The current state of customer service satisfaction is poor, particularly in the auto insurance industry.

The current state of customer service satisfaction is poor, particularly in the auto insurance industry.

Abstract

The current state of customer service satisfaction is poor, particularly in the auto insurance industry. The purpose of this study was to examine and identify how poor stakeholder relations can affect business, in particular companies that provide auto insurance to drivers and how customer claims are handled. In order to answer the research question, the researcher sought the insight and counsel of industry experts through interviews to learn and understand how complaints get resolved, if the organization benefited from what was learned, how leaders used any of the internal lessons learned from their dealings with outside stakeholders to administer new policies and improve upon existing ones, and furthermore discover if any policy changes were made, and how did stakeholders react to the specified changes. Results from the data collected indicated that organizations that listened to feedback from their clients, followed an easy to understand internal complaint policy, emphasized open engagement with the intent of building relationships, were successful in keeping stakeholders satisfied. Conclusions from the brief Literature Review and the results of the subjects’ responses indicated that customer engagement and robust policies that were focused on building relationships was beneficial for both the stakeholder and organization. Based on the project conclusions and researcher’s professional knowledge, the researcher recommends that business leaders seeking to improve their organizations standing with their customer base should focus on creating or improving their existing internal complaint resolution policies, and entities should also install mechanisms that will foster authentic feedback and engagement from their customer base, which will in turn nurture long-term relationships and profits.

Introduction

Introduction Statement

The current state of customer service satisfaction is poor, particularly in the auto insurance industry. Some entities (i.e. online market places, government, customer service industries etc.) do a good job in handling complaints and addressing the needs of the customer. For instance, there are enterprises such as Amazon that have an excellent track record of expertly handling complaints. Auto insurance claim handlers seem to be lacking when it comes to quickly resolving claims of their paying customers. Ultimately, it is the stakeholders that are directly affected and the entity develops a poor reputation when handling complaints.

A study in the area of stakeholder satisfaction will be a benefit for businesses or any entity that engages with customers and clients on a consistent basis. Results from this study will benefit organizations that are seeking to establish a standard for handling complaints, and improving relations between the organization and their stakeholders. Furthermore, companies in certain industries that work with various individuals on a daily basis could benefit directly from increased customer satisfaction, which enhances customer retention. In other industries where there is not much customer interaction, but the organization thrives on employee interaction, a complaint handling system can improve workplace environment, morale, and interaction amongst employees.

This topic is of interest to the researcher because he recently had the unpleasant experience of not having a complaint taken seriously. He was impacted personally because the experience disrupted his time at work, affected his pocket book, and cost him vacation time. It took the auto insurer 5-months to compensate the researcher for his personal losses.

Purpose of the Study

The purpose of this study was to examine and identify how poor stakeholder relations affect a business, in particular companies that provide auto insurance to drivers and how customer claims are handled. Furthermore, the researcher pinpointed the best methods used in large and small customer-related industries to resolve matters with their stakeholders. The researcher interviewed three top professionals in order to understand what successful organizations do to resolve issues with their stakeholders.

Research Problem

The researcher found that stakeholder relations between auto insurance companies and their customers is severely lacking. Automobile owners find it difficult to have their claims resolved in a timely manner, and it comes at the expense of the customer. This usually happens when customer service representatives fail to listen to the needs of the customer, which ultimately leads to delayed claims, frustration, and loss of time and money. Every vehicle owner is required to purchase auto insurance. With several companies a customer can choose from, it would be prudent for insurance carriers to improve the way complaints are resolved so they do not risk losing a customer if the complainant is left unsatisfied. Otherwise, stakeholders may decide to leave and take their business to another competitor, which will affect their revenues. Consequently, the organization can develop a bad reputation that can damage their image, and their good will and can take years to restore.

Research Question

Does Stakeholder Satisfaction Matter? How Organizations Can Resolve Stakeholder Complaints a study on how organizations can properly handle consumer issues and stakeholder complaints.

Methodology Description

In order to answer the research question, the researcher collected data by conducting interviews with top-level managers and customer service handlers within the airline, and business-to-business industries. The formulated questions for the researcher’s subjects were intended to extract from top company leaders what organizations are currently doing to resolve consumer issues. The researcher also gathered data from two peer-reviewed case studies, which also contributed to the formulation of the researchers questions. The researcher learned how complaints were resolved, and if the organization benefited from what was learned. In addition, the researcher found out how leaders used internal lessons learned from their dealings with outside stakeholders to administer new policies, or improve upon existing ones. Furthermore, the researcher discovered policy changes that were made, and how their stakeholders reacted to the specified changes.

Summary of Overall Project

Conclusions from the brief Literature Review and the results of the subjects’ responses indicated consumer complaints and stakeholder satisfaction go hand in hand, and they are crucial in all areas of business, especially in industries that are reliant on direct customer relations as their primary means of business. When it comes to resolving serious complaints, customers want to be understood and heard, and the perceived effort and justice from the organization has to be genuine from the perspective of the client. Positive relationship building is another key area that can be exploited through easy- to-follow complaint policies. Policies that are successfully implemented will not only restore customer satisfaction, but can also improve the relationship between the customer and organization. Finally, customers that are satisfied with the service they are receiving are usually more engaged, and customer service related industries will benefit financially.

To enhance future studies, the researcher recommends a larger sample size and an in-depth review of the Literature. Based on the project conclusions and the researcher’s professional industry knowledge, the researcher recommended that business leaders seeking to improve stakeholder satisfaction with their customer base should adopt policies and instruments that allow and encourage customer engagement, create advisory groups made up of their own consumers so they can get realistic feedback on their services and improve satisfaction with their clients, create an internal customer complaint process, and devise a comprehensive rating system that allows for the customer to individually rate each of their services after a service has been rendered.

