Int. Journal of Business Science and Applied Management, Volume 3, Issue 1, 2008
Customer complaints as a source of customer-focused
process improvement: A constructive case study
Kari Uusitalo
Department of Management Studies, University of Tampere
FI-33104 Tampere, Finland
Tel: +358 400 616 358
Henri Hakala
Department of Management, University of Vaasa P.O. Box 700, FI-65101 Vaasa, Finland
Tel: +358 6 3248249
Teemu Kautonen
Department of Management, University of Vaasa, P.O. Box 700, FI-65101 Vaasa, Finland
Tel: +328 44 0244280
Process-based thinking commonly focuses on enhancing the efficiency of processes, while it is often
criticized for not paying enough attention to the customer. This paper argues that customer complaint
information can be used as a basis for customer-focused process improvement. Thus, it is not enough to
make the complaining customer satisfied, but the complaint information should also feed back to the
actual processes where the fault causing the complaint arose and where it can be removed. The
empirical component of the study includes the development of a novel construction to utilize customer
complaints for process improvements, which was implemented in a large Finnish enterprise operating
in the wholesale logistics environment. The results show benefits at both operational and strategic
Keywords: customer orientation, process improvement, customer complaints, complaint management,
operations management, constructive method
Int. Journal of Business Science and Applied Management /
The market-oriented philosophy in marketing and management literature has emphasized
customer satisfaction and loyalty as sources of performance and profitability (e.g. Deshpandé, Farley
and Webster, 1993; Foster, Gupta and Sjoblom, 1996; Jaworski and Kohli, 1993; Knox, 1998; Oakland
and Oakland, 1998; Slater and Narver, 1996). However, the customer orientation seldom reaches the
operational level of business processes in theory or practice. Process-oriented management teachings
such as activity based management (Turney, 1992), total quality management (Creech, 1994; Mizuno,
1992), business process re-engineering (Earl and Khan, 1994), continuous improvement (Davenport,
1993), lean management (Taylor, 1999; Vollmann, Berry and Whybark, 1997) and supply chain
management (Shapiro and Heskett, 1985) have traditionally focused on enhancing the efficiency of
processes within organizations. While a number of scholars have raised the role of the customer in the
improvement of business processes (Jones and Sasser, 1995, Kohli and Jaworski, 1990, Slater and
Narver, 1994, 1996), these teachings have also been criticized for being rhetoric and not paying enough
genuine attention to the customer (e.g. Wood, 1997). In short, despite their development towards
increased customer focus, these ‘engineering’ approaches essentially concentrate on processes as such
and do not appear to provide sufficient support to focus on the issues that are important to the
This paper argues for a customer-focused approach to the improvement of business processes by
developing a construction which systematically utilizes customer feedback in form of complaints to
achieve process improvements both at strategic and operational levels. The basic idea is that it is not
enough to make the complaining customer satisfied, but that the complaint information should feed
back to the actual processes where the fault causing the complaint arose and where it can be removed,
thus avoiding further similar errors. This thinking is essentially utilizing the ideas of a learning system
(Checkland, 2000) and feedback loops that balance the variety between the environment and the
operations (Beer, 1985). While complaint management has been addressed in the previous literature
(e.g. Boshoff, 1997, 1998; Brown, Cowles and Tuten, 1996; Feinberg, Widdows, Hirsch-Wyncott and
Trappey, 1990; Hart, Heskett and Sasser, 1990; Johnston, 1995), Johnston and Mehra (2002)
emphasize that further research is required especially with respect to the ‘how’, that is, how the
complaint information could be utilized operationally. Moreover, little research has been devoted so far
to investigating how companies can better utilize qualitative customer complaint information. The
present paper addresses both of these knowledge gaps.
Empirically, the paper adopts an applied approach based on the constructive case study method.
The constructive method concentrates on developing and implementing a new, innovative and
theoretically anchored construction (e.g. a model, plan, organization, technology, software or a
combination of these) to solve a real-world problem situation (Kasanen, Lukka and Siitonen, 1993;
Lukka, 2000, 2003, 2005). The implementation phase is an integral part of this method, as the ideal
construction not only makes a theoretical contribution but also solves the practical problem (Lukka,
2000). Thus, in business studies the construction is subjected to the practical test of whether it works in
the company or not. The construction developed in the present study includes a database solution for
collecting and analysing qualitative customer complaint data in a large Finnish company operating in
the wholesale logistics environment. The aim of the construction was to provide a tool for customer-
focused process improvement.
