, and Uses Thereof Company E does derive useful marketing information from unsolicited consumer complaints. The marketing in— formation derived appears to fall into the following broad areas of marketing application, namely, evaluation of dealer and service agency performance, consumer edu- cation, quality control used in a broad marketing sense, and product development. Evaluation of dealer and service agency perform— ance.--Both service organizations and retail dealers have been discontinued by Company E because these organizations failed to correct situations which resulted in an exces— sive number of unsolicited consumer complaints. 148 Consumer education.—-Many consumer complaints re— sult from improper use of the product because the user did not read the owner manual. In an effort to increase readership of manuals, information received from consumer complaints has been used to redesign and rewrite the owner manuals. Company E now supplies the product pur- chaser with a separate owner manual written for each specific model of the product. Formerly purchasers re— ceived a combination manual which described the use of several models. In addition, Company E now supplies all purchasers with a general booklet describing the nature of operation and use of the product category. Quality control.—-A frequent cause of consumer com— plaints is the performance of purchased components. Con- sumer complaint information has been used in selecting and working with suppliers of components. A specific example is provided by the thermostat on the range fea— turing the automatic burner. As a result of consumer complaints, Company E changed to a more reliable supplier for the thermostat. Product development.——Through the weekly consumer service meetings many product changes have been made as a result of information from unsolicited consumer com— plaints. Product improvements as well as new products are also discussed in the meetings of the product com— mittee. This committee composed of the president and men 149 from engineering, manufacturing, and sales is made up of some of the same individuals who are present at consumer service meetings. The following are specific examples in which unsolicited consumer complaint information was a significant or dominant factor in product design changes. Both the lift—up range top and the slide—out oven were direct results of unsolicited consumer complaints about the difficulty in keeping the appliance clean. The lift-up range top provided easy cleaning, but resulted in consumer complaints that rust was forming on the under side of the range top. This complaint, con- fined to gas ranges in certain areas of the country, was found to be caused by certain impurities in the gas. A vent was added to the gas range to eliminate the cause of complaint. As a result of complaints that the gas burners were difficult to clean if spills got on all the small holes where the gas comes out, Company E redesigned the burner to eliminate the holes and to make the gas outlet part of the burner easily detachable for cleaning. A consumer complaint that the door seal around the oven was difficult to clean influenced Company E to make the oven door seals removable for easy cleaning. Excessive surface (exterior) temperature is an age- old consumer complaint about ovens. The problem has not been completely corrected, but Company E has recently 150 introduced a better insulating technique (by allowing air to pass between the insulation and the outer surface of the oven) in order to minimize the problem and the number of complaints resulting from it. After receiving a substantial number of unsolicited suggestions from consumers to the effect, Company E put two large-size burner elements (instead of one) on ranges. This is a recent change. Unsolicited consumer complaints, in some cases prompted by competitors pointing it out as a product dis— advantage, about the low height of the upper oven on ranges resulted in slightly raising the height of upper ovens to allow more room for large pans between the burner level of the range top and the overhang of the upper oven. Additional examples of the use of consumer complaint information are provided by the dishwasher. Redeposition of dirt on dishes in dishwashers was a serious consumer complaint about the product. Therefore Company E, after extensive experimentation with several impeller arrange— ments, redesigned the entire dishwasher to incorporate an arm impeller which rotated in both directions. Also, as a result of unsolicited consumer complaints, the roller on which the dishwasher rack slides will be fastened by a rivet in the future instead of the present fastener de— vice. 151 Strengths and Weaknesses of Unsolicited Consumer Complaints Company E does use unsolicited consumer complaint information advantageously for those purposes mentioned in the preceeding section. An advantage of complaints is that they provide information sooner than do some other sources. However the information provided is often vague. Company E executives feel that complaints are valid most of the time. Validity is investigated by dealers, field service representatives, and Company E salesmen. However, in many cases the user's own misuse of the product is the real cause of the complaint. Con- sumer complaints do give company executives a feel for how well they are satisfying the consumer. Complaints do provide information for needed changes. However, com— plaints must be combined with other sources of information to be most useful. Company F Company Organization and Marketing Background Company F currently produces and sells under the Company F brand name the following major household appli- ances: wringer washers, automatic washers, gas and elec- tric automatic dryers, and combination washer—dryers. The company does no private-label business. Company F is exclusively a laundry equipment manufacturer although the company once manufactured other appliances. 152 Unsolicited consumer complaints to Company F are usually handled within the marketing department. Report— ing to the vice president of marketing is the general service manager. Reporting directly to the general ser- vice manager is the manager of product service whose responsibilities include handling adjustments, service publications, and consumer complaints. Those persons who actually handle most of the complaints report to the manager of product service. This includes two service supervisors, a product specialist, and two secretaries. The channel of distribution for Company F products is from the manufacturer, through three different types of wholesaling arrangements depending on the geographic area involved, to retail dealers, and to consumers. Most sales are direct to retail dealer; ie., the wholesaling function is most often performed by Company F salesmen operating from branch offices used in combination with public warehouses and direct factory shipments. However, in a few areas the physical distribution functions of wholesaling are performed by primary dealers. A primary dealer is a limited-function wholesaler who earns the difference between carload and less-than-carload price by performing the physical distribution function. The third wholesaling arrangement is the wholly-owned Com- pany F subsidiaries which act as distributors. Service is performed by servicing dealers and in metropolitan areas service is also performed by central 153 service organizations, many of which are owned indepen— dently. Company F field service assistants are attached to branches for service instruction purposes. Most branches also have a branch service manager. The Stated Company Philosophy toward Consumer Complaints The specific objectives of Company F in handling unsolicited consumer complaints are (a) to build maximum consumer acceptance of and confidence in Company F prod— ucts and (b) to channel all specific failures through engineering, research, and inspection personnel in order to improve the product. All Company F responses to con— sumers are individually dictated. The company attempts to do all it can, even beyond the expressed warranty responsibilities, within reasonable limits and within prevailing policies to make the consumer satisfied. For example, Company F will replace a part but not an entire appliance because the company feels that any appliance can be repaired. Closely-related Consumer Satisfaction Information Solicited by Company F Company F takes the initiative in soliciting con— sumer satisfaction information in the following ways: service call analysis, replacement parts analysis, pur- chaser surveys, service surveys, testing new products in homes, competitive brand surveys, and field service re- ports. 154 Service call analysis.--The central service organi— zations in the Los Angeles and Newark, New Jersey areas submit service call records for all service calls made in these two areas. Weekly and monthly reports for products in first and second year of service are made to determine the ratio of service calls to sales. Replacement parts analysis.-—Parts failure is anal- yzed by tabulating factory shipment trends and by tabu- lating ”no charge" replacement parts claims. Purchaser surveys.——Twice a year, Company F surveys by mail a sampling of recent purchasers of various Com- pany F models. Names are secured from warranty regis- tration cards. Marketing research compares changes in answers from survey to survey for each category of questions. Service surveys.--Mail surveys are conducted on both in-warranty and other service of Company F products. Two basic types of service surveys have been conducted. One is apparently used as a check on replacement parts charges made by servicing dealers and organizations. The other mail survey is more extensive and involves many areas of service satisfaction. Solicited complaint infor- mation results from both surveys. Testing new products in homes.-—New products, such as the electronic dryer, are placed in consumer homes in the plant area to learn of consumer satisfaction about such subjects as degree of dryness. l55 Competitive brand surveys.——From a national proba— bility sample, Company F has surveyed recent purchasers of all brands of washers. The purpose of this survey was to learn of consumer satisfaction with competitive as well as Company F products and features. Field service reports.-—These individual reports are sent in by field service assistants for all visits made by them to homes of consumers. Complaints received in the above solicited methods are handled in the regular manner if they require re— sponses to the consumer involved. Handling of Unsolicited Consumer Complaints Major household appliance complaints are received by Company F at its headquarters, at its branches, and by its subsidiary distributors. Figure 10 on the following page illustrates the paths which complaints take from the time they are made to Company F by the consumer until they are considered closed by Company F. Retail dealers are not considered part of Company F. Complaints to them are therefore not included in Figure 10. Complaints re— ceived by a Company F branch or distributor—subsidiary are normally handled at the point of receipt. In neither case is any information concerning the complaint normally forwarded to headquarters unless (a) a field service report is made because a home visit is necessary or (b) the volume of complaints on a certain topic reaches the 156 Fig. 10.——The structure and flow of unsolicited consumer complaints within Company F 1. RECEIPT OF COMPLAINT Any office of Company F at headquarters 2. SORTING Any Company F Branch or Distributor—Subsidiary Centralized mail room at headquarters \\\\\\\fl addressee Specifically designated 3. ACKNOWLEDGMENTJAND ACTION Product Service at headquarters Department or other Service Personnel ,_____, For investigation if necessary V [Back to consumer 1. Dealer 2. Company F field personnel 4. CLOSING \/ Product Service quarters closes automatically or upon receipt of Department at head- satisfying report ’Back to consumerli_________J Dealer sends Satisfaction Report 4__.______if requested by headquarters l 5. MARKETING INFORMATION USES 157 point that headquarters is advised of the problem. Consumer complaints and other correspondence ad- dressed to a specific Company F executive at headquarters are sent by the centralized mail system to the addressee. The addressee then forwards the consumer complaint to the product service department for handling. All consumer correspondence, including consumer complaints and service inquiries not addressed to a specific individual, is normally sent by the mail room to the product service department. One exception is that correspondence involv- ing washability and other home economics problems is handled by the home service (home economics) department. Some correspondence initially sent to home service may be passed along to product service, and vice versa. A secretary in the product service department checks for previous correspondence of the consumer and sorts the mail into wringer washer, automatic laundry equipment, and other. The product service department employs one service supervisor for wringer washers and one for automatic laundry equipment. Part of the job of each service supervisor is to handle consumer correspon— dence. Other consumer complaints are handled by the product service manager, a product specialist, and some— times the general service manager. Through a system of blocking and coding, the product service department identifies the geographic area and the 158 regional representative covering that area. From this location file system they get the block number and the nearest Company F dealer to the point of origin of the consumer complaint. Complaint letters are answered, or at least acknowledged within two or three days of receipt. Company F replies are individually dictated letters. The product service department also writes the dealer in— volved and encloses a copy of the Company F response to the consumer. In addition the Company F manager of the region involved receives a copy of (a) the response to the consumer and (b) the Company F letter to the dealer. Serious complaint problems, such as those involving an improperly operating appliance, are marked for follow-up in the files before they are considered closed. Com- plaints marked for follow-up are closed when a satis- fying report is received from the dealer. Other com— plaints are considered closed automatically. If field investigation of the validity of the com— plaint is necessary, this is first performed by the deal- er and then if necessary by Company F field personnel. Consumer complaints received with solicited infor- mation such as survey returns are handled in the same manner. Some complaints are handled by telephone. Con- sumer suggestion letters involving possible legal rights are sent to the legal department and the director of research. 