Literature Review

Introduction Statement

In order to answer the research question, the Literature Review focused on the major theme of stakeholder satisfaction and resolving issues between an organization and the customer. The researcher analyzed two scholarly articles that focused on customer behavior, and the importance of organizations having a robust resolution process in place for their customers. Each of the articles gave insight on how to build customer satisfaction through relationships, and how to effectively analyze the satisfaction of customers.

Increasing Customer Satisfaction and Profitability In their 2014 article, The High Price of Customer Satisfaction, Timothy Keininghan, Sunil Gupta, Lerzan Aksoy, and Alexander Buoye focused on the major theme of customer satisfaction, and whether customer satisfaction is directly linked to financial performance. Their publication is a scholarly journal review that focuses on the complexities of satisfaction between customers and different organizations, and how organizations should analyze the different relationships between what common indicators are used to judge consumer satisfaction. The authors of the article discussed how easy it was for organizations to misalign the concept of customer satisfaction and profitability, and ways to for organizational leaders to align satisfaction with profitability. The authors breakdown and analyze three specific issues business leaders need to pay attention to: accurately quantifying customer satisfaction, satisfaction and spending, and scoring satisfaction as it relates to profits.

Keininghan, Gupta, Aksoy, and Buoye discussed in their article if going through the efforts of promoting customer satisfaction was truly worth the cost. The authors gathered their data from two sources. The first set of data is derived from the American Customer Satisfaction Index (ACSI) that consisted of 137 U.S. companies that are listed on NYSE, AMEX, and NASDAQ from 2000 to 2009 (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 39). The information collected was cross-referenced to the returns from each company’s stock, which was compiled by the Center for Research in Security Prices at the University of Chicago (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 39). The second set of data came from a large market research company, and it focuses on actual satisfaction ratings from 161,542 consumers, and their category spending across 315 brands (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 39). Both sets of data allowed the authors to examine the relationship between customer satisfaction and overall business outcomes, along with consumer spending (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 39). The authors found that in their article is that the relationship between customer satisfaction and customer spending behavior is very weak. According to the article, the correlation between customer satisfaction and the performance of stocks shows only a 1% variation in the company’s returns (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 37 – 38). The article also indicated that the relationship between customer satisfaction and customer spending only showed a 1% variation in category spending (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 37 – 38). Both of these findings would cause business leaders to question if it is even worth investing in customer satisfaction. The article goes on to explain that there are three critical issues that negatively impact translating customer satisfaction into positive business outcomes. According to the article, the first critical issue is that managers within organizations cannot accurately quantify the increase of customer satisfaction on a hypothetical scale of 1 – 10 (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 38). Furthermore, it is even more difficult for managers to put a value on how much an increase on a customer satisfaction scale is actually worth to the organization. The authors say that this is attributed to their findings that returns on investing in customer satisfaction is often insignificant or comes at a loss (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 38). The authors pointed to an example of a large beverage distributor based in the Midwestern U.S. and it was found that what the distributor invested in increasing customer satisfaction did not generate more revenue, rather it increased their customer service costs by 10% thus negating the company’s revenue (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 38). The researcher agrees with the authors of the article as it highlights a good example of a company that was not financially profitable from improving their customer service. If anything this instance strongly indicates that customer satisfaction can be ineffective if organizations fail to pinpoint what aspect of customer satisfaction they are trying to target in order for their efforts to reflect positively in their revenues. The article further explains that it is low prices which drive consumer satisfaction. The authors of the article did an analysis of the U.S. credit union industry, and found that customers of credit unions have the highest level of customer satisfaction of any industry found within the American Customer Satisfaction Index (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 39) This is because credit unions have lower fees and higher interest rates on deposits than traditional banks. Keininghan, Gupta, Aksoy, and Buoye also found that the majority of individuals that were customers of a large financial service institution had an extremely high rate of satisfaction. However two-thirds of these customers were not bringing a profit to the institution (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 39). Again, the reason is attributed to the thought that if customers think they are receiving the best deal, they will be happy. According to the authors, the company heeded the results of their analysis and the financial institution restructured the pricing of their products so that they would not lose money, and force the customer to start paying for the true value of their services. This did cause discord among their existing customer base, and almost all of them stopped using the services of the financial institution, and overall satisfaction declined (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 39 – 40). However, within three month almost all of their customers