The contribution of this paper is two-fold. Firstly, it introduces a novel construction which links
customer complaints to the company’s processes arguing that complaint information can be effectively
used to improve customer focus and operational quality. Secondly, from a managerial point of view,
the paper describes a construction that effectively utilizes customer complaint information in support of
managerial decision making both at operational and strategic levels aiming towards improved
operational quality.
The paper is arranged following the logic of the constructive method. The first section reviews
literature relevant to analysing the role of customer complaints as a source of information for the
purpose of process improvement. This review summarizes the main literature used in developing the
construction. Next, the constructive case study methodology is described and the case company and
the developed construction are introduced. Finally, the results of the study are presented and discussed,
followed by the conclusions and implications for management and further research.
Kari Uusitalo, Henri Hakala and Teemu Kautonen
Extending the market-oriented philosophy to the management of processes would imply that the
emphasis should be placed on identifying and improving those processes in the company’s value chain
that generate the most value to the customer. Such improvements are not just a cost but also an
investment in long-term profitable customer relationships (Reichheld and Sasser, 1990). However,
errors and unsatisfactory service occur in all businesses given that “mistakes are an unavoidable feature
of all human endeavour” (Boshoff, 1997, p. 110). Occasional failures are not necessarily bad. As a
matter of fact, most customers accept that things go wrong sometimes and are happy enough as long as
the problems are solved and do not occur again (Bitner, Booms and Tetreault, 1990; Feinberg et al.,
Different types of faults can be prioritized on the basis of the cost they cause to the company or its
customers (Albright and Roth, 1994; Shank and Govindarajan, 1994). The Japanese quality philosophy
distinguishes between random and systematic faults in this context (Mizuno, 1992). Random errors
often have relatively simple causes and are thus fairly easy to identify and analyse. They are often
‘human’ and can therefore usually be corrected by the person responsible for the particular task (Cardy
and Dobbins, 1996; EFQM, 1997; Oakland and Oakland, 1998). Systematic errors cause the customer
to experience dissatisfaction on a continuous rather than sporadic basis. The reasons causing this type
of errors are often multifaceted and removing their causes requires complex analysis (Mizuno, 1992).
To correct the problem is therefore a task for the management who have the power to eliminate the
causes. Our particular interest in this paper concerns systematic errors as removing such faults in a
company’s processes demonstrates the greatest potential to improve quality in a way valued by the
customer (Berry and Parasuraman, 1997; Clinton and Hsu, 1997; Hammer, 1990).
The identification of systematic faults requires a considerable amount of versatile data (Reichheld
and Sasser, 1990). We argue that customer complaints can be a valuable and inexpensive source of
information for identifying systematic errors and enabling customer-focused process improvement. The
feedback that the customer provides out of their own initiative, such as complaints, is often very direct,
concrete and detailed (Reichheld and Sasser, 1990). Thus, compared with data collected by means of
customer surveys and panel studies, complaint information provides a more reliable picture of the
customer’s true opinion. Complaint information has several managerial applications. Johnston (2001)
developed and tested a conceptual model demonstrating three routes that link complaint processes with
the company’s financial performance. We coined these routes as the Customer Orientation, the Human
Resource and the Engineering routes (Figure 1).
Figure 1: Three routes linking complaints to performance (based on Johnston 2001)
Customer Orientation
Human Resource
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The Customer Orientation route suggests that complaint processes impact on customer
satisfaction, which in turn through its effect on customer retention has an impact on the firm’s financial
performance. It essentially covers the customer recovery process, that is, making the complaining
customer satisfied through an appropriate correction of the error made. Furthermore, Johnston (2001)
argued that complaint processes, if made ‘staff-friendly’, can also have an impact on employee
attitudes and to financial performance via employee retention. We call this the Human Resource route.
The reasoning behind this route suggests that by making complaint management easier to the
employees, allowing a certain degree of human error, and relaying not only the complaints but also the
positive feedback received from the customers to the employees, employees are believed to be happier,
learn from their mistakes and remain with the company, thus reducing operation and switching costs.