159 Company F does not use preprinted forms for han— dling complaints. The one exception to this is that a field service report form is used when a field service assistant makes a home call in connection with a com- plaint. Company F does not use a specific company manual in handling consumer complaints. However, the branch pro- cedural manual and the adjustment policy manual do cover topic areas often involved in complaints. No step-by— step procedure for handling complaints is outlined in these manuals. Handling procedures at headquarters are well—established. Each year Company F holds a week-long conference for branch service managers, distributor ser- vice managers, and field service assistants. The single topic of this conference is all the various phases of consumer complaints. Analyses and Reports Made of Unsolicited Consumer Complaint Data In the past, all unsolicited consumer complaints were analyzed on a regular basis by kind of complaint. Company F presently keeps records of number of complaints by kind for wringer washers. This analysis is not dis- tributed on a regular basis but is used in special meet- ings. For automatic laundry equipment, complaints are no longer tabulated on a regular basis. However, special tabulations are done when problem areas are under study. 160 The product service manager stated that Company F receives consumer complaint information on faulty design sooner from indirect sources such as dealers and branches than it does directly from consumers. Such information, as well as individual consumer complaint letters, is routed to product planning. Any time a complaint of dealer or consumer origin is received from a dealer, a report goes to inspection, production engineering, assem- bly, and research and development. Field service reports of field service assistants' calls at homes of consumers are another reporting device. Finally, copies of Com- pany F responses to consumers and letters to dealers sent to regional managers constitute a method of reporting to field personnel. Of all the above reports, the wringer washer analysis of complaints by kind is the only summary report of unsolicited consumer complaints prepared on a regular basis. Marketing Information from Unsolicited Consumer Complaints, and Uses Thereof In spite of the lack of summarized analysis and reporting of complaints, through the use of the present methods of handling unsolicited consumer complaints, Company F has been able to derive useful marketing infor- mation from this source. In general, Company F personnel felt that over a period of time they did find out how serious a problem area was from complaints. If Company F 161 received enough complaints, changes would be made. Com— plaints are used in the evaluation of product performance, especially in determining consumer expectations. Specific examples of the marketing use of complaint information are primarily concerned with product develop— ment and improvement. However, consumer complaints are an additional factor used by regional management to eval- uate the level of performance of dealers and service organizations. Through consumer complaints to dealers, the manu- facturer learned that one of its products was leaking Oil on the floor because of the design of the automatic lu— bricating device. Consumers complained to the manufacturer that the open lid on the automatic washer hit the timer knob, and they feared that this would ruin the finish. Company F states that because of the quality of the paint used, the finish would not be harmed. However, through unsolicited complaints the company did learn of this cause of anxiety to the appliance owner. From consumer complaints and other means, Company F learned that under certain conditions rust stains formed on wringer washers. To combat the problem the company now applies an acrylic lacquer as a finish. Based upon unsolicited consumer complaints, Com- pany F now uses a high—torque (more powerful) motor on wringer washers. Consumers, primarily in the South, were 162 burning out the motors through misuse with extension cords, electrical overloads, etc. Because of consumer complaints that the V-belt on the gas wringer washer kept slipping off, the product ser- vice department requested that the problem be corrected. The shape and material of the belt were changed to effect the correction. Product planning does ask the product service de— partment for information about numbers and trends in unsolicited consumer complaints about different things. For example, during the Korean War, because of parts shortages, Company F produced an automatic washer which in fact had a cold water rinse cycle even though the cycle was not labeled on the machine as a cold water rinse. Company F is now considering the sale of a machine with a labeled cold water rinse cycle. The man- ager of product planning therefore asked product service about the consumer complaint record of the Korean War model. However, as was pointed out by the manager of product planning, this is not a very good example because human memory was used to supplement old, incomplete records. Company F does not use complaining consumers as a group for carrying on solicited marketing research. The marketing research department does not use unsolicited complaints as a source of ideas for questionnaires. 163 Strengths and Weaknesses of Unsolicited Consumer Complaints Company F does use unsolicited consumer complaint information advantageously for those purposes mentioned in the preceeding section. Advantages of complaints are somewhat offset by disadvantages such as (a) complaint information must be used in combination with other information, (b) complaint information often merely verifies what has already been learned from other sources, and (c) complaints are often incomplete in facts and biased in presentation. Company G Company Organization and Marketing Background Company G, a subsidiary of a large corporation, probably best known for its refrigerators, freezers, and combination refrigerator—freezers, also produces and markets room air conditioners, central air conditioning systems, and dehumidifiers. The responsibility for handling complaints to Com— pany G is located in the service department. The service manager is aided by two administrative assistants who are directly involved in the handling of complaints from con- sumers, dealers, and distributors. Another individual in the service department devotes his full time to answering unsolicited consumer complaint letters. Consumers typically purchase Company G products 164 from retail dealers who, depending on geographic location, J are supplied by branches (subsidiaries of Company G), independent distributors, or by salesmen on a direct-to— dealer basis which uses warehouses for physical distri- bution. These wholesalers are supplied by Company C. Company G maintains field service representatives who call on independent distributors and dealers of dealer— direct areas. Consumers receive service on Company G products from servicing dealers and from service organi— zations. The Stated Company Philosophy toward Consumer Complaints } At the time of this writing, Company G is unique in ‘Ufle industry by offering a five year warranty on labor and parts for the "total appliance.” This warranty is sijnilar in operation to those offered by the auto in— dustry. Expressed in the warranty are responsibilities of both the buyer and seller. The director of marketing stated that the number of consumer complaints has been fewer since the five-year, expressed warranty has been in effect. This new warranty policy is intended to be a device for selling additional product and service, in addition to retaining good—will on the original sale. Because of this warranty policy and because Company G wishes to protect its quality image with distributors, (jealers, and consumers, the company handles consumer Ccnnplaints promptly in order to achieve its objective of 165 incxreased sales. Closely—related Consumer Satisfaction Information Solicited by Company G Company G does not rely entirely upon unsolicited cor181mner complaints for consumer satisfaction information. The company takes the initiative in soliciting such in— forwnaition in those ways discussed below. Owner surveys.—-These mail questionnaire surveys, sanqpiLing a portion of the warranty card registrants, are corniiicted at irregular intervals. Consumer satisfaction infCDIunation is obtained in answers to questions. In addjxtion, respondents may attach to the questionnaire their‘ own expressions of dissatisfaction. Complaints whickl accompany solicited responses are handled in the normafll manner described in the next section. Distributor service surveys.--Company G has sur- Veyed service customers of distributors to find out if the Seervice was satisfactory. However, the primary pur- pose (of such surveys has sometimes been to determine Whetfler‘or not actual service was performed for which the distI‘ibutor had made claims for reimbursement. ch§£.——Personal visits of Company G executives With— (Sealers is another source of information. At one times, Company G did make a regular tabulation of service ca11_ Einalysis. However, this practice has been discon— tlnufiicfl. Replacement parts analysis is not done on a 166 regyilar basis, but the raw data are available for such taloulations when they are desired. Likewise, the con— suuner complaint to sales ratio is not computed, but neczessary data for such a computation are available and tklez computation has been made in the past. Handling of Unsolicited Consumer Complaints Complaints are received by Company G at its single 1Lx351tion. Figure 11 on the following page illustrates flue paths which complaints take from the time they are madee to Company G by the consumer until they are con- sideared closed by Company G. Retailers and wholesalers are riot considered part of Company G. Complaints to them are ‘therefore not included in Figure 11. Complaints re— ceivred by retailers and wholesalers are normally handled at tkie point of receipt and information concerning such comTXLaints, if forwarded at all, is forwarded to the maDUffiacturer on an informal and voluntary basis. Consumer complaints and other correspondence ad— dreSESed to a specific executive in Company G are sent by the (lentralized mail system to the addressee. The ad- dresssege may at his own discretion forward a consumer com- plailfif: to the service department for complete handling or for Eisssistance in securing an answer. Consumer complaints not Eicidressed to a specific individual are sent by the mai]_ Zroom to the service department. One correspondent in tries service department answers the bulk of the consumer 167 Fig. ll.—-The structure and flow of unsolicited consumer complaints within Company G l. RECEIPT OF COMPLAINT [Company G headquartersl 2. SORTING ICentralized mail system] lService departmentlZ//fi\\\\\\g Tb specifically designated addressee 3. ACKNOWLEDGMENT, ACTION, AND AUTOMATICALLY CONSIDEREDlCLOSED BY COMPANY G 1 Service department or 2. Other addressee aided By by investigation of 1. Dealer service department 2. Distributor , \ 3. Company G For investigation 7 personnel if necessary ED ._____9, Back to consumer 4. MARKETING INFORMATION USES letters. Other service department personnel answer con— sumer letters and letters from dealers and distributors. An attempt is made to answer all consumer letters within three days with either a form letter or individual letter. Copies of replies to consumers are also sent to the Com— pany G regional sales manager, the distributor (or other wholesaler of the area), and the dealer service manager 168 or service company. If field investigation of the valid— ity of the complaint is necessary, this is done by the dealer, distributor, and/or Company G personnel. Com- plaints received with solicited information such as sur— vey returns are handled in the same manner. Extremely urgent consumer complaints may be handled by telephone or by a personal visit to the home by a Company G field ser— vice representative who submits a written report of the situation. Company G does have a manual which outlines pro— cedures and form letters to be used in handling consumer complaints. The company relies primarily upon copies of consumer letters and company responses, rather than printed forms, to expedite the handling of complaints. Company G does not ordinarily receive follow—up infor— mation on complaints and considers complaints to be closed when the company responds to the consumer. Analyses and Reports Made of Unsolicited Consumer Complaint Data On a monthly basis, Company G tabulates unsolicited consumer complaints by number and by kind of complaint. The tabulation is not regularly broken down in other ways such as by geographic area, model, etc. However, if a problem becomes evident, or is currently under study, special analysis will be done. Consumer complaint infor— mation is distributed on an individual basis by sending 169 copies of Company G answers to letters to the regional , sales manager, the distributor (or other wholesaler), and the dealer service manager or service company. Written reports of field service representatives, who visit con— sumer homes in extreme consumer complaint situations, are forwarded by the service department to the merchandising committee at Company G. Field service reports are also fed to the product group involved. A product group is composed of representatives from service, engineering, and production and is concerned with a Company G product. The merchandising committee, composed of the vice president of subsidiaries, the vice president of market— % ing, the director of advertising, and other top marketing executives, receives a combination of all consumer com— plaint information derived from consumer letters, tele- phone calls, weekly reports of service personnel, and special reports. The merchandising committee and the product groups, operating at different levels, are the two chief recipients of consumer complaint information at Company G headquarters. Marketing Information from Unsolicited Consumer Complaints, and Uses Thereof Company G does derive useful marketing information from.unsolicited consumer complaints. The following are examples of situations in which consumer complaint infor- mation has been used, usually in combination with other 170 sources of information, in making marketing decisions. , The examples cited deal with (a) evaluation of dealers and service organizations and (b) product improvement by improved design and features. Unsolicited consumer complaints are one means by which evaluations in the field are made of dealers and major appliance servicing organizations. A reverse statement is also true; ie., prior knowledge of the level of performance of dealers and service organizations is used by Company G in evaluating complaints of con- sumers. From unsolicited consumer complaints, Company G learned that a batch of compressors which were purchased components was defective. By using serial numbers, Company G was able to locate and replace the defective components and obtain reimbursement from the supplier. From unsolicited complaints and from an owner survey, Company G found that the refrigerator egg tray was capable of holding only small size eggs. The design was changed. Consumers, dealers, and distributors all requested that Company G add a door stop. This feature was added. Unsolicited consumer complaints about the offensive odor of the product led the company to discover that under certain operating conditions a sealer produced the odor. The company changed to a different sealing com- pound to correct the problem. 