chose to have their services restored after realizing that what the financial institution offered is of value and worth paying for (Keininghan, Gupta, Aksoy, & Buoye, 2014, 39 – 40). The researcher views the authors point as valid, because when it comes to customer satisfaction in any service related industry, if the organization can convince an unhappy customer that their products and services are worth the cost that will compel them to stay. The second critical issue that Keininghan, Gupta, Aksoy, and Buoye found is that the belief of higher customer satisfaction will lead to higher spending, and strong market share is actually the opposite (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 40). Their research found that high satisfaction is a strong negative predictor of future market share. The article explains this phenomenon by comparing customer satisfaction between three fast food companies McDonald’s, Burger King, and Wendy’s based upon 18 years’ worth of statistics from the ACSI (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 40). According to these statistics, for 18 years, Wendy’s had the highest level of customer satisfaction, followed by Burger King, and lastly McDonald’s, which ranked third 17 times (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 40). Amongst discount retailers, Walmart has trailed Target, Sears, and J.C. Penney’s in customer satisfaction since 2007 (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 40). What the authors wanted to indicate is that both Walmart and McDonald’s have the largest market share of their respective industries, yet both corporations have managed to keep their market share despite having lower customer satisfaction levels than their competitors (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 40). The authors found that the reason why companies like Walmart and McDonald’s have lower satisfaction among customers is that the broader the company’s appeal relative to the offerings of their competitors, the lower the satisfaction tends to be. In short, between a company with more diverse offerings and smaller niche companies, one can expect the organization with a targeted set of stakeholders to have a much higher customer satisfaction (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 40). The article makes it clear that despite these findings, organizational leaders should not dismiss the overall notion of customer satisfaction just to gain a larger share of the market. Rather, they should focus on targeting the right balance of customer satisfaction and gaining acceptance from a broad customer base (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 40). This also correlates to the researcher’s topic regarding customer satisfaction since organizations can easily overlook how they are really doing with their customers, and in the case of insurance companies, some offer more products than others, which could make it tricky for their management to find the right balance to keep their customers happy. The final critical issue regarding customer satisfaction is the belief that higher satisfaction scores means customers will spend more money (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 40). According to the authors, that is not necessarily true because an organization cannot predict how a customer will divide their spending among different brands despite having a high level of satisfaction for each of the brands the consumer enjoys (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 41). Furthermore, high satisfaction levels is not likely to have an effect on the share of category spending customer allocate with a specific brand (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 41). The authors explain their stance by pointing to specific example involving hotel guests. The article describes this particular finding by citing a study from the hotel and hospitality industry. According to the study, 50% of hotel guests choose to spend their money at hotel chains that are not their preferred place to stay (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 41). Another study the article cited stated is about the banking industry, and how only 5% of bank customers close their accounts each year, which translated to a loss of only 3% of total deposits (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 41). Because the parallel between customer satisfaction and the customer’s pocket book is not very strong, organizational leaders are unable to find out what approach they need to take to grasp a larger share of their spending (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 41). The Net Promoter Score is often used by companies to measure a customer’s loyalty, however the NPS does not measure a customer’s overall preference towards a brand, and managers often believe that as long as a customer is giving a rating that is completely satisfactory, they will get more money from that particular customer, which the authors of this article say is not true (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 41). The authors of this article suggest that by transforming absolute satisfaction levels to giving a particular brand a relative ranking compared to another brand, can give businesses a clearer idea if their customers spending is actually parallel to their satisfaction. For instance if a customer ranks brand A “1” and brand B “2” on a scale of 1 – 10 there is a 20% variance in the explanation of a customer’s spending per a particular category or brand (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 41). The authors further point out that as individuals, we look at rankings as a whole number; this is first, second, third and so on, but never as an average number. The only way to get a true satisfaction rating is to assess the satisfaction rating among all the brands a consumer uses, and determine if the organization’s offerings are seen as the best or worst among their competitors (Keininghan, Gupta, Aksoy, & Buoye, 2014, p. 41). Overall, the author’s explanation of utilizing an effective ranking system falls in line with the researcher’s topic regarding stakeholder satisfaction, because it should matter to the organization how customers and outside stakeholders view how they stack up against their competitors. A ranking system can better assist managers so organizations can get a true reading of how much of the consumers spending they are getting versus their other competitors.