Finally, Johnston (2001) suggested that complaint processes should be designed to focus on process
improvements that are likely to achieve savings and thus positively impact profitability, which is not
necessarily the case if the improvement merely targets customer satisfaction. These elements form the
third route in the model, which we coined the Engineering route. According to our understanding, this
is the process where the errors causing the complaints are identified, analysed and tracked back to their
source. Thereafter the information can be used in aid of decision making in an attempt to improve
processes, thus preventing similar errors happening again.
The focus in the following analysis is on the Engineering route. We argue, however, that the three
routes are intertwined. Process improvements affect customer satisfaction and retention, as they do
employee attitudes and retention. Similarly, process improvement should be based on information
about the factors that have a positive impact on customer satisfaction and employee attitudes. The
particular emphasis of the following analysis is on utilizing customer complaint information to
determine what makes the customer dissatisfied and using this as a basis for process improvement,
which in turn aims to avoid the repetition of the errors that gave rise to the complaint in the first place.
So far little research has been aimed at finding tangible methods to analyse and derive operational
benefits from customer complaints. The following section presents a construction that was
implemented in a large Finnish company as a solution for analysing complaint information and tracking
back complaints to the processes within the organization where the fault causing the complaint
occurred. This is followed by a discussion of the results achieved through the implementation at both
the operational and strategic levels.
The constructive case study method
The constructive method is a specialized form of case study, which concentrates on developing a
new, innovative construction to solve practical, real-life problems Lukka, 2003, 2005). Lukka (2000)
characterizes construction as an abstract concept which has a nearly infinite number of possible
realizations. Examples include different models, diagrams, plans, organizational structures, commercial
products and information systems. A particular characteristic of constructions is that they are not
discovered but invented. The construction developed in the present study is a novel, practically relevant
method of systemizing the utilization of customer complaint information for processes improvement.
In addition to building a theoretically anchored construction, the implementation of the developed
construction is at the core of the method. Therefore, unlike for example in action research, the
researcher does not attempt to be an observing bystander but works actively and explicitly on the
project in order to make it work in practice (Lukka, 2005). A constructive study is experimental by its
nature. Following the pragmatic philosophy of science, the constructive method believes that one can
make a contribution to theory through a profound analysis of what works and what does not work in
practice (Lukka, 2000). The ideal results from a constructive case study combine both the solution to
the practical problem and a contribution to theory. The theoretical contribution can take the form of an
entirely new theory but more often constructive studies demonstrate, test or develop existing theory
(Keating, 1995; Lukka, 2000, 2005).
The present study was carried out in three phases. The pre-study phase and the development of the
construction took place mostly during 1999-2001, whilst the implementation of the construction in the
case company followed in 2001-2002. Analysis and monitoring of the continuing implementation of
the construction has continued ever since and the construction is still in use at the case company at the
moment of writing this paper (August 2007). The relatively long period between the initial
implementation in the case company and this analysis, strengthens the validity the construction and
findings, as the construction has been not only initially successful, but stood against the test of time in
ever changing world. The strong intervention required by the constructive case study method was
Kari Uusitalo, Henri Hakala and Teemu Kautonen
enabled by the main project researcher’s position as a project manager responsible for the development
of the customer feedback system, and his previous experience with the company. The credible
organizational role of the main researcher allowed him to collect a wealth of data by means of
observation, participation and interaction with various staff members in meetings, informal discussions
and email dialogues. The researcher made extensive notes over the course of the implementation
process, which were used as a basis for the present analysis. The following sections present the case
company and the theoretical construct, followed by a presentation and discussion of the results of the
The case
The case company ‘HouseTech Corp’ (pseudonym) is one of the major agents in the technical
wholesale in Northern Europe. It generates an annual turnover of around one billion euros, has
approximately 2500 employees and maintains operations in eight countries in Northern Europe. As is
typical in the wholesale business, logistics has a central role in HouseTech Corp’s operations. Its role in
the value chain is to act as an intermediary between the manufacturers and their customers. The present
study was conducted in HouseTech Corp’s central distribution centre in Finland. This unit maintains a
product range of nearly 30 000 items and delivers approximately six million order lines per annum. Its
clientele includes electrical, heating, plumbing, ventilation, air conditioning and refrigeration
contractors, industrial companies, power plants, public organizations and retailers. The central
distribution centre delivers goods with the help of transport partners directly to business or public
sector customers or the customers can choose to collect the goods from the central warehouse.