171 As a result of complaints from consumers, dealers, and distributors, a heater switch was added to the re- frigerator to eliminate, while the door was open, the burst of warm air which the machine normally produced during a certain cycle. Through unsolicited consumer complaints, Company G learned that the complete system of one model it pro- duced did not meet the design standards of the company. The company then offered a generous trade—in allowance to those consumers who had purchased the faulty model. From consumer complaints over a long period of time, Company G was made aware of a faulty gasket problem. The example illustrates the difficulty in attempting to discover some things before the product is actually in the home. The gaskets were laboratory tested by a machine which opened and closed refrigerator doors. How- ever, it was not until unsolicited consumer complaints ‘were received that the company realized that the gaskets were not suitable under actual home-use conditions. In cather words, the controlled opening and closing in the test laboratory did not accurately simulate actual opening and closing practices in the home. Strengths and Weaknesses of Unsolicited Consumer Complaints Company G does use consumer complaint information advarmageously for those purposes mentioned in the 172 preceeding section. The principal advantage cited for consumer complaint information is that this source pro— vides the company with some information which is not normally available through other means. The gasket exam— ple in the previous section illustrates this point. The chief disadvantage of complaints is that consumers are not always objective and factual. Unsolicited consumer complaints are considered to be valid by Company G. The company realizes that com- plaints are sometimes slightly distorted. Therefore Company G checks on validity through dealers, distri— butors and its own field personnel. Such factors as history, nature, and source of the consumer complaint are also considered when the company evaluates complaint validity. Company H Company Organization and Marketing Background Company H, a division of a large corporation, manu— factures and sells major household appliances. Products sold under the Company H brand are refrigerators, combi— nation refrigerator—freezers, freezers, air conditioners, and electric ranges. Company H does not manufacture its own electric range, but does manufacture some products sold under private labels. This case study deals with major household appliances sold under the Company H brand. 173 The service organization is headed by the general service manager, to whom the national service manager reports, in turn, to whom the manager of customer re- lations reports. The manager of customer relations for Company H has primary responsibility for handling all consumer complaints. He is assisted by secretarial help in this task. With very few exceptions, all sales of Company H products are from the manufacturer, through independent distributors, through retail dealers, to consumers. The independent distributors of Company H products usually carry a broad line of electrical products for the home. Company H exercises only limited control over these independent wholesalers. In the field, Company H has six regional service managers and eleven regional sales man— agers contacting its eighty-five distributors. Service operations are also maintained by distributors, dealers, and service contractors. The Stated Company Philosophy toward Consumer Complaints Company H executives regard consumer complaints as an opportunity to demonstrate by prompt action to pur— chasers that a wise choice was made when a Company H product was purchased. They feel that the reputations of the factory, distributor, dealer, and service company are at stake. To achieve their objective of having satisfied 174 customers who are boosters of their products, the manu— facturer works through distributors in handling consumer complaints. Closely—related Consumer Satisfaction Information Solicited by Company H Company H does not heavily rely upon unsolicited consumer complaints for consumer satisfaction information. The company takes the initiative in soliciting such in— formation in those ways discussed below. Owner surveys.——Company H has from time to time sent mail questionnaires to a sampling of recent pur— chasers whose names were obtained from warranty regis- tration files. Information about the acceptance of product features is gained in this way. The engineering department also uses the owner survey to determine if engineering changes have caused problems. Service call analysis.——This is a continuous survey of all Service calls for contracted in—warranty service in the Detroit area. Geographically the test area is being enlarged to include the New York area, and even— tually to include from six to twelve major markets throughout the country. The data are electronically processed and many cross—tabulations are available con— cerning product failure while in warranty. Service call analysis reports are sent by the service department to production, engineering, and quality control. 175 Regional service manager reports.—-All reports of , regional service managers are combined into monthly summary reports. Questionnaires to company personnel.——All employees purchasing Company H appliances are sampled by mail questionnaire. This is recognized as a biased source of information. Parts analysis.——An unsophisticated analysis of parts usage is sometimes performed on a special basis. Handling of Unsolicited Consumer Complaints Major household appliance complaints are received by Company H at headquarters and at the corporate level. Unsolicited consumer complaints and other consumer cor— respondence are normally handled by the customer re- lations manager. Figure 12 on the following page illustrates the paths which complaints take from the time they are made to Company H by the consumer until they are considered closed by Company H. Retail dealers and distributors are not considered part of Company H. Complaints to them are therefore not included in Figure 12. Consumer complaints and other correspondence ad- dressed to a specific executive are sent by the central— ized mail room to the addressee. These letters and all letters dealing with customer relations and not addressed to a specific individual are forwarded to the secretary 176 Fig. l2.--The structure and flow of unsolicited consumer complaints within Company H 1. RECEIPT OF COMPLAINT Any office of Company H Any office at the at headquarters corporate level 2. SORTING .( J Centralized mail Specific room at headquarters 9 addressee Service department k(////////’ 3. ACKNOWLEDGMENT AND ACTION Service mgr. of } distributor For - Acknowledgment ¢/ investigationlandlhandling within the service dept. Customer relations mgr. l/ l/ to consumer Sometimes, dealer _19 Back to consumer 4_____or service company 4. CLOSING \L J, Automatically considered closed, Distributor or if placed on hold, it is Service mgr. closed upon receipt of satisfactory send satisfac- report from distributor, by the tory report manager of customer relations I i 5. MARKETING INFORMATION USES /\ 177 of the service department. This secretary sorts all ser- vice department mail and sends to the customer relations manager all the consumer mail. The customer relations manager, with secretarial help, answers most of the consumer correspondence. A very few complaints are han- dled by the national service manager. An attempt is made to answer all letters within two days. However, for the most part, the manufacturer does not actually handle consumer complaints. This responsi- bility has been shifted by Company H to its distributors. The distributors, in turn, sometimes rely upon dealers and service companies to handle the actual complaint. For service inquiries and requests for product information, the customer relations manager sends the consumer a postal card reply giving the consumer the name and telephone number of the distributor and stating that the distributor will answer the questions of the consumer or give the consumer the name and address of the nearest dealer or service company. In cases such as this, a copy of the consumer letter is sent by customer relations to the distributor service manager. If the consumer has previously contacted the distributor, the Company H cus— tomer relations manager writes the consumer to the effect that Company H has asked the distributor service manager to contact the consumer, or have a dealer or service company make such a contact. On a footnote to the copy 178 of the Company H response to the consumer sent to the a distributor, or in a separate letter to the distributor, the manufacturer makes known its suggestions to the dis— tributor. Contact with the consumer and action taken are the responsibility of the distributor. A very few first consumer letters, and all subse— quent letters from consumers, are placed upon hold for a follow-up. For such complaint letters, after a period of from one week to one month, the Company H customer re- lations manager sends a follow—up letter to the distri— butor requesting the present status of the complaint. When a satisfactory report is received from the distri- butor, the complaint is closed by the customer relations manager. Company H usually uses individually—typed form letter responses to first letters, and individual letter responses to subsequent consumer correspondence. In shifting the responsibility for handling unso— licited consumer complaints from the manufacturer to the distributor, Company H made provisions for giving assist— ance to the distributor when needed. For example, if the complaint problem is on a new product, Company H sends a copy of the technical bulletin to the distributor, and if a specially—designed kit has been prepared to correct the problem, customer relations places such a kit on order for the distributor. If a letter is received from a distributor or dealer requesting help from the manufac— turer, the letter is given to one of the two product 179 engineers who are employed by the Company H service department. These men usually know the answers or can get the answers from the engineering department. The reply is then forwarded by the customer relations manager to the distributor or dealer. Consumer complaints to distributors and dealers are handled at the point of receipt. Company H uses bulletins for describing complaint handling procedures, but does not have a manual on the subject. Suggestion letters received from consumers are always forwarded to the engineering department. Analyses and Reports Made of Unsolicited Consumer Complaint Data Before Company H began to use service call analysis, they did tabulate unsolicited consumer complaints by kind of complaint at the time of receipt. At the present time, complaints are not tabulated on a regular basis but are tabulated over short periods of time on a special basis. Consumer complaints are used as a warning flag to indicate those potential problem areas that warrant fur— ther investigation by other means. Under normal con- ditions, after a complaint is closed, there is no further use made of it. However, if too many complaints of a particular kind or on a new topic were being received, a special tabulation would be made by the customer relations manager and would be reported to the national service manager, who would then report the situation to the 180 general service manager and to engineering. Reasons given for not tabulating unsolicited consumer complaints on a regular basis include poor reporting of complaint action from the field because (a) Company H tries to get fast action and (b) Company H must work with independent distributors who sometimes do not report well. Consumer complaints are used by a monthly meeting known as the quality control meeting. Information from special tabulations and selected complaints is made avail— able. Those attending the meeting include the vice pres— ident of operations and top-level representatives from sales, service, engineering, production, and quality con— trol. The presence of the vice president means that de- cisions can be made involving changes unless the changes involve design. If design changes are involved, design engineering will then be contacted by the process engi— neers. Some consumer complaints are always reported to the executives involved, on an individual basis. For exam- ple, damage complaints are always channeled by the cus— tomer service manager to the director of technical train- ing. Other complaints are on an individual basis brought to the attention of the product engineers of the service department who pass the information along to the engi- neering department and pass along to the distributor service managers the means of correction. 181 Another method used to communicate consumer com— plaints and other consumer satisfaction information is the quarterly meeting at which regional service managers and headquarters executives carry on discussions about current problem areas. Marketing Information from Unsolicited Consumer Complaints, and Uses Thereof In spite of the lack of regular tabulation of com— plaints, Company H does derive some useful marketing in— formation from this source. Consumer complaint infor— mation is used in combination with information from other sources. That is, complaints are used as a device for F helping to uncover potential problem situations that re— quire further investigation before a decision is made. Company H executives do not claim to get much information from complaints. Some specific examples in which unso— licited consumer complaints did prove to be useful are described below. Interior refrigerator door and racks.——Unsolicited consumer complaints to the factory were the source of discovery of this problem. Consumers complained that the door racks were falling off. This was a new product so the complaints were tabulated over a period of time and during the same time period the regional service managers also questioned distributors in order to get additional information on the problem. A report was then sent to engineering and the size of the plastic inner door was 182 changed slightly to correct the situation. Compressor noise.--Unsolicited consumer complaints about excessive noise when the refrigerator compressor turned off led the company to discover that a compressor jig in the factory needed some adjustment to eliminate such noise. This problem occurred shortly after a change was made in the compressors used for refrigerators. Lower top shelf.—-From consumer suggestion letters, the refrigerator top shelf was lowered slightly in order that the shelf could accommodate tall bottles. Rigid refrigerator shelf.