Similarly, in the 2015 article, Can Complaint-Handling Efforts Promote Customer Engagement?, authors Jesus Cabra-Fierro, Iguacel Melero-Polo, and F. Javier Sese focus on the subject area of developing an effective complaint-handling strategy that will increase customer satisfaction and customer engagement. The empirical article is a scholarly journal review that offers various insights on customer non-transactional behaviors, and how an effective complaint process can build engagement and rapport with customers. The authors base their article of study by sampling customers within the financial industry and their customer service experiences. They also discuss why the perceived effort, justice, and satisfaction from the purview of the customer are key in establishing a strong level of engagement with customers. Overall, the researcher does agree with the author’s stance that if the stakeholder does not sense a genuine effort from an organization in resolving an issue, there is a high likelihood that the consumer will become disengaged.

The authors state that it is inevitable that companies will make mistakes, and the affected customer at some point will file a complaint in hopes of getting the issue resolved (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 848). Typically, when a complaint is filed, organizations will invoke their internal process of resolving the said complaint. The authors report in their article that the quality of the organizations policy hinges on the clarity, simplicity, and how it is oriented for their customers to ensure that issue is properly resolved (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 848). They also note that successful results often yield a level of satisfaction that can restore and even improve upon the existing relationship between the stakeholder and the organization (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 849). The issue of stakeholders resolving customer complaints relates to the researcher’s topic because the auto insurance industry seems to lack a clear process for resolving the complaints of their stakeholders. Concerning companies in similar customer-oriented industries where satisfaction is paramount, the researcher agrees with the authors of this publication that the quality of the complaint handling process is critical to customer satisfaction. According to the authors of the article, the concept of customer engagement, when it comes to handling complaints, has gotten very little attention in research. They also believe that when a customer is highly engaged, they are more valuable and as a result they may contribute to improving the performance of businesses. The authors further their point about the discussion of a concept called customer lifetime value (CLV) (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 850). CLV is the value of the relationship with a customer and what it provides for the company over the duration of relationship (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 850). They also say that instances of non-transactional behaviors (i.e. word-of-mouth, and general feedback) is not usually taken into account, and is usually underestimated (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 850). Also, the authors of the article point out that the reason why engagement and complaint handling is essential, is because it is easy to lose an engaged customer when a mistake is made by the company. In the review of this article, the researcher has noticed that in his recent personal experience of the handling of his auto insurance issues, there are parallels to what the authors described regarding customer engagement. A highly engaged customer can contribute to the performance of the business, but poorly handled complaint can lead to the loss of customer value, as in the case of what the researcher experienced when dealing with his auto insurance company. Customer service failure, according to the authors, is a failure and perceived problem that will occur at some point during the relationship between the customer and the company (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 848). When this happens, a complaint process should be implemented and followed. However, the authors of this article say that the way organizations manage complaints is linked to customer engagement, and how the interaction between the stakeholders impacts their transaction (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 848). They also imply in the article that the complaint handling process is critical to restoring satisfaction between the customer and business entity, and provides a platform to encourage interaction which then leads to cultivating engagement (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 848). Again, for the researcher reviewing this article, this is key since his experience with his auto provider did not yield a positive interaction, which led to a deep lack of satisfaction with his insurance provider. When it comes to possible solutions in resolving customer complaints, the authors of the article said that the perceived effort and justice are key elements that existed to measure customer satisfaction in resolving a complaint (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 851). The article defines perceived effort as customer perception of the resources a company invests, as well as the degree of interest shown when providing solutions to customer related problems that can have a positive impact on the level of customer service (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 853). When it comes to effort perceived by the customer, it should be made clear by the entity to the customer how much resources, time, and effort that are being expended to resolve the complaint. The authors of the article also added that companies that failed to disclose the amount of resources, time and effort invested in solving the stakeholder’s problem, resulted in lower satisfaction between the customer and the organization. (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 851). Perceived justice is defined in the article as the individual’s subjective assessment of an organizations response (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 851). The reading also noted a study that customers are more satisfied with the complaint handling process when justice is perceived in the firm’s reaction to their complaint in the final solution offered (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 851). To further substantiate their point, the article says that the three dimensions of perceived justice (distributive, procedural and interactive) have a positive impact on customer satisfaction (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 851). Companies hope that their complaint handling efforts will translate into higher profits. According to the article, this is an area that past researchers have overlooked as past efforts have been focused on measuring satisfaction, repurchase behaviors, loyalty, trust, and word of mouth after a complaint has been handled by an organization (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 851). Findings in the article suggest that customer engagement is a superior construct with ‘potential present and future economic value for firms, which secures non-transactional behaviors i.e. word-of-mouth, referrals, feedback, influencers, and co-creation’ (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 851). The article further states that these elements are the basis of how a satisfied customer could become an engaged customer, which creates value for the organizations, and customers who are displeased will not be engaged and negate the value of the organization (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 851 – 852). Again, this fits into the topic of the researcher because customer service is not solely based on just making customers happy, but in trying to build positive rapport with an outside stakeholder, satisfaction does matter when it comes to resolving customer complaints. One of the final points made in this article is that customer satisfaction is a prerequisite for customer engagement (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 852). The article notes that customer satisfaction combined with a process that addresses complaints may be a key driver when it comes to customer engagement. In the context of engagement being an individual construct in resolving complaints, the authors propose that ‘the greater the level of customer’s complaint-handling satisfaction, the greater the degrees of the customer engagement’ (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 854). The article goes into further detail noting that if a customer notices that a company is putting in the effort to resolve their issues, the company’s effort will be reciprocated by the customers raised level of CLV, which could generate future revenue for the organization (Cambra-Fierro, Melero-Polo, & Javier Sese, 2015, p. 852). Again, this fits into the researcher’s narrative of how the resolution of stakeholder complaints matters and a lack of a resolution process can prevent an organization from connecting with their stakeholders.

Critiques of Journal Articles In the article, The High Price of Customer Satisfaction, authors Keininghan, Gupta, Aksoy, and Buoye did a thorough analysis depicting the complexities of customer satisfaction, which is not easily explained just by looking at the overall revenue. Their article emphasizes that even though highly satisfied customers are good for business, measuring specific variables is key for organizations to successfully set themselves apart from their competition. The authors also placed a valuable emphasis on the importance for businesses to take their time in finding the right formula that is profitable that can both attract a large share of the market and maintaining a high level of customer satisfaction. Furthermore, the findings of the author support the researcher’s thesis because customer satisfaction is not limited to how customers view the organization as a whole. Rather it shows how easy it is for any individual in the position of leadership to misappropriate the equation that high customer satisfaction does not always mean companies will see a positive return in revenue. Rather, it is important to note that there are different elements within the arena of customer satisfaction, and each one must be addressed individually to improve overall satisfaction with outside stakeholders.

Similarly, in Cabra-Fierro, Melero-Polo, and Javier Sese’s 2015 article, Can Complaint-Handling Efforts Promote Customer Engagement?, the authors give an in depth assessment of how perceived effort and justice in resolving complaints between stakeholders is critical. The article also emphasizes the point that when the customer is highly satisfied with the way their complaint is handled, that builds engagement with the customer, and that individual is likely to say positive things to other potential customers about the entity. Overall, the article fits into the opinion of the researcher that stakeholder satisfaction does matter when it comes to resolving complaints. The researcher also agrees with the findings of this article that a strong complaint process can pave the way for a prosperous and long lasting relationship with the customer. Additionally, the researcher can use the information to support how an effective complaint process relates to positive customer satisfaction.

Conclusion statement

From this brief Literature Review, the researcher learned that stakeholder satisfaction is attainable by finding the right balance of growing their market by striking a medium between satisfaction and customer acceptance. Furthermore, a robust complaint mechanism also plays a direct role in stakeholder satisfaction in industries that are heavily driven by direct company to consumer relationships. The auto insurance industry is one them: their product is just one of many commodities sold by large insurance firms. If insurance companies, in particular auto insurance providers prompted their stakeholders to rank their brand of items against their competitors, they can get a clearer idea of how they are doing and where to improve in administering their services. Additionally, this will allow auto insurance providers to improve various areas of customer care, which could improve the ways claims are processed, enhance customer satisfaction, and reduce the number of dissatisfied policyholders.