Moreover, the company operates a chain of 'express stores' where local small businesses can purchase
and collect a limited selection of items without prior order.
This study deals with the customer delivery process. The customer delivery process is a
combination of the physical movement of goods and information. Quality in this operation means, from
the customer point of view, that the ordered goods reach the right place undamaged and at the right
time. Due to the nature of the technical wholesale business, the majority of complaints relate to actual
'physical' shortcomings in the delivery process rather than emotional perceptions of service quality. In
other words, the complaints relate to situations where the products ordered have reached the customer
late, in a faulty condition, in insufficient quantities, or the correct products have not reached the
customer at all. These sorts of problems are common in all high volume warehousing operations. Most
customers tend to complain about this kind of shortcomings because the operations management
system automatically invoices all the goods that have left the warehouse. HouseTech Corp had and still
has a back office function to handle complaints that cannot be immediately and informally solved by
the sales clerk. While sales clerks input most of the complaints into the system, further processing and
the correction of errors is dealt with by the back office complaint handlers.
The need for the project on which this paper is based arose because the logistics management was
concerned about the increasing number of complaints and the associated costs. The preliminary
analysis of the logistics management concluded that the quality management projects already
undertaken including a quality system covering all functions in accordance with the ISO9000
standard and self-assessments in accordance with the criteria provided by the European Foundation for
Quality Management did not seem to focus on the issues that the customers complained about. At the
operational level, the complaint handlers were not satisfied with the IT system and had concerns over
the quality of the complaints process. The complaint handlers are operational problem-solvers whose
task is to solve the problem for the customer, make the appropriate corrections in the warehousing and
invoicing systems as well as find out who is responsible for the direct cost associated with the error,
whenever this is humanly possible. Complaints handlers did not have a managerial perspective to their
work, but a lot of tacit knowledge on what caused the problems in the first place. Since the complaint
data was neither systematically collected nor analysed and the complaint handlers merely focused on
correcting individual delivery errors, the complaint information and the complaint handlers’ tacit
knowledge did not reach the managerial level. An effective method and respective working procedures
were required to address this problem.
The logistics director of HouseTech Corp had a strong belief in the benefits of using customer
data, but no clear vision as to how one should go about realizing the benefits. At the time, there was no
known off-the-shelf software or other solution available for the problem situation at hand. This is why
the company decided to have a research-based solution developed to solve the problem. The aim was to
provide a solution to the question of how to use the complaints information in order to improve quality
in the processes causing the complaints in the first place. As the precise objectives of the project could
not be clearly defined, the project was given plenty of room for innovation. The research process could
be characterized as heuristic. As the objectives were not clear, the best means of getting there could not
Int. Journal of Business Science and Applied Management /
be ‘programmed’ and planned in advance (e.g. Moustakis, 1990). Moreover, numerous small problems
had to be solved during the course of the project as they emerged, and many of these solutions needed
to be approved by a number of people in the organization, which slowed down the process. Against this
backdrop, it was necessary to choose a method where the problems, disturbances and unexpected
difficulties could be tackled heuristically as they appear (Wisner and Kuorinka, 1988), and the
constructive methodology appeared appropriate and flexible enough for this purpose.
The construction
To function as the technical core of the construction, a database solution was created based on
standard relational databases and the SQL protocol. The user interfaces were custom-developed, and
although the system was built on standard database elements, the application itself was new and not
available off-the-shelf at the time. The user interface for the input of data into the system was created
around the job description of the complaint handlers. This was done because the complaint handlers
were the ones holding the most information in each individual case and it was recognized that it would
be beneficial to capture some of their knowledge to support managerial decision making. In the new
system, a qualitative description of what went wrong from both the customer’s and the sales clerk’s
perspective was made available to the complaint handler. A new task for the complaint handler became
to link the complaint to the company’s process and activity descriptions in the database system.
Furthermore, since complaint handlers obviously find out what happened and why as well as how the
complaint was solved, the new system required them to record their own description of these elements
too. All of the complaint related details, although recorded mainly for the needs of the complaint
handler, were stored in the data warehouse. All the details, including the qualitative customer
comments, could be easily accessed should someone wish to look deeper into the individual complaints
later on.