--Shortly after the second world war consumers complained that the top shelf of the refrigerator bowed. This was due to the heavy load of several large milk bottles. The top shelf was made more rigid to avoid this problem. Company H does not perform additional marketing research upon complaining consumers as a group. Strengths and Weaknesses of Unsolicited Consumer Complaints Company H does to a limited extent use unsolicited consumer complaints. Complaints are used to trigger further investigation and are used in combination with other sources of information. A further advantage cited is that complaints point out weaknesses and deficiencies, but also suggest to engineering some changes which con- sumers desire. Complaints are received in sufficient quantities to be useful; however, for some kinds of 183 problems, complaints to the factory are not as timely as other sources of information. The major disadvantage cited by Company H is that using consumer complaints can be very dangerous because the company hears from a very small percentage of the product users. They feel that the opinions of this small minority may not in many cases represent the opinions of the vast majority of users. That is, from consumer complaints alone, the universality of the problem cannot be determined. A further disad— vantage is that complaints are vague and are sometimes overstated. Validity is normally investigated by the distri— butor or his dealer or service company, and not directly by the manufacturer. Company H's six regional service managers do sometimes become involved in checking on the validity of complaints. Summary of Findings of the Case Studies For convenience and summary purposes, some of the more important findings of the eight case studies are combined below under the same headings used in the cases. The eight major household appliance manufacturers in the case studies include three individual companies and four divisions and one subsidiary of five other com— panies. These major appliance manufacturers may be di— vided between a broad—line group that includes Company A, Company B, Company C, and Company D and a narrow—line 184 group that includes Company E, Company F, Company G, and Zompany H. Although some differences exist, particularly in relation to the amount of ownership and/or control by :he manufacturer, the channels of distribution used by :he eight manufacturers are quite similar. The narrow- Line manufacturers are somewhat more inclined to deviate Trom the conventional distribution channel of manufactur— ar--company zone or independent distributor--retail lealer--consumer. In all case study companies, most com— >laints to the manufacturers are handled on a centralized >asis by a subunit which is a part of or closely related :0 the service portion of the business. The company attitude toward consumer complaints may >e described as (a) the nuisance approach, (b) the public “elations approach, or (c) the marketing management ap- >roach. The stated company philosophies and actual prac- ;ice may vary. Stated philosophies of five of the manu— ‘acturers definately emphasize the public relations ap- >roach. The stated philosophies of Company D, Company E, .nd Company F indicate the marketing management approach. Closely-related Consumer Satisfaction Information Solicited by the Companies The following summary table lists the various meth- >dS that interviewees claimed their companies used to .olicit consumer satisfaction information. The judgments .s to the intensity of use of each method by each manu— 'acturer are those of the researcher. 185 BLE 2.—-Number and extent of methods for soliciting « nsumer satisfaction information, as reported used by major appliance manufacturers* Manufacturers Total thods A B C D E F G H (M) (P) Owner (user, pur- aser) mail survey 3 3 2 O l 3 l l 7 14 Service call alysis 2 2 2 2 2 2 O 2 7 14 Service surveys d audits 2 2 O 3 O 3 2 O 5 12 Consumer use— st panels 2 O 2 2 2 2 O O 5 10 Sales and ser— ce field reports 2 2 O O O 1 O 2 4 7 Company person— 1 product use 0 O 2 2 O O O 2 3 6 Recent purchaser ) rsonal interviews 0 O O 3 2 O O O 2 5 Warranty service cords and parts turn analysis 0 O O O 2 2 O O 2 4 Out—of—warranty ner surveys O 2 O 2 O O O O 2 Product use by dependent home onomists O O 2 O O O O O l 2 Media adver- sements solicit— O 2 O O O O O O l 2 g complaints Open letter rchaser survey 2 O O O O O O O l 2 Other related search 2 o 2 2 1 2 1 o 6 1o tal mentions (M) 7 6 6 7 6 7 3 4 46 nk of companies y mentions 1-3 4-6 4—6 1—3 4—6 1—3 8 7 tal points (P) 15 13 12 16 10 15 4 7 92 nk of companies y points 2-3 4 5 l 6 2—3 8 7 *The methods included in the listing and awarded ints for the companies are those which were specifically ted by company personnel as methods of soliciting 186 consumer satisfaction information. It is very likely that (a) not all methods have been listed and (b) not all companies have been awarded points for all methods used. The key for judging extent of methods reported used by the companies awards no points if the method is not used or not reported, one point for slight or less than aver— age use (in comparison to other case study companies), two points for average use, and three points for inten— sive, extensive, or greater than average use. Although the summary table has some weaknesses, it does indicate that (a) all surveyed manufacturers solic- ited consumer satisfaction information by various methods, (b) some narrow—line companies were less active than the others, and (c) a few methods are popular among most of the companies. Handling of Unsolicited Consumer Complaints Complaints are handled on a centralized basis by all case study firms. Minor differences exist among firms in receipt, sorting, and acknowledgment practices. Four degrees of mechanization are exhibited in the han- dling of complaints. Most highly—mechanized are the computer systems of Company A and Company B which utilize multi—copy, preprinted, coded forms along with complaint letters and company responses. Second is the Company D system which is similar to the above except that the coding is used for special tabulations only. Third is the Company C multi—copy, preprinted form system. And least mechanized are the relatively similar letter file systems of the remaining four companies. 187 Degree of follow up and closing control exercised 3y the manufacturers also varies. The practices of Zompany A, Company B, Company C, and Company D may be iescribed as requiring follow up and formal closing re- ported on all complaints to headquarters. Companies F ind H follow up on the more serious and on second com— plaints, and assume all other complaints closed upon answering the consumer. Companies E and G provide for no automatic follow up by the company. In general, the broad—line manufacturers are more nechanized in handling complaints and exercise more follow up and closing control than the narrow-line manu— facturers. Complaint handling practices may increase or iecrease the marketing intelligence capabilities of the :ompanies. Analyses and Reports Made of Unsolicited Consumer Complaint Data All case study firms except Company H and the auto- matic laundry portion of Company F perform some tabulation ind analysis of complaints on a periodic or continuous )asis. And all firms at least perform complaint analysis eregularly under certain circumstances. A judgment ranking of the tabulation and analysis efforts of the eight firms shows Company A's total program to be most :omprehensive, followed in descending order by companies 3, E, D, C, G, F, and H. 188 The following listing shows by companies the com- laint marketing intelligence reported in writing and rally to individuals, committees, and other groups. ig. l3.——Complaint marketing intelligence reported to whom, by companies lescription of Complaint [arketing Intelligence Leporting To Whom Reported tOMPANY A — All com- » aints by type, product, .nd area of responsibility, IQ summary and by dis— ;ricts monthly and quar— ;erly3 precoded computer ;ystem3 product dept. sub— ;idiary reports, special ;tudies and individual :omplaints. )OMPANY B — Coded computer system, by zone, service supervisor, dealer, cause )f complaint, how settled, 10W could have prevented, Jhether consumer was satis— ?ied, and by model number. IOMPANY C — Monthly by i1str15ution points (zones 3r distributors) and by product; by age for open :omplaints. IOMPANY D — Special studies for customer assurance, for each distributor by dealer and by cause, and open overdue complaints; numer— ical summary by products; system is computed coded for use when desired. COMPANY A — HQ product ser- vice section, district product service mgrs., product division product service mgrs. who report at product planning meetings. COMPANY B — At zones to sales mgrs. and service supervisors, at HQ to cus— tomer relations, service mgr., sales mgr., general mgr., and the reliability and quality control com— mittee which is same as executive committee. COMPANY C — Appliance di— vision VP, sales VP, engi— neering dept., product mgrs., and regional sales mgrs.; and complaints dis— cussed at monthly quality control meeting. COMPANY D — Customer assur— ance dept., field reps., distributor and distributor service mgr., service de— velopment dept., and prod- uct divisions. )MPANY E — Complaint to Lles calculated by model, Toduct, date, and kind of )mplaint, for all com— _aints combined, some )ecial reports. )MPANY F - Special tabu— Ltions only (no regular) )r automatic laundry, 1mber of complaints by _nd for wringer washer, :her special and indivi— 1al complaint reports. )MPANY G — Monthly by unber and kind of com— Laint; and special and 1dividual reports. )MPANY H — Not tabulated 1 a regular basis; Decial tabulations and 1dividual use. COMPANY E — Weekly consumer service meetings composed \ of president, sales VP, sales product mgrs., pro- duction and engineering, mgr. of consumer service division. COMPANY F — Special meet— ings, individual reporting to product planning, re- gional mgrs., and possibly to inspection, production engineering, assembly and r & d COMPANY G — Combination of all complaint information to the merchandising com— mittee; individual and spe— cial reporting to regional sales mgrs., distributors. COMPANY H — National ser- vice mgr., general service mgr., and engineering; at monthly quality control meeting, regional service mgrs. Marketing Information from Unsolicited Consumer Complaints, and Uses Thereof The following sixty-five examples of consumer com— laint marketing intelligence are empirical evidence that inufacturers of major household appliances do gain and 3e marketing intelligence from this source. The lengthy isting of complaints, users, and purposes in Figure 14 s summarized here from the eight case studies because of ie importance of these findings and for easy reference. are is said about the ways in which complaint intelli— ence is used. 190 Total number of examples cited by companies are ompany A 15, Company B 5, Company C 4, Company D 10, ompany E 13, Company F 6, Company G 8, and Company H 4. ome of the examples are more specific than others. The lassification of the examples into groups in Table 3 is omewhat arbitrary. In spite of such difficulties, the able shows that nearly two—thirds (41) of the examples re about some aspect of change in the physical product. In a real sense, the discovery and description of arketing uses of consumer complaint intelligence repre— ents the conclusion of the case study portion of the, ‘esearch. ‘ig. l4.—-Listing by companies of consumer complaint marketing intelligence, user, and purpose .7 onsumer Complaint For What End iarketing Intelligence Used by Whom or Purpose 10MPANY A Tabulated com— Product Product planning llaints and service planners at and design speci— alls on old models planning fications; eg., meetings door seals h Tabulated com— ” Addition of filter )laints about lint in device .utomatic washers 3. Single complaint Protective shield bout hinge opening added >n dishwasher Complaints over Position of push _ong period of time, button controls on LDd other sources range changed 5. Tabulated com- plaints about plastic tray breakage 5. Tabulated com- plaints and other sources about naterial 7. Complaints of arm injuries 3. Single complaint about offensive sound of refrig— erator 9. General complaint against industry of "no frost” refrig- erator operation 10. Tabulated com— plaints over time about cracked and oroken plastic parts on regrigerator doors 11. Tabulations showed fewer com— plaints when service contract was sold Nith product 12. Regular and spe— 3ial tabulations of :omplaints about automatic laundry transmission warranty 13. Complaints of product performance in use 14. Complaints about new products, features, etc. 191 Product planners at planning meetings H Product testing Product planners at planning meetings Customer relations dept., mar— keting mgt. of depts. Customer relations dept., laundry marketing mgt. Product service section Marketing research Morewdurable«plastic used for transparent vegetable tray Change in translu- cent plastiglass trim on ranges Added brake to top— loading washer Company now uses both sexes to test for product noise Tested own product against competitive models and adver- tised favorable results Used more durable plastic and absorbed additional cost by using this as a selling feature Increased interest in service contract sales Changes in warranty Publish user in— struction booklets Source of ideas and areas for study 5. Individual com— laints OMPANY B Tabulated com- laints about ealer performance Complaints in eneral and actual omplaints Tabulated com- laints and other roduct quality omplaints . Tabulated com— 1aints of high ervice charges . Tabulated com- laints by zone OMPANY C Complaints in eneral Untabulated uality complaints Tabulated com- laints by distri— ution point Individual and ntabulated com— laints 192 Head— quarters mgt. Sales mgr. & service mgr. Service dept. Reliability and quality control committee Service dept. & reliability and qc committee Service dept. Customer relations mgr. Monthly quality control meeting VP sales Varies Distribution of actual complaints among mgt. for morale purposes To catch an unfit dealer at an early time For developing dealer—principal technical training and customer re- lations programs One indicator of product performance Relocation of refrigerator relay switch A zone performance control Training program materials for company and dis— tributor personnel Insure performance in use according to design Distributor control and evaluation Unspecified indi- vidual problem situations OMPANY D .. Tabulated com- laints geograph- ,cally Tabulated com— laints geograph- .cally .. Tabulated com- ulaints geograph- .cally Tabulated com- .laints and open :omplaints 5. Complaints in general 3. The handling of :omplaints 7 Complaints in general 3. Special tabu— -ations of :omplaints 3. Special tabu- _ations of :omplaints .0. Product quality :omplaints 193 Service development dept. Customer assurance & home service dept. Customer relations & service training depts. Service training Customer assurance Customer assurance, quality control Measure of effec- tiveness of franchise service program Measure of effec— tiveness of warranty service program Spot dealers and service agencies that need to be up— graded or replaced Distributor or branch performance—- quarterly ratings Discover areas where consumer education is needed and re— write owner manuals CR dept. used to help train field service reps. Source of materials for training pro— grams To draw customer specifications in the product life cycle To guide necessary corrective action in product life cycle, eg., change dish- washer racks Quality control QMPANY E Excessive number >f complaints 3. Complaints in ;eneral L. Tabulated com- ulaints on quality if purchased .omponents Tabulated com- >1aints of cleaning ,ifficulty .. Tabulated com- .laints of cleaning ifficulty Tabulated com— laints of rust under .ift-up range top Tabulated com— 1aints of cleaning ifficulty Tabulated com— laints of cleaning ifficulty Complaints over a ong period of time bout excessive urface heat 0. Complaint sugges— ions tabulated about eed for additional arge burner element 194 Consumer service div., sales Dir. of home service, consumer service div. Consumer service div., quality control, weekly con- sumer ser— vice meeting Weekly consumer service meeting, product committee