Methodology

Introduction Statement

In order to answer the research question, the researcher developed a list of interview questions and then collected data by conducting interviews with executives who have influence in implementing customer service related policies. The researcher spoke to representatives from a small business-to-business service provider company and the airline industry. The information and perspective gained from the case studies aided in the formulation of his questions for the executives interviewed for this study (Ghauri & Gronhaug, 2010, p. 125 – 133). The researcher learned how complaints get resolved, and how the organization benefited from what was learned. It was also revealed to the researcher how leaders used internal lessons learned to administer new policies, or improve upon existing ones. Furthermore, if any policy changes were made, how did their stakeholders react to the specified changes.

Subjects

The subjects for this study were identified from the researcher’s professional network. The subjects were selected because of their combined years of experience and industry expertise. Since these individuals are seasoned professionals in their respective industries, the researcher believes his subjects will provide a reflective and in-depth perspective during the interview. The researcher found in the literature reviews that the overall relationship between the organization and outside stakeholder is paramount to success, and it is not just limited to overall satisfaction of the customer, and the researcher believes that the responses from the participants below will substantiate the literature reviews.

Subject 1 – Director of Operations for a Business to Business Service Provider based in New York

Subject 2 – General Manager for a Major Airline overseeing the Portland Metro Area

Subject 3 – Executive Managing Director for Global Sales of a Major Airline based in California

Instrument

The researcher designed the instrument in order to identify how difficult issues were resolved, what was learned, and how the organization benefited from what was learned. Questions were developed so the researcher could discover how leaders used any of the internal lessons learned to administer new policies, or improve upon existing ones. Furthermore, the set of questions were framed to find out how stakeholder input influenced policy changes, and how stakeholders reacted to what was implemented by company decision makers. The researcher also wanted to find out if there were specific procedures and techniques the interviewees were implementing that were rare or not part of the mainstream, if the responses from the interviewees were parallel to what was found in the scholarly articles the researcher reviewed, and if any new concepts could be applied in the researchers final recommendations.

Question 1 – What are your current processes in handling employee complaints and what makes them effective?

Question 2 – How do you handle customer complaints that are serious when it is determined that the company is at fault?

Question 3 – Based on your experience, what are the benefits to the organization when complaints are resolved satisfactorily?

Question 4 – How can social media play a role in new product development?

The reasoning behind the first question, What are your current processes in handling employee complaints and what makes them effective?, was structured by the researcher to find out how organizations handle internal issues regarding employees. The researcher believed that if internal processes regarding employee complaints were not resolved, it could potentially harm their services and products to their customers, especially if internal functions were not performing at an optimal level behind the scenes. The second question, How do you handle customer complaints that are serious when it is determined that the company is at fault?, was to find out if there was a complaint process already in place by the company to address customer issues. The researcher wanted to find out from the interviewees the efficiency of how companies successfully made their customers whole in the event there was a mistake that caused inconvenience to a customer. The third question, Based on your experience, what are the benefits to the organization when complaints are resolved satisfactorily?, was purposed to find out how the organization directly benefited when they were able to satisfactorily resolve a customer issue. The reason for this question was that the researcher wanted to find out how satisfactory relationships were established between the organization and the outside stakeholder. The final question, How can social media play a role in new product development?, related to how most customers today utilized social media, and whether the companies paid attention to what is being said, and if they took feedback on public forums into consideration when new products and services were being developed.

Procedure

The data was collected through telephone interviews. During each interview, the researcher took detailed notes of the responses from each interviewee. After the interviews were complete, the researcher analyzed his subject’s responses and devised his recommendations to his research question.

Conclusion Statement

The results of the data collection will be tabulated in the Results Section of this project.

Results

Introduction Statement

The following is a tabulation of the results of the data collection.

Instrument Results

The following is a simple tabulation and a paraphrase of the subjects’ responses to the instrument questions.

Question 1 – What are your current processes in handling employee complaints and what makes it effective?

Subject 1 – The subject noted that alleviating employee complaints is key to ensuring that current and potential stakeholders are not affected by any internal issues. He referred to using an example of what happens when a technical glitch occurs during a normal workday. The employee notified the subject and a new procedure was put in place behind the scenes so their operation ran smoothly without affecting the stakeholders. This was critical because the subject noted that the nature of the business involved customers using their services online, and technological issues could arise in real time. Additionally, the subject said that a little chaos behind the scenes was acceptable just as long as it did not affect the customer. In order for there to be semblance, their organization made it a point to resolve their real-time technical issues within 15 minutes, and this was achievable since the organization’s staff is small. Once the employees logged into the ‘employee’ section, they could see a notice on how to address an unexpected issue, and within 24 hours the issue was permanently fixed.

Subject 2 – Discussed different examples of how internal and external disputes were handled, and also how employees within his region had implemented suggestions because of an employee complaint. Addressing internal employee issues, the subject said that if there was an employee having a dispute with another employee, it was encouraged that they both resolve it on their own. However, sometimes that failed and by the time it reached the subject, it was beyond resolution and he would have to intervene. Sometimes an employee might have an issue with a particular job function, and it was affecting their work performance. When this happened management would listen to the employee to see if they were following proper protocol for that particular function and would take the appropriate action to resolve the issue. If the employee had a solution that could solve an issue that was not functioning properly, they employee had to approach management with the idea and plan. The new function would undergo a trial period to see how well it worked, and the results were reported back to management. If it was a success, it would be implemented.

