Customer care balance sheet

To gain a better understanding of the impact of complaints, a customer care balance sheet is useful tool. It tells the organisation how much business it is losing both from customers who do not complain and from customers who do complain and are not satisfied with the way their complaint is handled.

 

Different surveys can be used periodically to ask customers who have not complained and those who have, how satisfied they are with their experience, how many people have they will tell if they are not satisfied and whether they intend to use the services of the company again, as a result of their experience.

 

The answers from these surveys are then converted into annual lost sales revenues using the formula shown above.

 

The first element I sales lost from customers who experienced a problem and who did complain but were not entirely satisfied with the way their complaint or enquiry was handled; it also includes negative word of mouth and non repeating sales.

 

The second element is sales lost from customers who experienced a problem but did not complain. Again, the sale lost include sales lost from negative word of mouth and non repeating sales.

 

From the 2 elements sales which wold in fact have been lost anyway through attrition are detracted.

 

In the formulation, sales gained from positive word of mouth advertising are not taken into consideration because the formula deals with market damage rather than market opportunity.

 

To make the calculation accurate for each type of business, the formula is applied over reasonable period of loyalty of the customers. The final calculation then takes the total sales lost over this period of loyalty, divided by the period of loyalty to arrive at annual sales lost.

 

This type of customer care balance sheet can help win the financial support of senior management to develop a means of ongoing customer measurement which allows employees throughout the organisation to determine how well they are performing.