meeting H Evaluation of dealer and service agency performance Redesign and rewrite owner manuals Change to new sup- plier for component; eg., thermostat for automatic burner Lift—up range top Slide-out oven Design with vent to eliminate problem Redesign gas burner for easy cleaning Redesign oven door seals for removable easy cleaning New insulating technique used Two large sized burner-elements on ranges 1. Tabulated com- 1aints stimulated y competitive alesmen about height f upper oven 2. Long standing omplaint about re- eposition of dirt n dishwashers 3. Tabulated com— laints about reakage OMPANY F Untabulated com- 1aints geograph- cally . Untabulated com— laints that open lid f automatic washer it timer knob Tabulated com— laints and other ources on rust stain roblem on wringer asher Tabulated com— laints of wringer asher motor burning ut . Tabulated com- 1aints that v-belt n gas wringer washer ept slipping off . Consumer accepta— ility of cold water inse cycle on 195 Weekly consumer service meeting, product committee meeting H Product Product service manager, product planning, and r & d H Product planning Raised height Redesign dishwasher completely and in— corporate two— directional arm impeller New fastener device for dishwasher rack roller Evaluation of dealer and service organi— zation performance No corrective action taken because not considered to be a real problem ( a de- cision) because of high quality finish Applied acrylic lacquer as a finish Motor change to compensate for con- sumer use conditions Belt change on gas wringer washer To determine accept— ability of proposed new model utomatic washer-- ere there com— laints? OMPANY G . Tabulated com— laints about dealer nd service agency srformance . Tabulated com— Laints about de— active purchased amponent compressors Tabulated com- .aints and other >urces that egg tray .s too small Tabulated com— aints and other urces that refrig— ator door stop be ded Tabulated com- aints of offensive oduct odor Tabulated com— aints and other irces that refrig- ator produced hot r when door opened Tabulated com— aints on one Tticular model 196 Service department & sales department, merchan- dising committee Service department, merchan— dising committee, purchasing Merchan— dising committee Evaluation of deal- ers and service agencies Replace defective components, sup— plier relations Size of tray f changed Door stop added Change to different sealing compound Added heater switch to refrigerator Model considered a design failure; discontinued design, appropriate cus— tomer relations action taken 197 3.Tamflated com— Merchan- dahfis over a long dising >eriod of time of 'aulty door gasket OMPANY H .[kmabulated com— Service Lahfis that refrig- department, Tannrdoor racks engineering, 2re:&flling off monthly quality control meeting Untabulated com- ” aints about exces- ve refrigerator npressor noise Untabulated con~ ” ner suggestions Lt tall bottles >uld fit top re— .gerator shelf Untabulated com- ” ints that top re— gerator shelf bowed '7 Gasket changed, but company also learned that laboratory testing did not simulate home—use conditions Size changed on interior plastic door and racks In-use quality control--quiet performance, (also mfgr. qc--slight adjustment to jig) Lowered shelf Made shelf more rigid for heavier loads Strengths and Weaknesses of Unsolicited Consumer Complaints 'The case study companies do use complaints as a ‘ce (If marketing intelligence for those purposes ed :in the previous section. Major disadvantages or IleSEHBS cited by the companies in using complaints are ennotxion, vagueness, incompleteness, overstatement, lacfli of technical language in complaints; (b) influ- of‘ outside factors such as geography and publicity 198 ABLE 3.--Number of consumer complaint marketing intelligence uses cited by companies Number of Examples by Company reas of Use A B C D E F G H Total . Product manage— snt: the planning, ssign, change, avelopment, im— rovement, and/or 1ality control of as physical prod— :t éexamples:* l— 3 B 3, 4; C 23 8, 9, 103 E 3—135 2-63 G 2—8, H 1—4) 8 2 l 3 ll 5 7 4 41 Channel of dis— ‘ibution evalu— :ion and control 5 l, 53 C 3; D 3, E 1; F l, G l) O 2 1 2 1 1 1 O 8 Consumer edu— tion (A l2, l3, 5, E 2) 2 o o 1 1 o o o 4 Training (B 2, 1, D 6, 7) o 1 1 2 o o o o 4 Miscellaneous: New opportuni— ties (A 9, 10, ll) 3 Idea source (A 14) l Mgt. morale (A 15) 1 Individual pro— blems (C 4) 1 Evaluate mfgr. programs (D l, 2) 2 >tal Misc. 5 O l 2 O O O O 8 TAIJ 15 5 4 10 13 6 8 4 65 Hi ORDER 1 6 7-8 3 2 5 4 7—8 *Numbers under each company correspond to Figure 14. 199 an mmmlaint to sales ratios; (c) unknown representative- ness;(d) difficulties in obtaining meaningful tabu- Latnxm which do not simply duplicate other sources, and kfi dangers of failure to use complaint intelligence as finely one part of a total program. Offsetting advantages or strengths of the consumer :omplaint source are (a) the number of complaints are sually sufficient for tabulation and analysis, (b) com— 1aints are usually valid as indicated by investigation, c) for some information, complaint intelligence is more imely than that from other sources, (d) some complaint nformation is unavailable from other sources, and (e) omplaint intelligence is well—suited for pointing out aaknesses and possible areas of change and for trig— aring further investigation Summary For convenience in reference, and not to be totaled 1 any quantitative manner, the inter—company comparisons 'e presented in Table 4. 200 E 4.—-Inter—company summary comparisons Manufacturers 1arison Items A B C D E F G H Woad (B) or narrow product line B B B B N N N N tated public re— ons (PR) or market— management (M) osophy toward laints PR PR PR M M M PR PR ank order compari— of reported use of ods of soliciting umer satisfaction rmation, by points 2—3 4 5 l 6 2-3 8 7 egree of mechani— f 0 on in handling sented in l to 8 order, l‘is most anized) 1—2 1-2 4 3 5—8 5-8 5—8 5—8 egree of follow up :losing (presented -8 rank order) l-4 1—4 1—4 1—4 7-8 5-6 7-8 5—6 agree of tabu— 3n and analysis of Laints (1—8 rank -"> >mplaint intelli— 2 examples cited _n rank order) 1 6 7—8 3 2 5 4 7—8 CHAPTER IV RECOMMENDED MANUFACTURER PRACTICES FOR HANDLING UNSOLICITED CONSUMER COMPLAINTS FOR MARKETING INTELLIGENCE PURPOSES Introduction to the Chapter This chapter sets forth recommended manufacturer tices for handling complaints for marketing intelli— e purposes. The recommendations do not constitute a l or optimum program for handling complaints. Areas iscussion which are noticeably excluded or mentioned dentally are the public relations and office proce— s aspects. The practices recommended here are not for a par— lar industry or manufacturer; however, the influence 1e major household appliance case study findings can litely be noted. Although the recommended practices ;pecific and are suggested for a hypothetical firm, can hopefully be adapted to fit the needs of dif- [t firms in different industries. Without specifying of similarity, the assumption is made that the hetical firm is sufficiently similar to the case Inanufacturers in those things which importantly ‘t consumer complaints and complaint handling 201 202 :tices for marketing intelligence purposes. The two—phase framework of the consumer complaint keting intelligence system, described in the theoret— 1chapter, is used here. Recommended practices are my limited to the second phase although management Dexercises some influence and control over parts of first phase. The Customer Relations Department: Receiver and Source Positive action must be taken on the part of the Lfacturer if unsolicited consumer complaints are to be advantageously for public relations and marketing lligence purposes. A prime requisite is a consider- degree of geographic and organizational centrali— on in handling complaints. An organizational sub— , sometimes called a complaint bureau or customer tions department, should be charged with the respon— lity for handling all consumer complaints for the re company or operating division. This customer re— ans department acts as a centralized decoder—receiver amplaint messages from consumers and as the central— source of records and encoder of complaint intelli— a to marketing management. )rganization of the Customer Relations Department The entire company organization structure cannot be around the function of handling consumer complaints 203 “puhhc relations and marketing intelligence purposes. 'Qflfiflt as complaints may seem in the present study, ii‘place in the total business operation is quite 11. In spite of the present temptation to stress the cmiance of the customer relations manager, his imme— te superior would most often not be the company's top ieting executive. The following recommended organi— ion assumes that a service organization exists, at at at the headquarters level. For products requiring rice, as can be noted in the major appliance case lies, the knowledge requirements for handling both Fuct and service complaints can be found among service onnel who can be taught the necessary public re— ons and marketing intelligence collection skills. quality control department is a logical choice for ting customer relations if a headquarters service rtment does not exist. It is interesting to note while the case study manufacturers recognized the ic relations aspects, none of these manufacturers led consumer complaints through public relations amnents. IInternal organization of the customer relations KLt is relatively simple because of the usual small IFormal horizontal relationships should be estab- :d loetween customer relations and (a) the customer icnis counterparts for the wholesale level of 204 tribution, (b) technical service personnel, and (c) mesentatives from product planning. If the manufac— er has an established marketing intelligence organi— ion, as described by Kelley1 and outlined in the st chapter, such a unit could be used for distri— ing consumer complaint intelligence to service, prod— planning, and other users. However, in the likely ence of such an organization, organizational relation— ps must be defined between customer relations and all 1" (D of complaint marketing intelligence. Functions of the Customer Relations Department Under a marketing management approach, the two Lc functions of the department are in the areas of _ic relations and marketing intelligence. In many >anies, the marketing intelligence purposes are made >ndary to public relations purposes. In any event, .eting intelligence from consumer complaints should t as an end or purpose of the department and the ific end uses of consumer complaint marketing intel— nce should be defined for the customer relations rtment. Initial definition of such uses should be , preferably in writing, by the marketing management 3 of such information. This principle of specifying problem or objective for a management subunit was 1William T. Kelley, ”Marketing Intelligence for Top gement,” Journal of Marketing, XXIX (October, 1965), 205 :ussed by Stinchcombe2 and is illustrated by Company D. the Company D case, for example, customer specifi— 1ons used by the customer assurance department in the iuct life cycle are defined as being partially the alt of complaint intelligence. Such definition of pose by the user facilitates the determination of elligence collection requirements by customer re— ions. Recommended Receiving and Handling of Complaints Receiving and handling practices recommended for tomer relations are (a) provision for centralized re— ving and a written record of all complaints, (b) pro- ion for investigation, follow up, and closing of all plaints, and (c) integration of the handling and clas- ication system used for public relations purposes with tabulation and analysis requirements for marketing elligence purposes. Several positive steps can be en to promote centralization and recording of com— ints. First, a top management directive to all parts the company that complaint correspondence is to be han- d by customer relations, is necessary. However, to be ective, the customer relations department must over e show why and how it can do a better job of handling 2Arthur L. Stinchcombe, ”The Sociology of Organi— ion and the Theory of the Firm,” Marketing and the avioral Sciences, ed. Perry Bliss (Boston: Allyn And on, Inc., 19 3 , 206 plaints. Centralization can be facilitated by using desired company address on all products, labels, in— ts, etc. and by training of mail employees. Preprinted /or precoded forms encourage recording. Special prob— 3 which arise if the manufacturer desires to secure plaints made to branches or wholesalers probably veigh any advantages from such a high degree of cen— Lization. A complaint handling system which provides for astigation, follow up, and formal closing of all com— .nts promotes good public relations, but it also 'ents information loss and misinformation from de— ,sing the intelligence value of consumer complaints. omic considerations may dictate that detailed inves— tion be undertaken only for those complaint situ- ns which are statistically attributable to specific er than common causes or chance. However, this rs to that form of investigation or search action 1 may be called further study of a problem which has pointed out by consumer complaints. In any case, individual complaints should be satisfactorily inves— ted for purposes of validation. Investigation is asary to validate the information contained in the _nal complaint and to secure additional needed infor- >n. Such investigation may take place in the field the factory. Field investigation, necessitated by factors as product size, can be carried on by 207 Luacturer field personnel or by channel of distri- ion personnel. Investigation at headquarters may plve technical service, quality control, or other per— xfl” However, the responsibility for investigation ains with the customer relations department. A system :h provides for follow up on all complaints not closed as to insure that some complaints are not neglected reveals information about ”open” as well as ”closed” >1aints. The formal closing requirement forces some- to make a positive decision that the complaint should :losed rather than merely letting the complaint dis- sar by itself. In general, the case studies indicated the larger, broad-line firms exercise more follow up closing control than other firms. This may or may be a function of size; however, such practices are mmended here. The third recommendation, an integrated classifi— on system, is simply a reminder that terminology, 3g, and other parts of a classification system for laints must be compatible with both the public re- pns and marketing intelligence requirements of the ury. More is said about this later. Encoding and Decoding Recommendations jMarketing intelligence messages can be encoded from ridualconsumer complaints and/or from groups of com- rts classified into categories for tabulation and 208 lysis. In any case, a necessary early step is for tomer relations to interpret and record for each com— int such information as (a) consumer identification a, (b) product identification data, (c) a description the complaint, (d) description of company handling and estigation, (e) causes, (f) remedial action, (g) geo— phic location, (h) date, and others factors which .ld prove useful in evaluating individual situations serve as bases for classification. Complaints used on an individual basis for intel- ;ence purposes should be validated before use. Com— .ints used on a classified basis may be validated ,her before or after classification and use. All com— .ints should be validated. Validation before use uces encoding and decoding noise, however, this takes Le. Use before validation by ignoring or estimating : amount of noise or error from misclassification in— fases the currency but reduces the accuracy of market— ; intelligence. Either method can prove to be satis— ,tory. Questions arising in connection with a classifi— .ion system for complaints for marketing intelligence 'poses are: Should complaints be classified at all? .t are the criteria of a good classification system? .t bases of classification should be used? What clas— ‘ication systems have been used by other companies? 