With lockdown restrictions extending for another few months, demonstrating empathy and understanding to customers is more important than ever.

This is especially true when services or products fall short of expectations, emotions run high and frustrations come to the fore.

Mortgages are a particularly emotive financial product, with high financial and personal stakes for the consumer. This means that, when a mistake is made, the way their complaint is managed is vital to the future of the relationship.

It’s how you deal with the problem that matters

The Institute for Customer Service’s UK Customer Satisfaction Index revealed in January that customer satisfaction for 2020 was at its lowest level since 2015.

This is no surprise given the operational challenges many firms faced.

However, a crucial take away from the report is that, while customers expected more things to go wrong last year, what really affected their satisfaction was how they were  treated when they made a complaint.

This insight certainly chimes with our own experience managing complaints for a broad range of financial services firms.

Unprecedented levels of activity in the mortgage market ahead of the stamp duty deadline has resulted in a 43% annual fall through rate in 2020.

This figure is likely to be even higher for Q4 2020 and Q1 2021. Increased financial vulnerability – which has affected up to half the adult population according to the FCA’s Financial Lives survey from October 2020 – has also driven up requests for mortgage holidays and forbearance.

It is therefore likely that we will see a spike in complaints about services and advice in H1 2021.

Viewing complaints as an opportunity 

The first mistake that many firms make with complaints is to see them as a nuisance, rather than a valuable source of customer feedback and an opportunity to earn trust, loyalty and even advocacy.

Currently, only one in 20 complaints result in advocacy. However, our latest benchmark report, Complaints Outlook 2021, which focuses on the emotional journey through the complaints process, suggests that this number can be increased to one in four when customers are extremely satisfied with their  overall experience.

People remember how you treat them when things go wrong, and they will be quick to tell others about it too.

By engaging in clear communication from the offset and responding to complaints with empathy, firms have an opportunity to leave a good lasting impression.

The report is based on a YouGov survey of 2,522 customers who made a complaint to a broad range of financial services and utilities companies.

Alongside this, Huntswood conducted its own research into the experiences of 500 complaint handlers and 54 firms.

Of the consumers surveyed for Complaints Outlook 2021, 17% more would recommend their broker or firm to others if they felt valued while making a complaint. It’s therefore important that firms engage with customers in a way that makes them feel like their feelings are valid.

We also found that ensuring complaints are dealt with quickly and consistently is key to rebuilding the customer relationship as, although 64% of customers will feel frustrated when they first discover an issue, frustration rises to 74% if the process of making a complaint is difficult.

The speed in which companies respond can also have a big impact on retention, with 80% of customers being retained if a complaint is resolved within the first two days.

While firms should always try and resolve issues as quickly as possible, it’s important to remember that some complaints will be more complex than others and will simply require further investigation.

The trick for brokers is to ensure they are proactive in their communications, as keeping the customer updated and reassured will help to reduce their frustration.

This is reinforced by the fact that three out of four customers feel angry when they have to chase for an update and do not receive one.

Our data also found that consumers respond better to firms which take responsibility for their actions, with customers 17% more likely to stay with a provider if it can apologise when it is at fault. Despite this, 25% of firms are still not doing this every time.

Becoming a customer‐focused business

While the pandemic has presented challenges in terms of resource and operations, the firms we spoke to also identified some key opportunities for improving customer complaints in the current environment.

By embracing new ways of working and allowing for more flexible resource capacity, firms can take a more proactive approach to their complaints handling and put the above insights into practice.

The ability to scale resource up and down as required will ensure that call handlers can concentrate on customer concerns and will also help with resolution times.

Technology and automation can further support customer service teams, giving them the tools to keep customers updated and focus resource on areas where the human touch is most needed, while improvements in root cause analysis will allow firms to identify the cause of complaints and promptly address the problem to prevent recurrence.

This last point highlights the value of customer feedback that comes from complaints. If they invest time in learning from their mistakes, firms can reduce complaint volumes, avoid escalation to the ombudsman and save cost and resource in the long run.

This is highlighted by the fact that 29% of customers are more likely to remain with their provider if they feel their complaint has made a difference to how it operates.

Our research clearly shows that if mortgage firms can build empathy into their complaints process, there is an opportunity for them to improve loyalty and retention moving forwards.

How you treat your customers is important at the best of times, but it is even more crucial in the current climate. Ultimately it could help you differentiate yourselves from the competition.

Ben Garratt is director of retail banking at Huntswood