Small Business

What to Do When a Customer Complains


An attorney representing a New York City dry cleaner suing a customer for defamation offers advice on responding to client complaints

When a disgruntled customer of a New York City dry cleaner posted his complaints on neighborhood leaflets and created a derogatory Web site, the small business owner decided to fight back, suing for defamation and getting an injunction to keep the man out of his Upper East Side establishment. Entrepreneurial firms that rely on Internet and word-of-mouth referrals could be seriously harmed by angry clients, says Debra Guzov, managing partner of Guzov Ofsink, the law firm representing the dry cleaner. She recently gave some tips to Smart Answers columnist Karen E. Klein about how to respond to customer complaints.

Most small business owners have to deal with unhappy customers, including some that bad-mouth the business. Did this situation go farther than that?

Yes. Unfortunately this turned into a kind of extreme situation. The customer took his complaints public by making up leaflets complaining about the company, posting them around the neighborhood, and then posting a Web site about his complaints. It comes up very high in the search results when you Google this company.

Most companies—even the small ones—are being discussed on Internet sites that solicit consumer reviews of products and services. What's the effect been?

It's a double-edged sword. The Internet is a wonderful tool for businesses and consumers, and it's also a very dangerous thing. One negative thing that's written about a business or a professional can immediately hit 60 million people. Even if it's not true, once people see it in black and white it suddenly has a lot of importance. Since our whole judicial system is based on free speech, it's very difficult if not impossible to take something off the Internet once it's there.

How do you recommend small business owners respond?

In this case, we went to court in August and got an injunction keeping this individual off the property. The remainder of the case, which is for defamation, hasn't been litigated yet. But in general, situations like this do not have to happen, let alone wind up in court.

The first thing I'd recommend is for the business to post its own Web site or blog, showing how wonderful its service is and including accolades from other customers. This is one way to counteract the negativity of one individual who's upset.

What can you do when first handling a complaint, before it escalates?

The first step is to investigate any complaint thoroughly and confirm its accuracy. What helps is to have a written-complaint policy in place. If it's a serious complaint, get it in writing, investigate it promptly, and respond to the customer in writing.

Make sure your employees know about your policy, and that they take it seriously. They may be the ones who have the initial contact with the upset customer. Part of your policy should include a protocol for questioning your employees about a complaint and checking the equipment or other factors that could have contributed to the problem.

You also need to make sure this is an isolated problem. Check with other customers to see if they have had the same trouble. You may find that 50 other people are upset but they didn't complain; they'll just go somewhere else. Most of the time, once the issue is explained there is a simple fix to the problem.

What about the old saying: "The customer is always right?"

Every business has to weigh the cost (BW SmallBiz, October/November, 2007) of that, depending on what kind of complaints it's getting. Customers are interested in knowing that you're taking their problems seriously because their business is valuable to you. Things generally go well if you stay in touch with the customer, explain what you're doing about their complaint, and show that you're striving to do the best you can. That kind of personal interaction really wins a business a lot of points and it makes the customer feel much better, whether the problem was real or perceived.

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.


Steve Ballmer, Power Forward
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