Subject 3 – He did not speak much on the issue of addressing employee-to-employee complaints. He discussed in-depth how, when there was an issue with a business account, it was important to send their own executives to their customers to determine what issue might have caused the failure. Their organization put a premium on building a relationship with the customer because they had found that usually the customer did not necessarily want compensation, but rather they wanted to be heard. In the interviewee’s role in the organization, he wanted to be make sure that executive’s being sent to a customer showed the customer that by sending a top level employee, they valued the relationship with the customer, and would not just send anyone without credibility. Secondly, an executive would be well versed in different areas of expertise and could explain to their account holder what exactly happened that adversely affected them, and listen to their feedback. Again, the subject emphasized that this approach was key to building and maintaining a relationship with the stakeholder. Question 2 – How do you handle customer complaints that are serious when it is determined that the company is at fault?

Subject 1 – The interviewee said that because his organization had a high efficiency rate, it was rare that they have customer complaints. He said that their company had about one to three mistakes a year. Nevertheless, regardless if the company was at fault or not, the subject said there was a formal process in place to handle serious customer complaints. First, the employee immediately put the customer in direct contact with the subject, who is the director of operations, so he could handle the issue hands on, and the customer did not have to deal with the ‘front line’ of the organization. According to the subject, because of the small size of their company, this is a benefit that they had over larger companies. He said that they followed a three-step internal process: First, exhibit empathy regardless of who was at fault, and never blame the customer. Second, issue a refund. If the company was at fault, correct the situation at no cost, but if it was obvious the customer was at fault, the issue was still corrected but at a reduced cost to the customer. Third, offer to expedite and solve the problem by the end of the business day. The processes put in place by their organization ensured that good will, and relationship building was at the forefront and it showed the customer that their sole objective was not going after their pocketbook. The subject even said that because of their internal complaint-handling processes, customers had sent gifts to their employees because of the high level of customer service and good will towards their clients.

Subject 2 – He said that their organization had an internal formalized complaint process that was initiated through their website online, and their corporate offices would work with the customer to resolve the issue. In real-time, when a supervisor was dealing with a customer over an issue, they were told to listen to the customer’s complaint and make sure that there is real problem. In order to do that, the supervisors needed to understand the problem, apologize, and determine what the customer really wanted. Most of the time, the customer needed to be heard and understood, and that was enough to resolve the issue. The interviewee shared an example of when he was summoned to deal with a fairly serious customer issue. The problem involved a passenger who blamed the airline for damaging an electronic device, after finding the screen had cracked. The airline’s company policy made it clear they were not responsible for any checked in items that get damaged, and it was the responsibility of the passenger to remove fragile items before the bag is checked. The customer contested that when it was time to board the plane, the carry-on bag was deemed too big to carry onto the airplane and he was left with no alternative but to check-in his bag which contained the device. Furthermore, according to the passenger, he was not informed by any of the airline staff that such items needed to be removed. When the subject listened to the customer’s complaint, he knew there was a fairly high likelihood that what the customer said was true, as the customer was put into a position where the personal item could not be retrieved. Even though the airline could not replace the damaged device, the subject was able to satisfy the customer’s expectation’s by offering an alternative form of compensation from the airline.

Subject 3 – The interviewee said that there were instances when they already knew that the company was at fault for something, and it was usually an instance where it is beyond the control of the airline. He spoke about mechanical delays as an example of an issue that would cause customers inconveniences, and when that happened there were contingencies already in place. The organization empowered their employees who were close to the ‘action’, and they were advised by their consumer relations group in advance, on what compensation should be offered when unexpected issues delayed their customers. In the event there were customers wanting to submit a complaint against the organization, they were urged to submit their complaint through their website and customer relations would open a file and conduct an investigation. The results of the investigation would determine if the customer was at fault or the organization is responsible. Question 3 – Based on your experience, what are the benefits to the organization when complaints are resolved satisfactorily?

Subject 1 – He believed that customer retention and satisfaction skyrocketed amongst his customers when complaints were resolved to the satisfaction of the customer. He said that their company employed a star rating system for the customer to rate each item or task within each order a customer places. For example, if there are six tasks, the customer can rate each task individually, and if one of the specified items receives a low score their organization would reach out to the customer to see how they could improve in that particular area. The subject also said that in 2014, they implemented a setup for early 2015 that allowed customers to interact with their company after a ticket was closed. A direct email is provided so that customers can reach out to the employee who assisted them. The subject said that since their company had provided this avenue of relationship building with their customers, it allowed them to improve their services and products and it reflected positively in their finances. In 2015, 20% of the company’s revenues were profit, and in 2016, that jumped to 30%. The direct email mechanism process was crafted in 2014, and the interviewee said that he strongly credited the 10% increase to their direct feedback process.

Subject 2 – The interviewee said that everything about a brand was word-of-mouth, and they did not want customers to remember a bad experience. He also said that when complaints were resolved satisfactorily, his experience had taught him that people would forgive mistakes, but if you do not take care of your customers, they will not forgive you because you did not care or show any empathy. The subject further expressed that when an organization shows that they do not care, customers would associate the company’s brand with a negative experience of how an issue was unresolved, or service that was rendered poorly as the only thing they remembered about their experience.