1, what is recommended? 209 Complaints should be classified for use in tabu— ltion and analysis. Marketing intelligence use of com— .aints on an individual basis alone is quite often un— Ltisfactory. The summary of case study findings indi— Ltes several uses of classified, tabulated information. Wasson says of criteria that the six conditions rich a good research category set must fulfill are: l. The degree of subdivision within the set must be great enough to reveal any differences between those items measured or observed which would effect decision and subsequent action. 2. The categories chosen must be such that the mar— ket or business elements so classified can be identified for purposes of subsequent action. 3. The categories used should be based on a single classificatory principal (extent of buying action, social class, place of residence, or other basis relevant to the kind of action or decision to be taken). 4. The classification should be all—inclusive (There should be no element of observation or measurement which does not fit neatly into one or another of the categories used). 5. Classification should be such that every element of observation can be placed in one and only one of the classifications (i.e., such that cate— gories chosen should be mutually exclusive). 6. The categories used should be homogeneous (all substantially alike) from the standpoint of the kind of interpretation to be made of study results. The bases of classification for the category sets ould be determined by the purposes for which the 3Chester R. Wasson, Research Analysis for Marketing cision (New York: Appleton—Century—Crofts, 1965), 179. 210 alysis is to be used. Of concern here are the public lations and marketing intelligence requirements, com— tibility with other departments such as quality control, 1 the available tabulation capabilities. Classification systems used by other companies are ported in the cases, suggested by the reporting methods sted in Figure 13 of the case study summary, and are itioned elsewhere in the study. A recommended classification system, designed to rve those marketing uses which the case study systems re found to serve, would use such bases of classifi- :ion for category sets as product, model or model num— ?, geographic area by wholesale marketing territories, aler, warranty status, date of complaint, cause of nplaint, area of responsibility in company, how settled, 7 could have been prevented, and whether or not con- ier was satisfied. The number and complexity of actual 1 potential tabulations and cross tabulations will de— 1d on the availability of machine or other tabulation pacity. Encoding should put the information in a form which Ll minimize the amount of decoding necessary on the cts of marketing management users of complaint intelli— 1ce, however, the user must decode and apply the intel- gence to the specific problem or use—situation involved. other words, the decoding task should be simplified as :h as practical by uncluttered reports, etc. For 211 .mple, Company A retains a summary report for the head- .rters product service section, sends a geographic sub- liary report to districts, and another subsidiary re- 't to product departments. Later in this chapter, in the subsection on the use the so-called statistical control method, are shown scific examples of analysis and reporting of consumer 1p1aint marketing intelligence. Message Channel Recommendations Message channel recommendations are necessarily Ltricted since the established organization structure 1 communication channels of the firm are not going to significantly changed merely to accommodate consumer 1plaint marketing intelligence. Message routes and Licles are discussed here, but the discussion does not ,ail the designing of report forms or the efficiencies committee operation. Recommended message channel routes are the estab— Lhed formal routes supplemented where necessary by ‘ormal routes to all those members of marketing manage— 1t who are in a position to use the information. If a 1tralized intelligence service (as briefly described in a first chapter) exists in the firm, this service and ; established routes should be used.LL uSee William T. Kelley, ”Marketing Intelligence for 3 Management,” Journal of Marketing, XXIX (October, >5), 19—24. 212 Principal available message channel vehicles are ditch reports, oral reports, committee meetings, and formallneetings. Written reports and committee meet- gseue recommended because their formal nature insures 2N3complaint information, often of a negative variety, 11 at least be discussed. Oral reports and informal. etings are recommended when necessitated by the time :tor. The proper mixture of formal and regularly peduled written reports and committee meetings, and a1 reports and informal meetings will depend on indi— iual company situations. For example, Company E amed to very successfully rely on committee meetings 7e heavily than did some other case study companies. a marketing management receivers of reports and 'ticipants of committee meetings are identified in the :t section. Marketing Management Receivers of Complaint Intelligence The traditional starting point in marketing research matching marketing intelligence with marketing manage— 't is a management unit with a problem. In the present fly, the communications approach first focuses attention qu information source. It is recommended here that actueJ_practice both source and management unit be i as; starting points. First, all marketing management us should be generally apprised of actual and potential 213 fixfiing intelligence available to them. From this gen- tliUsting, each management unit must decide (or have :mxm for it by superiors) what types of consumer com- .mu;and other marketing intelligence may be useful to :unit in the solution of recurring problems. Specifi- ions regarding the intelligence which units wish to eive on a regular basis should then be sent to cus— er relations. The initiative for the program may be rcised by a centralized intelligence department, cus— er relations, or a marketing management unit which ards complaint intelligence as very desirable. Also, anagement unit with a nonrecurring or specific market- problem may request on a special basis consumer com- Lnt marketing intelligence bearing on the problem lation. Management units which may typically be expected to complaint intelligence are suggested by the examples 'igures l3 and 14 of the case findings summary. The .ples in Figure 14 and the areas of use in Table 3 of same section suggest purposes for which complaint lligence might be used by other manufacturers. ough titles vary from company to company, noticeable g the users are product planning, quality control, ice, and customer relations departments and commit— Product management, which includes the planning, arr, change, development, improvement, and/or quality D col.<3f the physical product, was the area of use in 214 e cases which accounted for nearly two—thirds of the e examples. This area of use is recommended as worthy investigation by other manufacturers. Recommendations for Reducing Noise in the Consumer Complaint Marketing Intelligence Message Slight alteration makes the following detailed :ommendations about message fidelity of consumer com— iint marketing intelligence applicable to many busi— 3ses. Some of the ideas used here have been mentioned the first chapter under a subheading on noise. Rec— lendations regarding representativeness and signifi- Lce are made here. Investigation for validity has 1 eady been recommended. Representativeness Representativeness refers to the inclusion within sample of all the important kinds of units which are luded in the population from which the sample was vn. If the complaint messages as a group are con~ ered as a sample, of what population is such a sample resentative? Manufacturers have assumed that the pop- :ion is dissatisfied consumers. Such a general metion may be sufficient for many uses and users of )1aint intelligence. For example, if complaint intel— nce is used to point out problems which may be worthy Iarther investigation, the representativeness question ot 'too important. However, information about the 215 finesentativeness (and proportionality) of the sample is mmtimes desired. The use of an experimental design is recommended as a ens for determining representativeness. Performing such ,experiment once or at infrequent intervals on a sample sis could serve as an adequate guide to representative— ss. The objective of such an experiment would be to de— ne the population of which complaining consumers taken a sample would be representative (and proportional). To determine the population of which complaining isumers are representative, the similarities and dif— rences would be compared between (a) a control group iposed of consumers who had complained and (b) an ex— ‘imental group (the hypothesized population or a sample >wn to be representative of it). Hypothesized popu— ions might be (a) consumers in general, (b) known con— ,ers of the product as evidenced by warranty regis— tion cards, or (c) some other group. Important kinds of ts which should be similarly included in both experi— tal and control groups are such factors as geographic ation, age, income, sex, occupation, education, etc. Professional marketing research consultation may be essary in conducting such an experiment, however, a ttively simple experimental design such as ”after only 1 control group”, should suffice.5 5Harper W. Boyd and Ralph Westfall, Marketing Research Levnpod, Illinois: Richard D. Irwin, Inc., 1964) p. 109. 216 Significance :roduction Significance refers to the importance or meaning en to a complaint or complaints. The significance of ingle complaint, factors affecting the rate of com— ints, and related topics were discussed in the first pter. The following recommended company practices olve specific quantitative measures of the signifi- ce of consumer complaint marketing intelligence. initions of Terms Used For convenience, several terms used throughout the ainder of this section are defined in this subsection. general, calculations involving these terms can be a for the entire firm or for a part such as a terri— f or product. Consumer complaints is the total number of consumer )laints (as previously defined) received by a manu— ;urer in a given time period.6 Sales (in units) is the total number of units of ,uct sold to consumers in a given time period. This Lre may necessarily be an estimate. Production (in units) is the total number of units 6This study has been primarily concerned with manu- 'urers whose products are ultimately sold to the con— r level, however, the present analysis could also be- ‘ted for manufacturers and others serving other mar— 217 product produced in a given time period. Serious defects is the number of products in a en time period that would be considered defective by tory inspection whether or not such inspection actu— y took place. The sale—to-complaint time delay factor is the nal time lapse from the sale of the product to the sumer to the receipt of the complaint by the manufac— sr. The production—to—sale time delay factor is the nal time lapse from production of the product to sale :he product to the consumer. The total time delay factor is the sum of the iuction-to—sale and sale—to—complaint time delay ZOI'S. Units in use by consumers is the estimated total >er of units of the product currently in use by con— :rs, regardless of when produced or sold. The propensity to complain is a measure of the lihood that an unsatisfactory sale will result in a laint. For example, a propensity to complain of ty—five per cent means that on the average one of ;y four dissatisfied consumers will complain. It is ratio of consumer complaints to unsatisfactory sales. Satisfactory sales (in units) is sales about which Inners are satisfied. 218 Unsatisfactory sales (in units) is sales about ch.consumers are dissatisfied regardless of whether or a complaint is received. If the above definitions are not satisfactory or patible with present company usage, the individual pany should construct and publish its own list of ms and definitions on the subject. By qualification combination, the above terms can be used to construct 1 ratios, indexes, and relationships as the ratios of sumer complaints to sales, serious defects, production, :5 in use by consumers, and others described in the _owing sections. of the Statistical :rol Method The following description of this method borrows 'ily from separate articles by Mac Crehan and Namias.7 so-called statistical control method is a general .nique which may be applied in analyzing complaints ,ny product. Namias says: It may also be useful in testing physical materials for quality, production rates, accidents, personnel turnover, demerit rating, and in fact in most situations where a decision must be made on whether to attempt to take corrective actign on causes of greater than expected variation. 7Wm. A. Mac Crehan, ”Watch Your Customer Com- nts,” American Machinist, XCIII (June 30, 1949), O and Jean Namias, "A Method to Detect Specific es of Consumer Complaints,” Journal of Marketing Re- gh, I (August, 1964), 63—68. 8 Jean Namias, ”A Method to Detect Specific Causes 219 The purpose of the technique is to show when the rved variation in the rate of consumer complaints may ssigned to a specific cause and when it may arise chance or common causes. The identification and re- 1 of a specific cause is simpler. To avoid additional calculations, the Namias exam- of how the technique was employed by a manufacturer everal brands of soft drinks is summarized below.9 chart and the table from which it is derived, Figure nd Table 5, were established by the following steps computations: he average rate of complaint p for all brands is = r/n where r is the total number of complaints and is the total number of units sold, then 186/71,758 = 5.9 complaints per 10,000 units (= rate). he rate of complaint for each brand, pi, is then com— uted (see column 4 in Table 5). The rate for brand is pi = ri/ni. For example, for brand no. 1, pl = /2,529 = 19.77 complaints per 10,000 units sold. ri the ”expected” number of complaints for each brand s shown in column 5. This is the number of com— laints for Brand i that one would expect on the aver- if the rate of complaint p = 25.9 per 10,000 0'8 D 3 nits would apply to each brand. The ”expected" number If onsumer Complaints,” Journal of Marketing Research, I ust, 1964), 63—64. Ibid., pp. 64—66. 