Consumer Complaints: Lenders’ Broken Windows
If a window is broken and left unrepaired, people walking by will conclude that no one cares and no one is in charge.
Criminologists and social scientists use the “broken windows” metaphor to explain a theory about problem areas in urban communities. If a single building is left neglected, the theory goes, rates of vandalism spike throughout the surrounding neighborhood. The converse is also true: when communities respond to seemingly inconsequential problems like broken windows, passers-by take notice and crime rates decline.
In other words, people care about the little things—because, more often than not, the little things indicate bigger issues.
In the consumer lending world, our broken windows are consumer complaints. Complaints that go unaddressed tend to escalate. What begins as a small chip in the façade will, if neglected, expand—until the entire storefront window needs to be replaced. Upon discovering the shards of customer dissatisfaction, regulators and capital partners typically detect the presence of larger issues lead right to the top of the financial service company’s leadership. Lenders who listen and respond to consumers, meanwhile, have a positive impact on the whole industry.
How are your windows holding up?
Is Your Company Listening?
No one likes to receive complaints—not people, not businesses.
Make no mistake: your company will receive complaints. What’s important is you do when it happens. Does someone notice the complaint? Is there anyone who cares, particularly at the executive level? Are you making sure to respond quickly and appropriately, and to look for patterns and trends among the complaints coming in?
By monitoring complaints, you gain insight into how your processes and people are working. Complaints identify ongoing service and compliance problems that cause inefficiencies and frustrations for your customers and staff. They also point you toward impending problems that may have serious consequences if left unaddressed. Complaint tracking is your opportunity to take systemic corrective action and avoid service failures moving forward.
Regulatory statistics paint a fuller picture. According to the White House Office of Consumer Affairs, for every person who bothers to complain, 26 other consumers remain silent. When complaints speak on behalf of a category of customers, it only makes sense to listen to and take care of any feedback your organization receives.
Just like a neighborhood rife with broken windows, indifference to customer dissatisfaction reflects poorly on the consumer finance industry as a whole, and deters existing and potential borrowers alike. There’s a high cost to these missed business opportunities: it’s 6 times more expensive to acquire a new customer than it is to keep a current one. Companies invest a great deal of time, money, and energy to find customers, encourage repeat business, and build a competitive advantage.
For continued success, businesses must adhere to a basic concept: Satisfied customers are key to business growth and sustainability.
Why Regulators and Lenders Care About Complaints
It’s not just your internal processes that require your attention. Regulatory agencies and capital partners care about complaints, too—for different reasons.
Keep in mind that complaints submitted through the CFPB website complaint portal are available for public view, and more than one million have been published as of February 2017. Additionally, CFPB data reveals that most consumers file complaints with the Bureau only after trying the institution first. Minimize your public exposure—and protect your and your bank’s reputation—by resolving complaints internally and expeditiously, and the CFPB won’t need to get involved.
Integrating a Complaint Management Program
No one complains at a finance company just to vent. When a consumer lodges a complaint with your organization, the consumer (and the CFPB) expects you to respond and work toward a resolution immediately. A complaint tracking and response program, which can be analyzed for root causes and trends, can improve products and create better outcomes for your customers. This is not only a best practice, but reinforces your commitment to your employees and financial partner. It demonstrates that your leadership knows customer feedback is vital to the company’s business strategy.
To avoid costly investigations and protect your relationships with capital sources, your CMS must be comprehensive and effective. As with broken windows, unanswered customer complaints are the first sign of trouble outsiders see. That is, regulators and auditors view your established process for responding to and managing complaints as an indication of the maturity of your CMS.
If your organization maintains two separate systems—one for complaints, and one for compliance—you are misusing your resources. Save time and money, and reduce regulatory risk, with an all-in-one system that handles complaints and workforce compliance. Your customers, your employees, your bank, and the CFPB will thank you.