KPI: Customer Complaints
Customer complaints can help us improve. Using the customer complaints KPI the right way will let us know whether something in our process is getting worse or if we are on the right track to solving a problem.
When getting a customer complaint we need to take many details from the customer and put them in our system. After investigating the reason for the problem we need to make sure that we have the following fields added to the complaint record so we can look at the bigger picture later:
- Complaint type(functional, packing, logistical, visual, etc.)
- Complaint subtype(Packing: damaged outer packaging, not the right sticker, damaged inner packaging etc.)
- Customer’s name
- Categories that describe the problems(main category and subcategories, so we can filter for different types of people)
- Unlimited tags that describe the problem
- Severity 1(In the eyes of the customer)
- Severity 2(How serious was the defect in the production/logistical problem)
- Specific product information(multi fields such as catalog number, work order number, family product etc.)
- Tools used for production or packing
- People who made and packed(if possible or relevant)
- Categories for corrective actions(main reason and secondary reason)
- Cause category
- Compensation in terms of cost
- Day of production
- Day of customer complaint(the day it arrives)
- Day of first response(to the customer)
- Day of applying first corrective action
- Day of applying last corrective action
- Day of closing the complaint
- Justified – yes or no
- Salesperson(if relevant)
- Responsible department
When looking for a KPI for customer complaints we look at the following categories:
- Complaint types
- Causes of complaints
- Origin of complaints(customers, salespeople)
- Corrective actions
- Time per stage in the complaint process
Before we begin we need to decide whether we use only justified complaints or both in each graph. I will use justified complaints only for now, but it is very important to understand the issues that are not justified.
Customer complaint types
The following KPI lets us understand what are the types of customer complaints we are getting. Anyone reading the following charts can understand what they are.
1. Number of customer complaints by period
Short Description: The number of justified complaints per period
Who uses it (importance): higher management (High), factory management (High), unit management (High)
Description: This KPI lets us see the big picture. Are we getting more or fewer complaints? Are we getting better or worse?
2. Cost of complaints
Short Description: Cost of complaints
Who uses it (importance): higher management (High), factory management (High), unit management (High)
Description: The cost per complaint is different for every organization. It should include compensation to customers, lost goods, shipments, the time for dealing with the complaints, and whatever else to be taken into consideration. This KPI allows us to see the direct costs of complaints (not including reputation, loss of future business, and more).
3. First breakdown by categories
Short Description: The number of customer complaints per major categories.
Who uses it (importance): higher management (High), factory management (High), unit management (High)
Description:This allows the management to understand what kind of complaints we are getting and how well we deal with them. In the following chart we can see that we have 5 main categories. Most (70% or more) of the complaints are coming from the functional and packing categories.
In order to see the 2 main categories by themselves we isolated them into the following chart:
4. Second breakdown into subcategories
Short Description: Breakdown into subcategories
Who uses it (importance): higher management (low), factory management (High), unit management (High)
Description: The first step is to pick a customer complaint category. The second step is to drill down to the subcategories. Usually we will show the category with the most complaints. In the following example I took the functional category and am looking at its sub categories. In the example below is one annual view (first chart) and one quarterly view to see how it changes in time.
5. Going down to the root cause
Short Description: Looking for the root cause for a main category and subcategory
Who uses it (importance): higher management (low), factory management (med), unit management. (med), QA (high)
Description: This KPI is used to monitor root causes that produce customer complaints and how well the factory is dealing with them. We can see whether the complaints are going up or down per cause or their number stays the same. We look at it as a pivot table by subcategory (first table) and then open it to causes (second table).
Causes of Customer Complaints
6. Customer complaint types vs. cause categories
Short Description: The operational reason why the failure happened
Who uses it (importance): higher management (low), factory management (high), unit management. (high), QA (high)
Description: After investigating the failure we are looking for the cause. We can categorize every cause into main reasons and secondary reason. That allows us to see if we are improving the procedures or not. That also lets us know whether some category becomes a major issue so we can allocate resources to improving the procedures. The following example lets us clearly see that the “not following procedure” category is getting better and better. This usually comes from massive training and discipline.
7. Customer complaint types vs. cause categories
Short Description: What causes customer complaints.
Who uses it (importance): higher management (low), factory management (high), unit management. (high), QA (high)
Description:Compare the complaint categories with the cause categories to see the major problems of each customer complaint category. As we will see in the following table, this allows us to find the major problems of each type of customer complaints.