22O 1f complaints for brand i = pni. Hence for brand no. _, pnl : 25.9 x 2,529 The upper and lower 2- = 6.55 per 10,000 units. sigma limits are computed for :he number of complaints, ri (columns 6, 7), from 7Er1i_1)2. ‘or brand no. 1, rU 'he upper and lower 2- .he rate of complaint, Eri t 1)2 n1 .imits are plotted on .umber. (They can be 'or brand no. 1, pU = (JETEE + l)2 ( 2.56 + 1)2 = 12.67 (upper limit) ((67? - 102 ( 2.56 - 1)2 = 2.43 (lower limit). sigma limits are computed for pi (columns 8, 9) from Figure 15 above each brand connected by vertical lines.) 12.67 2,529 = 50.10 complaints per 10,000 units (upper limit) 2.43 2,529 = 9.61 complaints per 10,000 units (lower limit). ‘hese limits provide a criterion for action. 221 he points pi are plotted on Figure 15 in the order of rand number (column 4). The plotted points will show ariation in the rates of complaint from one brand to nother. These variations may or may not indicate hat specific causes are at work. Their relation to he computed limits answers this question.10 The action limits shown in the figure are based on gma which corresponds to a level of significance of 5 (roughly 5 percent). Namias favors the 2—sigma ts over 3—sigma limits because experience shows that s economical to err occasionally in looking for ific causes of difference when they do not exist in r to fail only rarely to discover causes when they do t.ll When the lower limit as computed turns out to egative, it is put at zero, since a negative limit is ssible. The points for brands 2, 3, 4, 5, 7, l3, l4, and 15 outside the action limits. Complaint rates for ds 2, 3, and 4 are significantly high and for brands , 13, 14, and 15 are significantly low. Immediate stigation should be undertaken to determine the spe— c causes of variability of the above points. In the as example, the search for specific causes revealed a for worker training to correct the problems on lOIbid., pp. 65~66. 11Ibid., p. 64. 222 l5.—-Action—limits for determining brands with rates significantly different from all brands ® ® ® I I ; UFPQT __ :1-5131/“04 ~‘ L7m1+ — — — ‘77— I “ T IF [ —‘ /< l P: 2.5.? )< 2: l 1 e — 1. . "‘ Lewd.” ’ )I J— J 2_— Sigma; _5" — kiwi-1L ’ ' .1- rm ,1 m (VA m (‘1 \y /\ I /’)_3456789IOI//2/3//5 BRAND NUMBER 8 Points outside limits indicate existence of special causes of difference 121bid., p. 64. 223 TABLE 5.——Computation of action—limits (l) (2) (3) (4) (5) Rate of complaint Number (per Expected Brand Number of of com— 10,000 number of number units sold plaints units) complaints Di Ti pi = ri/ni Eri = pni 1 2.529 5 19.77 6.55 2 2,792 26 93.12 7.24 3 2,166 20 92.34 5.61 4 955 7 73.30 2.48 5 3,566 4 11.22 9.24 6 3.914 11 28.10 10.15 7 5,886 0 0 15.26 8 8,547 22 25.74 22.15 9 528 2 37.88 1.37 10 7,115 11 15.46 18.44 11 2,731 3 10.99 7.08 12 26,627 75 28.17 69.02 13 1,612 0 0 4.18 14 885 0 0 2.29 15 1,905 0 0 4.94 Total n = 71,758 r = 186 p = 25-9 Er = pn = 186.00 = r/n = 186/71,758 old (= rate). = 25.9 complaints per 10,000 units 224 TABLE 5.--Continuedl3 (6) (7) (8) (9) (10) (ll) Limits for pi P , t Limits for r- (JEri+1)2 (JEri—l)2 Quiggd: (rEri+l)2 (VEFi-l)2 n1 n1 limits rU rL pU pL high low 12 67 2.43 50 10 9.61 13.62 2.86 48.78 10.24 x 11.36 1.88 52.45 8.68 x 6.60 0.33 69.11 3.46 x 16.32 4.16 45.77 11.67 x 17.56 4.80 44.86 12.26 24.11 8.47 40.96 14.39 x . 32.60 13.76 38.14 16.10 ' 4.71 0.03 89.20 0.57 27.98 10.82 39.33 15.21 13.40 2.76 49.07 10.11 86.68 53.44 32.55 20.07 9.24 1.08 57.32 6.70 x 6.30 0.26 71.19 2.94 x 10.37 1.49 54.44 7 82 x 3 5 brands 2, 3, and 4. An investigation was also conducted into the causes of significantly low rates of complaint in order to determine if the low rates were caused by real reasons or by laxity in reporting or clerical error.14 Continued use of the technique by computing adjusted action limits about an adjusted central line will enable management to evaluate its performance. The adjusted v— 131bid., p. 65 14Ibid. 225 chart is calculated in the same manner as the first except that the data for the corrected situations (2, 3, and 4) are excluded from the calculations. The adjusted central line may be used as an assumed standard value of p for constructing the chart for the next period. This standard value may be revised again as new information is provided.15 The above example compares complaint rates using brand as the basis. However, this same technique can and prob- ably should be used for analyzing complaints on such bases as model, wholesale territories, and other pre— viously mentioned bases of classification. The Time Delay Factor in Relating Complaint Intelligence to Certain Other Data For certain uses of consumer complaint marketing intelligence the time delay factor becomes important. For example, if quality control records are kept accord— ing to production dates, complaint data about in-use per— formance should be related to the proper production date for comparison. Or, if a change(s) in the design of the product was made, complaint intelligence would be mis- leading unless management knew whether the product com- plained about was produced before or after the change. The actual time delay factor may be sought for each l51bid., p. 67. 226 individual complaint situation or it may be estimated by applying an average or normal delay factor. The use of the average method will be satisfactory for many users, particularly if the average is recalculated every six months or so. For individual use or for use in establishing the average, important dates can be identified by various means. Date of production is often identifiable by date stamp or serial number. Date of sale to consumer can often be established on a retail store sampling basis or by use of purchase warranty registration cards. The original date of receipt of complaint should be recorded by customer relations. Thus, the production—to—sale, sale—to-complaint, and total time delay factor can be calculated as desired. The following example shows one averaging method for assigning complaints to the month in which the unit was produced. The example uses an eight month weighted average. Individual company experience may indicate some slight changes. Another type of calculation over time should be mentioned. This is the cumulative complaint rate over time. Comparison of cumulative complaint rates since a common date such as date of first production may be helpful in evaluating the merits of a new design, market— ing program, etc. over that which it replaced. 227 Fig. l6.-—How to assign complaints t8 month in which unit was produced1 COMPLAINT TIME ANALYSIS SHEET Elapsed A B A x B Time: Number of Complaints Total Cell Months 5 10 15 20 25 Complaints Value Totals 1 2 fl 2 2 4 3 fl/ 3 3 9 4 .44 5 4 20 5 +4.4 4.4.! ##- / l6 5 80 6 A”, ‘ 4 6 24 7 , l 7 7 8 / 1 8 9 Computation: Efx = 152 = 4.75 Average n = 32 n 32 Delay Factor fo = 152 Time lag between receipt of complaint and month in which unsatisfactory equipment was produced is determined from above data. For example, with 4.75 average delay factor, complaints received in May are charged against January production. Procedure is to record all complaints re- ceived in given month. Figures for past eight months then form basis for computation. When figures for new month are added, those of oldest month are-dropped, and ”cell” valus from 1 to 8 are assigned consecutively to each month starting with oldest. Column totals are equated as shown to give delay factor. l6Wm. A. Mac Crehan, ”Watch Your Customer Com- plaints,” American Machinist, XCIII (June 30, 1949), 68. 228 Other Measures of Complaint Significance In the Namias example, the ratio of consumer com— plaints to sales was used in a statistical manner to measure complaint significance. This ratio and other measures may be used in either statistical or nonsta— tistical ways to measure complaint significance. Some such measures which may warrant popular usage are de- scribed here. The consumer complaints to sales ratio is one of the most popular performance measures used. It is easily calculated and easily understood. However, if used as an indicator of consumer dissatisfaction it could be mis- leading in some situations. For example, as was pointed out in the first chapter, the propensity of consumers to complain varies. Price of the product is the chief cause of variation. Therefore, complaints to sales ratios of differently priced products cannot be compared directly. The consumer complaints to serious defects ratio can be used as an indicator of the propensity to complain. Percentages resulting from this calculation were given in the first chapter. Also, through experimentation the quality control and customer relations departments of the individual company may calculate the propensity to com- plain for various products. Caution should be used in such calculations to insure that only quality complaints (not all complaints) are compared to serious defects. 229 The consumer complaints to sales ratio divided by the propensity to complain may be used as an indicator of the rate of unsatisfactory sales. For example, if there are five complaints on sales of one thousand units and the propensity to complain is twenty—five per cent, the rate of unsatisfactory sales is two per cent. (5/1,000-+ 25/100 2 2/100). The rate of satisfactory sales is one hundred per cent minus the rate of unsatisfactory sales. Although the above relationships do not themselves explain anything, they do enable management to arrange the figures is useful ways. A rate of unsatisfactory or satisfactory sales, even though calculated by an esti— mated propensity to complain, can sometimes be quite use— ful. Other measures, such as the consumer complaints to production ratio (which is the same as the consumer com— plaints to sales ratio adjusted for time), or the con— sumer complaints to units in use by consumers ratio, could also be calculated if desired. Calculations in— volving units in use would be meaningful for products with a considerable length of useful life, especially if the complaint pattern was dispersed over time. The Desired Rate of Satisfactory Sales Consumer goods manufacturers should receive some consumer complaints. How many? Too few complaints may indicate that the manufacturer is incurring costs to provide a level of satisfaction above that desired by the 230 market which it serves. Too many complaints involve needless costs of complaint handling and warranty ser- vice. Also to be considered is the cost of replacing dissatisfied customers through advertising and other sales efforts. Although it is generally considered a desirable improvement over past performance to reduce consumer com- plaints, this is not necessarily always true. Intro- ducing specific changes to remedy common, rather than specific, causes of complaint may create more varia- bility by injecting trouble where none previously existed. 0n the other hand, time and money are wasted through failure to recognize specific conditions. It is there- fore economical to look for a specific cause when there is more variability than is expected on the basis of chance (common cause) alone.17 By eliminating specific causes, the rate of complaints can be reduced, however, since all common causes are ultimately specific if the analysis is carried to the extreme on enough different bases, management must determine the desired rate of satisfactory sales by executive judgment as well as statistics. l7‘Namias, p. 63. 231 Shortcomings of Complaints As a Guide to Consumer Satisfaction Marketing intelligence from consumer complaints does not present a complete picture of consumer satisfaction or dissatisfaction. In addition, the complaint rate may be a biased indicator. Some firms say the rate is nat- urally higher in some geographic areas. The rate is said to increase whenever company executives give speeches or engage in other publicity activities. Increased company identification can make it easier for the consumer to complain. Other biasing factors were mentioned in the first chapter. For the most part, such biases are not major. Bias of some sort is inherent in any marketing research technique. Recommended Feedback Two feedback loops, an altered offering to the market and a response loop to the customer relations de— partment, should originate with marketing management receivers of complaint intelligence. Feedback to the market is the result of actual use of complaint intelli— gence in the company's marketing programs. Such use should be planned for and included as a regular part of company marketing programs such as the product develop- ment program, training programs, channel of distribution evaluation programs, etc. The feedback to the customer relations department should also be provided for to serve as a control for getting the right marketing intelligence 232 to the proper persons. In practical terms, such feedback could be accomplished by periodic review of the consumer complaint marketing intelligence program. CHAPTER V CONCLUSIONS OF THE STUDY Basic Conclusion of the Study The basic conclusion and the major contribution is: the study supplies sufficient empirical evidence to sup— port the hypotheses that unsolicited consumer complaints (a) potentially and (b) actually provide a source of marketing intelligence for marketing management. The case study examples of use of consumer complaint market- ing intelligence are the evidence. The recommendations offered in this study as to company practices, based upon both published and case study materials, lend additional support to the thesis by illustrating ways in which com- panies may better utilize this intelligence source. The marketing ends or purposes for which complaint intelligence was used in the case study examples are shown in Figure 14 and Table 3 in the summary of findings section. Figure 13 of the same section lists the users. The most frequent use for consumer complaint marketing intelligence for all case study companies combined is product management. For this and other areas of use mentioned in Table 3, the way in which complaint intelli— gence is often used is to point out a problem situation 233 234 which requires further investigation by other means. For example, Company D programed complaint intelligence as a regular part of the drawing of customer specifications and taking corrective action in the product development cycle. In other words, complaint intelligence is used to make management aware of the existence and severity of the problem. Complaint intelligence may sometimes suggest a solution, however, its primary contribution is to point out a problem and indicate what the cause may be. An entire chain of decisions resulting in product change or development usually involves additional forms of market— ing intelligence. This is so because such positive mar- keting decisions must be based upon more than the nega— tive information from complaints. Although differences do appear to exist among the case study companies in the extent to which each uses complaint intelligence, two areas of use are common to most companies. These are the physical product manage— ment area mentioned above and the area of channel of dis— tribution evaluation and control. An overall impression, based upon different company needs because of such dif- ferences as company size and product line breadth, and based upon more than simply the number of uses cited in each case study, leads to the conclusion that the market— ing management concept of complaint intelligence does prevail, but to varying degrees, in the case study 235 companies. The programs of Company A and Company E illustrate this