Subject 3 – He quoted their company’s motto as “the airline that listens the best” because they truly take customer satisfaction seriously. To tackle issues with their stakeholders, the interviewee said that an advisory board, which consisted of stakeholders who use their airline, was put together so they could tell their organization where they fell short in any aspect of their services. The individuals were recruited by their organization, and they stayed together for 1 year. Every quarter, the board met with representatives from the airline, and they were told to not hold back with their assessment of their airline. The subject said at times the feedback from the advisory board was ‘brutal’ but that allowed the airline to receive unfiltered responses from those who use their services the most. Anything from products purchased from the airline to food that was served on board was discussed, and all feedback collected was sent to company leaders who then came up with ways to fix customer related issues gathered from these quarterly meetings.

Question 4 – How can social media play a role in new product development?

Subject 1 – Social media did not play a role in new product development. The subject said that was because their company did not rely on any aspect of social media in reaching out to their customers. However, for the business sector in which they provided their services, the subject noted that their company would help their customers establish their presence on social media by posting announcements/notices through using the company’s social media resources. In other words, they would post/advertise for their clients, but this was done through an automated process after a customer requested it online. The subject also noted that the idea of their company posting announcements on behalf of their clients was an idea that was suggested by a customer, which has successfully been implemented into their list of services.

Subject 2 – He said that social media played a huge role in product development for their organization, and it is also a platform that allowed people to air their complaints. For this reason, they have dedicated employees who monitor all major social media platforms so they could reach out to unhappy customers on any platform to address their complaint. The overall goal was to change any negative narrative into a positive outcome so that stakeholders would have a lasting impression worth posting. The interviewee also shared how social media influenced what coffee was served on board their airline because several customers took to social media to complain about the coffee that used to be served on their flights. In response to their customers, the airline partnered with Italian coffee company, Illy, and customers were soon posting to social media how delicious the coffee was on board.

Subject 3 – He did not speak too much on how social media affects product development, but he did say that ‘social media is a game changer’ and their airline did have a social media group that monitored what was being said about the airline. The reason being that whatever was posted by stakeholders online could affect the reputation of the airline.

Conclusion Statement

The results will be analyzed in the Conclusion Section of this project.

Summary, Conclusions and Recommendations

Summary of Data Collection

The researcher felt the data collection was successful because the questions were crafted to elicit meaningful answers from each subject who worked in customer driven industries. All of the interviewees were thorough in answering each question, and the researcher could tell through their answers they were quite knowledgeable about stakeholder relations, resolving issues with their customer base, and building strong relationships with consumers. The researcher got all his questions answered in the pursuit of fulfilling his research question. The subjects the researcher interviewed were seasoned professionals in the airline, and business-to-business industry. These industries were heavily contingent on customer satisfaction, building good will with stakeholders, and reliant on maintaining long-standing relationships so that customers would keep returning to use their services. Each question was framed to engage a lively discussion between the interviewees and the researcher, and furthermore attempts to discover what new trends were used to build good will, maintain a high level of customer satisfaction, which ultimately led to their organizations being profitable. The researcher interviewed two subjects from two different major airlines, and one subject from a small business. What made the interviews successful was that the researcher collected new trends and ideas from his subjects and the data would be used in making his recommendations that would enhance satisfaction between stakeholders and organizations.

Conclusions from the Data Results

The following conclusions are based on the responses of the subjects to the instrument questions. The conclusions are also a based on a combination of the instrument results as compared to the brief Literature Review. Finally, the conclusions are a comparison of the instrument results with the Literature Review, and incorporates the researcher’s professional industry knowledge.

Resolving consumer complaints and stakeholder satisfaction go hand-in-hand, and it is crucial in all areas of business, especially in industries that are reliant on direct customer relations as their primary means of business. There were concepts in the literature reviewed that the subjects also discussed in their responses. For instance, in response to the researcher’s third question, ‘Based on your experience, what are the benefits to the organization when complaints are resolved satisfactorily?’, Subject 1’s response revealed a direct parallel to what was described in the literature review about accurately quantifying customer satisfaction. The first article reviewed referenced a company that spent money to increase their customer satisfaction, but it also increased their service costs and did not improve their revenue. Also in the literature review, it highlighted how ranking particular brands individually is not an effective way of measuring the correlation between the satisfaction of a customer and their spending when using a 1 – 10 scaling between brands and items. Rather, it is far more effective to have a detailed ranking system between all brands the customer used so that the organization can have a firm idea of how they stacked up against their competitors. The researcher learned from his interview with Subject 1 that he used a similar scaling system that the literature suggested was more effective in measuring customer satisfaction. In Subject 1’s response, he said that their company had a star rating system for their customers. The difference is that the customer rated each individual task within their order. Most of the time, companies asked the consumer to just rate the overall service, but in Subject 1’s case, each aspect of their service was rated. Thus, they were able to pinpoint which aspect of their service they could improve. This led not only to improved profits, but also increased satisfaction and made for a happier consumer. When it came to resolving serious complaints, the researcher found in both the literature review, and the responses from his interviewed subjects that understanding that the customer just wanted to be heard and to feel that the perceived effort and justice from the organization was genuine. In response to the researchers second question, ‘How do you handle customer complaints that are serious when it is determined that the company is at fault?’, Subject 2 said that his experiences taught him that customers do not want to be given something to make them feel better; rather they want to be heard and understood, and this was enough to resolve an issue. Subject 1 said that regardless who is at fault, the first step is to exhibit empathy. Subject 3 gave a similar response when answering the researchers first question, ‘What are your current processes in handling employee complaints and what makes it effective?’, by discussing how important it was to their organization to personally send company executives to their account holding clients when resolving issues. Similar to Subject 2’s response, Subject 3 said their organization put a premium on building a relationship with the customer because they also found that their customers just want to be heard whenever there is an issue. Relationship building is another area where the researcher found congruence between the literature review and the subject’s responses. In the second literature review, it was discussed that complaint policies that were successfully implemented could not only restore customer satisfaction but it could also improve the relationship between the customer and organization. All three subjects interviewed either mentioned or implied that the importance of developing relationships and building good will with their customers was beneficial to their respective organizations. Subject 1 said in his response to the researcher’s second question that the purpose of the internal complaint process they had in place was to ensure that they build a relationship and good will with their stakeholders. Subject 3’s response to the researcher’s first question, explained the reason their organization would go out of their way to send executives to their business account customers was so that they could build relationships with their clients. When answering the researcher’s third question, Subject 2 said that resolving complaints satisfactorily shows the customer that the organizations cares and had empathy for them and their complaint. In reference to customer satisfaction translating into profits, the second literature review highlighted how satisfied customers were more likely to be engaged customers, which created more value for the company. Subject 1 was the only individual who disclosed to the researcher the financial impact of inputting an avenue that permitted customers to interact with his organization. In his answer to the third research question, the subject mentioned that when his organization implemented a feature that allowed customers to communicate with their employees after closing a ticket, it boosted their organization’s finances. Opening an additional line of communication with their customers after resolving an issue, pushed for even more engagement between their organization and client base. As a result, Subject 1’s organization saw their profit from revenue increase by 10% in one year. Subject 1’s response supported the findings in the literature review. The researcher’s fourth question, ‘How can social media play a role in new product development?’, was the only question that did not garner similar responses or strong patterns. Subject 2 said that social media is a platform that allows people to air out their complaints, while subject 3 said that social media is a game changer. Both subjects said that their organizations had dedicated teams that monitored what was being said about their organizations. Subject 2 went into further detail about how social media actually played a role in their product development. He shared with the researcher an example of how customers complained on social media about the coffee served on their flights, and that prompted them to switch to a popular coffee brand. It is clear that organizations should not just pay attention to what is being said in the survey, but they should also pay attention to what was being said about them on social media platforms.