8. Severity – customer vs. Operations
Short Description: Severity is how serious we consider a problem to be.
Who uses it (importance): higher management (med), factory management (high), unit manage. (high), QA (high)
Description: The customer severity is how the customer looks at the problem. The customer is looking at how good the product works in his home or business. He doesn’t care what causes the problem, only how it affects him or his product.
The operational severity looks at how well the production, packaging, and delivery processes work.
Example of low severity: Human error taken into consideration when building the QA process.
Example of high severity: Cross contamination of products, QA tests that were not performed, Defective raw material that affected many batches.
The 2 charts reflect the 2 points of view: The sales department that looks in the eyes of the customers and the operational department that looks at the processes and how well they work. The operational QA will deal with every complaint, but invest more time on complaints considered of high severity in the customer’s eyes. The production leaders will focus most on solving the problems that caused the high severity in terms of operational problem.
By focusing on the yellow number which represents high customer and operational severity we can see whether we are getting more effective or not when looking at a time axis. The following chart example shows that we were going the right way until the last quarter.
9. Number of complaints per department
Short Description: Number of complaints per responsible department (or unit)
Who uses it (importance): higher management (med), factory management (med), unit management. (med), QA (med)
Description: For each customer complaint we are looking for the cause. Then we look for the department in charge of the process. When we count the complaints for each department, we can find out which department needs to improve. We can also use this value to set periodical goals. In the following example we can see an increase in the number of production complaints and a decrease in QA complaints.
Origin of Customer Complaints
By looking at who complains we can see if there is a customer who has more needs or a salesperson who is working in a market segment with a special QA problem.
10. Top complaining customers
Short Description: Sorting the top X customers with most complaints in a year (can be any other time period)
Who uses it (importance): higher management (med), factory management (med), unit management. (low), QA (high)
Description: By sorting the customers by their complaints we can find the customers who have QA issues with our product. Customers with QA problems don’t stay for long, so we need to address their problems. If we work well, we need to see different customers at the top each year.
When we identify the customers with the most complaints, we can drill down to see what kind of problems they have:
11. Complaints per salesperson (or team)
Short Description: The number of complaints per salesperson / team per period.
Who uses it (importance): higher management (med), factory management (low), unit management. (low), QA (med)
Description: If you are in a business that has 1 salesperson/team per customer, this KPI is for you. It allows us to see which salesperson/team has problems with their customers. We need to see why one salesperson has more complaints than the others. Is it the market segment? is it a specific customer? is it the geography? Does this customer have different needs? Is the salesperson giving the right service?
Customer Complaints – corrective actions
When dealing with customer complaints we will generate one or more corrective actions. The corrective actions are the most important element of the customer complaints process. The corrective actions usually are very specific, but we can put them into categories to see and understand how we deal with customer complaints.
12. Top 5 corrective actions
Who uses it (importance): higher management (low), factory management (med), unit management. (med), QA (med)
Description: For every complaint we will take the most affected corrective action andl categorize it. Then we can see each quarter/period what was done in terms of corrective actions.
Time per stage in the complaint process
We need to know that we are efficient and giving good service when a customer complains. We need to monitor the process to make sure that we are doing it well and respond in good time.
13. First response to customer complaints
Short Description: The time needed to first investigate the complaint and give the first response to the customer
Who uses it (importance): higher management (High), factory management (med), unit management. (Low), QA (High)
Description: When we get a customer complaint, we need to investigate to understand whether the customer is right and what seems to be the problem. That way we can decide how to compensate the customer and see if we need to send additional goods. When responding we should also add some of the corrective actions we want to take to prevent the problem from happening again. This process takes time and our first response determines how good is the QA process when dealing with customer complaints.
Time for response = day of response – day of complaint
Another way to see it is on a 12-months basis:
14. Time for first corrective action
- Time for first corrective action
Short Description: The time for implementing the first corrective action
Who uses it (importance): higher management (med), factory management (med), unit management. (Low), QA (med)
Description: The time it took us to first react with corrective actions to the customer complaint.
Time for first corrective action = Date of first implementation – date of complaint
15. Average time for closing customer complaints
Short Description: The average time it took to close the customer complaint
Who uses it (importance): higher management (low), factory management (med), unit management. (Low), QA (med)
Description: We close the customer complaint when we gave all responses needed to the customers and we finished the investigation and listed a corrective actions (not implementing them).
Closing time = Date of closing – Date of opening