approach to a high degree in both compre- hensiveness and results obtained. Company D, Company B, Company G, and possibly Company F (in descending order) also exhibit the marketing management approach, but to somewhat lesser degrees. Company C and Company H appeared to be relatively less concerned with complaints as a source of marketing intelligence. However, the above statements are judgments, and it should be remembered that programs of all case study companies displayed merit. Consumer complaints are potentially and actually an effective marketing information feedback mechanism from the market to the marketing management of the manufac- turers. Other Related Conclusions The following conclusions and generalizations re— late to the hypotheses in some way or at least relate to the theoretical aspects of consumer complaint marketing intelligence described in the first chapter. Many of these conclusions and generalizations are tentative in that the supporting evidence is neither complete nor con— clusive. Relation of Complaint Intelligence to Other Marketing Intelligence Consumer complaint marketing intelligence is fre— quently used in combination with intelligence from other 236 sources. In the summary of findings it was reported that (a) the case study manufacturers all solicited consumer satisfaction information, although (b) some narrow—line companies were less active, and (c) a few methods of soliciting such information are popular among most of the companies. Some firms such as Company A and Company D were judged to rank relatively high in both (a) methods used to solicit consumer satisfaction information and in (b) their programs of securing intelligence from unso— licited consumer complaints. Other firms ranked rela- tively low in both. However, the case studies indicate frequent exceptions to a pattern in which companies rank either high or low in both solicited and unsolicited programs. Therefore, it cannot be concluded that firms having good solicited programs tend to also have good un- solicited consumer complaint marketing intelligence pro— grams, and vice versa. This may partially be explained by the organizational separation of these two intelli- gence gathering functions. Even so, the nature of com- plaint intelligence, as indicated by the advantages and disadvantages cited in the summary of findings, indicates that complaint and other forms of marketing intelligence about consumer satisfaction tend to reinforce each other. Organization Structure and Definition of Objective Company organization structure and definition of objective regarding consumer complaints appear to influence 237 marketing intelligence results obtained from complaints. Organization structure and channels of communi- cation affect the end uses of consumer complaint market— ing intelligence in so far as information which is un- available to certain parts of the company cannot be used by those parts to define and/or solve problems. For example, restrictive communications policies as reported in the Company B case probably tended to restrict the usage of complaint intelligence. The advance, and preferably written, definition of objective tends to enhance results obtained. Specifi- cally, the definition of the production of marketing intelligence as an objective of handling unsolicited con— sumer complaints tends to improve results. The further definition of specific ends or purposes for which com- plaint intelligence is to be used is also advocated to improve results. In other words, a management subunit tends to consider as problematic and worthy of its effort only those things which have by definition of its manage— ment task been assigned as problematic to it. Therefore, results are improved by defining the task of the customer relations subunit to include the production of complaint intelligence for purposes specified by marketing manage- ment receivers of such intelligence. Company D and Com— pany E are examples of companies which provide such defi- nition. Company C and Company H, undoubtedly due in part 238 to their philosophies regarding the value of complaint intelligence, are examples of companies which largely neglected such definition. Generalizations About Consumer Complaint Marketing Intelligence As an Information System Complaint intelligence is sometimes unique in that such information is unavailable from other sources. It reflects actual, in—use experience with the product or service. Reported company experience shows (a) the signifi- cance of consumer complaint marketing intelligence can be measured, (b) when necessary, the representativeness of complaint intelligence can be estimated by experiment, and (c) the justifiability of complaints and the validity of complaint intelligence can be determined by investi- gation. Neither the costs of consumer complaint marketing intelligence nor the optimum program were determined. However, certain cost—creating activities are common to both public relations and marketing intelligence purposes. A sound public relations program for the handling of com— plaints can facilitate the program for consumer complaint marketing intelligence and a weak public relations pro— gram can limit the intelligence capabilities from the complaint source. Relatively comprehensive complaint intelligence programs exist among both the larger, broad—line and the 239 smaller, narrow—line case study companies. Generally, the programs of the former do eXhibit a higher degree of handling mechanization, follow up and closing control, and tabulation and analysis. These more elaborate sys- tems may be more necessary and more fruitful for larger firms. However, the case studies indicate that some minimum degree of mechanization, follow up and closing, and tabulation and analysis is necessary for obtaining effective consumer complaint marketing intelligence re- sults. This minimum, commensurate with the needs of the individual company, is influenced by company size and breadth of line. Higher degreescfi‘mechanization, follow up and closing, and tabulation and analysis at least pro— vide increased capability for the complaint intelligence program. Given sufficient capabilities for company needs, favorable management attitude toward the use of complaint intelligence is likely to be a major deter— minant of the effectiveness of the complaint intelligence program. Current Literature and Practice Current literature on the topic of consumer com— plaints, mentioned in the first chapter, suggests the importance of the public relations aspects of consumer complaints to manufacturers. Although such a conclusion is incidental to the present study, the case study com— panies, in so far as they are representative of the major 240 household appliance industry or of manufacturers of con- sumer durables in general, do provide evidence of doing a good public relations job in the area of consumer com- plaints. The present study shows that the case study com- panies use complaint intelligence as an effective feed- back mechanism from the market to marketing management. Further study is necessary to confirm the belief that the same is true of the industry in general, of other manu— facturers of consumer durables, and of other manufacturers and marketers. Increased Use of Complaint Intelligence In the future, some increase in the use of consumer complaint marketing intelligence by manufacturers and other marketers can be expected because (a) more is known and is being learned about how to use this source, (b) increased competitive pressures will necessitate a greater need for information feedback from the market, (c) the total use of marketing intelligence will increase and the consumer complaint form will share in this increase, and (d) more knowledgeable consumers will have a greater pro- pensity to complain and this will tend to increase the relative value of this source by increasing both the quantity and message fidelity of consumer complaint mar- keting intelligence. 241 Recommendations for Further Research It has been said that the work of research is never finished, ie., the findings and conclusions of one study create new problems and raise new questions. Although practical limits exist as to the advisa— bility of attempting to secure certain facts about a subject such as unsolicited consumer complaints, the « present pioneering study does suggest that more could be learned about (a) how widespread are the consumer com- plaint public relations and marketing intelligence practices described in the case studies; (b) the dissat— isfied consumer, studied from the viewpoints of marketing and other disciplines, and (c) the entire field of mar— keting intelligence, particularly from unsolicited sources. In addition to these general suggestions, some of the minor conclusions of this chapter may suggest areas where further research would be beneficial. BIBLIOGRAPHY Books and Reports Alderson, Wroe. Marketing Behavior and Executive Action. Homewood, Illinois: Richard D. Irwin, Inc., 1957. Alexander, Ralph S. and Berg, Thomas L. Dynamic Manage— ment in Marketing. Homewood, Illinois: Richard D. Irwin, Inc., 1965. Berlo, David K. 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APPENDIX A Introductory Letter (Company name) is of interest to me in connection with my doctoral dissertation in business administration. I am currently on leave from the marketing faculty of Xavier University and I am completing work on a doctoral degree at Michigan State University. The subject of my dissertation is Consumer Complaints As A Source Of Marketing Information To Manufacturers Of Major Household Appliances. The core of this dissertation involves a small number of intensive case study projects. I am soliciting your co- operation to enable me to prepare the (company name) case study. What I would like to do is spend a day or two in (city name) at the earliest convenience of (company name) to investigate firsthand: A. How complaints are received by (company name). B. What routines and procedures have been estab— lished by (company name) to handle consumer complaints. C. What statistical analyses, if any, are made of unsolicited consumer complaints. D. What positive actions are taken by (company name) to solicit complaint information from consumers. E. What broad kinds of information are obtained. F. What marketing or other purposes are served by this information. This data will be compiled into a case study and sub— mitted for your approval before further use. I am not familiar with the organization structure of (company name), however, those executives with whom I would like to speak are those whose areas of responsi— bility do in any way involve them with consumer com— plaints. 247 248 I would appreciate a chance to talk with these men in the very near future. For your convenience I have enclosed a stamped, self—addressed envelope and a carbon copy of this letter on which you may indicate when I may visit your company. If you wish to telephone me, my number is Area Code 517 355-2954. Day(s) convenient for my visit Time of appointment Office & person to contact upon arrival I shall be grateful for your assistance in this vital phase of my research. Very truly yours, Wm. H. Brannen SUGGESTED AREAS OF DISCUSSION APPENDIX B Interview Guide R) O‘\U‘| JZ’UJ . Handling of consumer complaints. . Marketing uses for consumer complaint information. Sources and receipt of consumer complaints. Analyses made of consumer complaint data. Information obtained from consumer complaints. Strengths and weaknesses of consumer complaints as a source of marketing information. Closely—related information which is solicited from consumers. Background data about the company and its marketing operations. Other areas of discussion with interviewee related to consumer complaints. SOURCES AND RECEIPT OF CONSUMER COMPLAINTS 1. In a rough diagram, Show all the routes through which consumer complaints are received. Mail-— A. Centralized mail room? B. Who determines distribution of mail not sent to a specific person? C. To whom are complaint letters sent if not addressed to a specific person? D. Is a single office charged with answering all con— sumer mail? 0ther——Discuss other sources. 249 250 HANDLING OF CONSUMER COMPLAINTS 1. Does the company operating manual outline procedures, etc. for the handling of consumer complaints? (IS a copy available?) May I follow through a few ”typical” consumer com— plaints (actually or on paper) from the receipt of the complaint by the company to the ultimate disposition and final use of the complaint? Name all persons in the organization structure who have any responsibility for the handling of consumer complaints. What are the specific responsibilities of each person? What office procedures, forms, etc. are used in the handling of consumer complaints? (Are copies avail— able?) What are the specific objectives of the company in handling consumer complaints? ANALYSES MADE OF CONSUMER COMPLAINT DATA 1. What tabulations and analyses of consumer complaint data have been made? . How were the data classified and what breakdowns were made of the data? Name all persons to whom the various reports are sent. Are dummy copies of reports available? If no tabulations and analyses of consumer complaint data have been made, may I examine the files for a past period in order to tabulate, categorize, and analyze consumer complaints for the past period? INFORMATION OBTAINED FROM CONSUMER COMPLAINTS 1. What Specific kinds of marketing information (if any) can be obtained from consumer complaints? What marketing information has been gained in the past from consumer complaints? (Give specific examples.) Are consumer complaints valid? How does the company check on validity? 251 4. IS additional marketing information ever solicited from those persons who make unsolicited consumer com- plaints? (If so, give examples.) MARKETING USES FOR CONSUMER COMPLAINT INFORMATION 1. For what specific marketing purposes has (or could) consumer complaint information been used? What.are the areas of marketing research application of con- sumer complaint information? (Give both broad areas and specific examples.) STRENGTHS AND WEAKNESSES OF CONSUMER COMPLAINTS AS A SOURCE OF MARKETING INFORMATION 1. In your opinion, what is the Single, most-important advantage of consumer complaints as a source of mar- keting information? 2. What are other advantages? 3. What is the single, most—important disadvantage? 4. What are other disadvantages? 5. How do such factors as the time element, quantity of complaints, validity of complaints, etc. affect the usefulness as a source of marketing information? CLOSELY-RELATED INFORMATION WHICH IS SOLICITED FROM CONSUMERS 1. Describe all solicited (surveys, consumer panels, etc.) information which the company gets from any consumers after the product has been purchased. (Give specific examples.) (Are copies of forms used available?) 2. Are these activities (or the information) combined in any way with unsolicited consumer complaint data? BACKGROUND DATA ABOUT THE COMPANY AND ITS MARKETING OPERATIONS 1. Channels of distribution. 2. Products (Major household appliances). 3. Company marketing organization structure. 252 4. Associations, research agencies, sponsors, etc. 5. After—sale service and warranty. 6. Other sources of information which would be helpful for this topic. OTHER AREAS OF DISCUSSION WITH INTERVIEWEE RELATED TO CONSUMER COMPLAINTS _ 2. GAN M'1”)(Ill)1111111111111111114111!)ES