How To Effectively Respond To Customer Complaints
Dealing with client complaints. There’s nothing more damaging to a business’s reputation than one that mishandles a customer’s complaint.
We, your certified chartered accountant, also draw your attention to the pros and cons of Cash and Accrual accounting methods. The topic may seem dry, but it is important that you understand it – for the health of your business.
Turn Complaints around
No one looks forward to dealing with a complaint from an unhappy customer. It’s uncomfortable and confronting and it’s hard not to react when someone is rude or angry.
The customer might be unhappy about the product or the service. Sometimes it’s as clear-cut as a product defect. Sometimes it’s a case of ‘that’s not what it said on the box’ and customer expectations have not been met. It can take patience to hear the complaint and get to the bottom of what has actually gone wrong before you can even start to fix it.
How you respond can make all the difference. Take a breath and appreciate the opportunity this customer is giving you. Thank them and mean it. Sure, it feels uncomfortable. But this customer has taken the trouble to come back (or call) and tell you about it. They are giving you the opportunity to sort it out. They could have just walked away and you would never have known there was an issue.
Tips for responding to unhappy customers
- Be patient, stay calm and listen.
- Ask ‘please can you tell me what happened’. Sometimes the customer just needs to vent. Weather the storm and keep your focus. It is important that they know they are being heard.
- Don’t be tempted to jump to conclusions or think about what you’re going to say ahead of the facts.
- Use active listening skills.
- Make eye contact and ask questions to clarify if you need to. Keep your voice tone low and even.
- Repeat your customers’ concerns to make sure you understand and they know you understand. Make this a point of agreement with them. Let them know you understand how they feel.
- Apologise with a good grace whatever the rights and wrongs of the situation are. Try ‘I’m sorry that you’re not happy with our product (or service)’ or ‘I’m sorry you’ve had such an unpleasant experience with this.’
- And then move straight into ‘Let’s see what we can do to make this right.’ Ask your customer what would solve the situation for them. Look at the options together. Again, make this a point of agreement.
- Make sure you follow up until you know the customer is satisfied with the outcome.
Take a minute
If you have had a confrontation with an angry customer, take a minute for yourself after you resolve the situation. Clear your head and let go the stress from your encounter. It’s important that you can be positive and upbeat with the next person you speak with. If you need to, go for a walk round the block or just as far as the water cooler or the tea room. Then you can give your best side to colleagues and customers again.
FYI… Cash or accrual accounting
You’ll often hear the terms cash or accrual accounting. Is this when you tune out? They’re the two main methods of keeping track of income and expenses. They work in different ways so it’s good to understand how your financials are put together.
First, a Definition or Two
The cash accounting method records income in terms of the date the cash is actually received and not necessarily the date when the sale was made. In the same way, expenses are recorded as at the date you actually made the payment, and not the date when you committed to the outlay. With credit transactions, the key date is when it’s charged to the card.
With the accrual method of accounting, income is counted from the date the sale is made (and that might be the date the customer put in their order or the date of delivery, depending on your terms). In the same way, expenses are counted as at the date you committed to the outlay. Sometimes it can be a little confusing to work out the date of transaction. The job completion date is all important here. If everything to do with the purchase has been received and installed, the job is complete and it can go on your books at that date.
Many smaller businesses use cash accounting as that suits them best. However, larger businesses use the accrual method. It is also important to note that generally businesses are required to recognise income on an accruals basis for calculating income tax. Therefore, even if a cash accounting method is used for budgeting or cashflow purposes, adjustments for accrual accounting will be required to determine the correct amount of tax payable.
Cash vs accrual accounting – pros and cons
The advantage of cash accounting is that it’s easier to understand. You see exactly what your cashflow is and you can see your cash reserves clearly. The disadvantage is that you don’t have an easy way of tracking how much money you owe your creditors or how much money your debtors owe you. It doesn’t take future expenses into account. So, it can sometimes be hard to assess long-term profitability in your business and it can be hard to spot the risks where money you owe will undercut your incoming revenues. As mentioned above, your income tax payable will also need to be calculated using the accrual method of accounting, so adjustments will be required to determine your tax liability.
The advantage of accrual accounting is that it’s easier to see amounts owed by debtors (so you can do something about them). It’s a more accurate picture of activity in your business for any given period. You can see the sales you’ve made and your costs, regardless of when the money is actually received or paid out.
The downside is that it is more complex to administer. It’s where the so-called double-entry bookkeeping system comes into the picture (let’s leave that for another day). It may be necessary to make accounting adjustments at the end of the reporting period to account for sales which have been made but the money has yet to be received for them. Similar adjustments will be made for expenses incurred but not yet paid for. Generally, making these adjustments for you is where we come in.
Sounds Like Fun!
If the topic leaves you cold, that OK. Just give us a call before it’s all too late – before discovering that you owe more than you have.
If you want to know more about the method used for your business and how it works, that’s great. Give us a call, and we will be happy to run our eye over your current situation.
We enjoy accounting. Indeed, that’s why we are here to help.
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