The Power of Compliments

There is no shortage of data in today’s world. It is what you do with it that matters. All large organizations are collecting reams of information from multiple sources every day. Perhaps, in our increasingly relational world, one of the most overlooked sets of data is customer feedback – especially positive customer feedback.

Organizations and their consultants are well practiced at handling complaints and other negative feedback. These come via an ever-widening range of media, whether it be old-school face-to-face, or telephone calls or more likely today, by email, Facebook or Twitter or other social media. These days the customer has plenty of opportunity to let the business know if it has not performed to expectation. And businesses are well prepared, generally, to respond quickly to such approaches.

Recent research we have undertaken at the University of St. Gallen highlights the impact of this feedback on the organization’s employees, and then shines a spotlight on why businesses routinely fail to balance this negative input with the positive feedback that is also received. Together with Heike Bruch and Dennis Herhausen, I explored how the handling of customer feedback affects the morale of employees and how it can be managed to improve organizational health.

There are two core reasons why effective handling of customer complaints is important:

• a well-handled complaint is a powerful way to enhance customer loyalty,
• and complaints (as with all mistakes) tend to be better learning opportunities than successes, so enable process improvement to occur

But, importantly, our research also shows that focusing exclusively on complaints is a ‘double-edged sword’. The constant management of negative feedback takes its toll on employees, and the wider ‘health’ of the organization, effecting employee productivity, retention and leading to organizational emotional exhaustion.

“It’s a sad fact of customer service that while complaints get logged, formalized and circulated, compliments and thanks are often just briefly expressed to one individual before disappearing off into the ether, never to be acknowledged again. It’s a shame, because for many customer service professionals these are the moments that make the job rewarding.” Customer Service Manager.

As the quote above, which we received during the research, indicates, there is a real benefit for organization’s health in sharing and championing customer compliments, but we found that few businesses were leveraging this.

The technical term that references events which alter employees emotions is ‘affective events’, and our hypothesis was that accumulations of positive affective events (including customer compliments, praise, expressions of joy, gratitude, or satisfaction) create energizing and engaging virtuous circles, where people are pleased to come to work and are keen to involve themselves in that work; whereas continual flows of negative affective events (including customer complaints, expressions of anger, frustration, or dissatisfaction) leads to a downward spiral of employee detachment and disconnection with their work, which ultimately can lead to reduced performance.

Our research covered 80 German businesses, with over 10,000 respondents including 178 Board Members. It showed that less than half of the businesses surveyed had any formal process to manage positive feedback, let alone share it with their employees. In addition we discovered that while there was no difference in the management of negative complaints between successful and unsuccessful businesses, those businesses that did share positive compliments were almost twice as likely to be successful ones.

In other words, based on this research while complaint management was not correlated with business success, compliment management is. This insight led us to analyse the processes – or lack of them – around gathering positive feedback.  We broke the potential process into three distinct phases: stimulation, systemization and dissemination. Most companies had no formal process to ‘stimulate’ positive feedback from customers, all the focus was on negative feedback. When positive feedback was received there was no ability to use it effectively as no system tended to exist to do so, and as a result no way to share the ‘good news’ within the organization.

This lack of focus on positive feedback has negative effects. Even ignoring the simple psychological effect of getting customers to identify the things they like will reinforce their positive impression of the business. This ignoring of positive customer feedback also prevents businesses from identifying the things they need to keep and keep doing, which, in a world of constant change, is as an important a piece of data as knowing what to change.

Our research suggests that a greater focus on stimulating, systemising and distributing positive feedback should occur, and we recommend some simple ways to encourage this. At its most basic, renaming ‘customer complaints’ as ‘customer compliments and complaints’ will radically alter the mindset of people dealing with these. Be creative with how compliments are stimulated, we are all used to the smiley faced tap buttons in airports these days, but other ways exist too. Every employee should ideally get to interact with customers from time-to-time, to strengthen the link between what they do and the end user. All compliments need to be responded to, the thanking is a key part of the loyalty building mechanism.

The over-riding lesson from the research is that far from fearing that compliments will encourage employees to rest on their laurels, it stimulates and strengthens their purpose and enthusiasm for their work. All managers should embrace it.