The following information was put together for each customer feedback event:
Complaint information from the customer, what has happened and the customer’s
perception as to why this has happened.
Sales clerk’s immediate reaction (e.g. calling the customer to find out what happened
exactly), possible corrective action and interpretation of the event.
Order data.
Complaint handler’s description and analysis of the complaint’s causes and effects, and
a description of the corrective actions taken.
Link to activities and agents identified to have been part of the cause for the compla int.
The system recorded both negative and positive customer feedback in a similar manner. As much
as 17 % of the feedback was positive. These customers could be described as particularly delighted
about the service, given that they made the effort to specifically relay their satisfaction back to the
organization. The rest of the feedback consisted of complaints, which can be classified roughly into
errors caused by workers or local poor working methods (40 %), poor internal processes (10 %) and
poor external processes (50 %, e.g. deliveries by the transport partners).
However, the real novelty of the construction does not lie in its technical structure, user interfaces
or what data is recorded, but in its managerial aspects. Three contributions of the construction should
be particularly emphasized in this context. First, the new system classifies the errors that have caused
the customer complaint for the purposes of further analysis and aid in managerial decision making.
Second, the system allows the management to trace back the complaint and the respective error to the
procedures, individuals, vehicles, partners (transport companies) or machines responsible for the error
within the whole delivery process. Thus, with the help of the new system, the management can aim
process improvement actions to those processes that really matter to the customer. Third, the new
system allows the company to combine the complaint data with other information already available in
the company. The procedures and activities that the complaints are now linked to were already
accurately defined in the company and used by its activity-based cost accounting system. As the whole
company utilizes the same data warehouse, the construction now also links complaints directly with
cost accounting, and provides qualitative data for the uses of management accounting. The following
section discusses the impact of the construction at operational and strategic levels as it was
implemented in HouseTech Corp.
Kari Uusitalo, Henri Hakala and Teemu Kautonen
Operational level compl aint handlers
The implementation of the construction had several positive effects at the operational level of
complaint handling. As an immediate effect of utilizing the new construction, the complaint handlers
perceived the recording, analysing and reporting of complaints data to have become easier, making
their work easier and more motivating.
“The best thing in the new system is that customer feedback, with all associated order data, prints
out automatically in our office. Just by reading one paper or screenful, I can now get a whole
picture of the complaint, and start doing my job without the need to search for more information
from the computer systems or telephone around the company and bother other people with simple
questions. The system makes our work considerably easier and faster. Another great thing in the
new system is the feeling one gets while recording one’s own actions into the database, that the
work we do is not wasted someone is going to use the information later on. Feels like the bosses
have finally realized how important work we are doing!”(A complaint handler, April 2002)
Therefore, in terms of the conceptual model (Figure 1), the process improvement in fact feeds
back to the employee attitudes component in the Human Resource route which, the model predicts,
contributes to performance via employee retention.
Moreover, the average working time used for handling each complaint was measured to have
reduced by approximately 15 % (or eight minutes) due to the new construction. The measurement was
conducted by recording the working time used on the different phases of the customer complaint
process during one week each in June 1998 and November 2004 by means of work-time clocking and
time-logs recorded by the new IT system itself. This result is a direct measure of success in terms of
improving the effectiveness and efficiency in the process of complaint handling. Although no direct
cost savings were made through staff redundancy, the direct time saving, for its part, made it possible
to keep staff numbers constant despite growth in operations volume.
Operational level warehouse management
The warehouse management (the lowest level of operational management) found the information
created by the construction a very useful tool. With the implementation of the construction, these
managers started to review the complaint data systematically and continuously, whereas previously
their knowledge about complaints was based on sporadic discussions with the complaint handlers. They
could now better monitor the performance in terms of the number of complaints tracked back to their
area of responsibility. The following quote from one of the warehouse operations managers illustrates
“We have had the custom of going through the errors with employees every week. Occasionally,
there were unpleasant situations where complaint handlers had marked an error as caused by a
particular employee, but the employee himself denied responsibility. And who would want to take
the responsibility for errors as they are linked to the productivity bonus and therefore to the
worker’s pay check. We as supervisors must be able to prove the error and its link to the specific
employee in a reliable manner if required, but previously without the system it was quite difficult.