Recommendations To enhance future studies, the researcher recommends a larger sample size and an in-depth literature review of how complaints are resolved in the insurance industry, and how resolutions would enhance customer satisfaction. The researcher also recommends that a niche study be conducted that includes a large sample size of participants who are experts in the auto insurance industry. The subjects should include industry professionals from small to large auto insurance providers which would generate enough new data so literature could be published that would shed light and provide insight on the complaint resolution practices, attention given to customers, and impact of revenues in the auto insurance industry. The researcher’s literature review was limited to scholarly articles that focused their sample data from various customer driven industries, but was lacking in data from the auto insurance industry. If such data was available, the researcher could create ideas and suggestions to improve the overall customer experience and satisfaction between automobile owners and their insurance carriers. The researcher’s recommendations were sourced from the literature reviews, and practices learned from the subjects interviewed. Based on the project conclusions and the researcher’s professional industry knowledge, the researcher recommends that business leaders working in any arena that is primarily dependent on customer interaction should understand that stakeholder satisfaction and engagement should be the primary objective in all aspects of their business operations. Organizations should adopt policies, and instruments that allow and encourage customer engagement, as it has been found by the researcher’s literature reviews and interviews with his subjects as an effective way to resolve mistakes between companies and stakeholders while simultaneously building long lasting relationships that will keep the organization profitable. Customer service within the auto insurance industry can drastically improve if customer-centric policies are implemented. Leaders in the auto insurance industry should consider creating advisory groups made up of their own consumers so they can get realistic feedback about their services and satisfaction. As described by Subject 3, advisory groups allowed their company to stay ahead of the curve and make necessary improvements to everything that is served on board, performance of their attendants, and products sold by their airline on a rolling basis. Since laws require all drivers to carry auto insurance, leaders in the insurance industry could easily source a large number of participants and develop a similar approach. Advisory boards made up of customers can give honest feedback regarding how insurance claims are handled, address timeliness issues, and resolve customer matters without hiccups. The researcher recommends this method because it can reveal to insurance executives where they are lacking in their services. An internal customer complaint process should also be constructed and implemented. The researcher confirmed with all his interview subjects that their organizations had a formal internal procedure in place. The researchers experience when dealing with his insurance company seemed to give an impression that his insurance provider was extremely disorganized. Company representatives often failed to update the researcher when promised, which left him with no choice but to follow up with his insurance company on his own accord, or seek information about the status of his claim from the repair shop. The researcher can only speculate if his auto insurance company had an internal process in place, and if they did, if it was being properly followed. According to the second literature review, when a complaint process is clear, simple, and properly adhered to, it can restore satisfaction with the customer and even improve the existing relationship between the organization and customer. Subject 1’s company is a small operation, but his organization had a simple three-step internal process that had yielded very good results because it focused on building a relationship with the customer. He even said that his employees had received gifts from their customers because of how well they resolved their complaints. For the final recommendation, the researcher believes that a comprehensive rating system that allows for the customer to individually rate each task within a service should be implemented after a service has been rendered or a ticket has been closed. Additionally, a mechanism should also be in place that can allow stakeholders to communicate with the company representatives after a case is closed, as this can generate relationship-building opportunities, build good will, and even solicit ideas that could help an organization can improve their services. During Subject 1’s interview with the researcher, he said that their business employed both methods and has been beneficial to both their organization and customers. If these methods can benefit Subject 1’s small organization, then a hybrid of these two methods can certainly be beneficial to the auto insurance industry, as it would improve satisfaction, strengthen relationships, and reduce frustration between the consumer and business entity. Moreover, the organization will know in which areas they are succeeding, and most importantly, businesses can pinpoint exact which areas they need to improve so they can strike a balance between profitability and stakeholder satisfaction.

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