What to Do When a Customer Complains

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What if the explanation you've given doesn't satisfy the customer?

This is when you need to document everything in writing. Keep an outline of events, including exactly what occurred and when. This will help you later if legal action needs to be taken. If there are flyers or letters being sent out to your customers, make sure to keep a hard copy for your records. If you can, have the customer make a written complaint and keep that also. If the unhappy customer persists in his claims, do a search online to see if that person has started a smear campaign against your business, and print out anything you find.

How do you deal with employees that may be approached by the upset customer?

Explain to your staff about the complaint that's been made—if they haven't heard already—and tell them what they should do or say if other customers or vendors ask about the situation. They should also know how to respond if the problem customer begins to harass the establishment. Most of the time, our initial inclination is to ignore and avoid the problem. That can lead to disaster and loss of business.

When do you take legal recourse?

If the problem customer persists and your attempts to resolve the situation don't seem to be working, that's when you may want to seek legal advice on how to best resolve the situation. Bring all the documents you have on the situation to your first meeting with an attorney.

My policy is that everyone should practice litigation avoidance. That means that you shouldn't first seek legal advice when you have a problem, but before you have a problem. When you're forming your corporation and putting your documents together, that's a good time to develop a relationship with a business attorney. That person can give you some more sophisticated preventive things you can do very early on, such as setting out your complaint-resolution procedure on the back of your purchase orders.

I advise that you include information there that states disputes will be resolved in binding arbitration, perhaps through the American Arbitration Assn. or the Better Business Bureau, if you're a member. That's an efficient and much lower-cost alternative to going to court, even small-claims court. The courts in places like New York City are so overloaded that before you blink an eye, $10,000 will be spent. That's a substantial sum, especially for a startup.

Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.