The new system enables us to print out every complaint with the associated data that shows
extensively the cause for the error, who made it and what sort of hassle the error caused. An
extensive and well documented description gives less room for guesswork and speculation, a thing
that my workers have started to appreciate. Our work becomes much easier; we can take action
backed by facts instead of guessing and shooting from the hip.”(A warehouse operations manager,
August 2002)
Furthermore, the new system enabled warehouse managers to effectively analyse the reasons
behind each complaint and combine this information with their own detailed operational knowledge.
Thus, the system provided warehouse management with factual information backing their decisions to
change working methods, relocate employees or initiate training. For example, when an employee was
identified as the cause for a systematic fault, the warehouse management initiated discussions with the
respective employee regarding the problem. In some cases this was enough, if the fault was caused for
instance by unintended carelessness on part of the employee. In others, the reason could be traced back
to faulty equipment, a local working method or a plain misunderstanding. Where the underlying cause
Int. Journal of Business Science and Applied Management /
was identified as shortage of skill, the warehouse manager could rotate the employee to other duties
more suitable to their skills or initiate further training.
Moreover, as positive feedback was recorded in a similar manner as complaints, the warehouse
management adopted the habit of reviewing also this information and giving feedback to employees on
their successful efforts that had led to customer delight. This was perceived to have very positive
effects to employee satisfaction and thus employee attitudes in terms of Figure 1.
“We do help some “begging” customers occasionally to get their stuff delivered next day,
although they have actually ordered too late in the afternoon to get next day delivery. It felt quite
nice that my boss [Transport Manager] actually said that the customer had thanked us because I
was still able to get his goods into the truck. Never thanked me for that sort of thing before. It
seemed to be important for the customer to get the ordered pipes next day, so I did a little extra
work, because of the hassle the customer would have otherwise had at his construction site.” (A
transport co-ordinator, August 2002)
Strategic level
At the strategic level, the logistics management became more interested in utilizing customer
complaint information with the implementation of the construction and started to review and analyse
complaint data regularly, on a monthly and annual basis.
“Analysing the data seems to become more and more interesting as the size of the database
grows. The database now has five months’ data, and it’s becoming quite interesting to play with
the data in Access, and see whether anything new comes out. I can hardly wait until we can start
looking at the data on an annual basis, when I expect we can better see the spread of different error
types and can evaluate their cost effects and use that for improving our operations.” (Logistics
Manager, August 2002)
“I have always believed that customer information is a key for achieving a new kind of, even
strategic competitive advantage. However, I often wondered what is the relevant information we
ought to get from the customer, and how we should go about getting that information. These
customer satisfaction questionnaires we send out seem, from the perspective of improving
logistics, rather useless. With regard to this new customer feedback construction, I was not
convinced at the beginning that complaints information is a sensible source of customer
information. I didn’t believe that it generates enough data for a reliable and systematic analysis.
However, as it seems now, our large volumes cause a large number of complaints, even though
they are relatively few proportionally [given the total volume]. A careful handling of customer
feedback creates a surprising amount of useful and interesting data.” (Director of Logistics,
November 2002)
By investigating and analysing the data in the long run, the top logistics management could
identify trends and larger issues in the delivery process. This led to a further investigation concerning
the potential for redesigning parts of the delivery process. For example, the logistics management
initiated discussions with the transport partners aiming to reduce the number of errors occurring when
goods are transported from the warehouse to the customer’s premises.
“I meet with all our transport partners once a month to evaluate and go through current issues and
ponder about how to develop operations and cooperation. Before the latest meeting with one of the
transporters, I filtered out from the system all the errors that, according to the system, they had
caused and sent them the list a couple of days beforehand. It was quite a confusion and surprise for
both of us, as we both claimed that we were innocent and that the other party was solely
responsible for the mistakes. However, the uniform reporting of errors created an intensive and
productive dialogue. Already during the first meeting we found a problem spot in the delivery
process, which we obviously decided to fix as quickly as possible. I am going to do the same thing
with all of our transport partners.” (Transport Manager, October 2002)
Numerous small changes in the warehouse operations were implemented during the observed
period. As the construction continues to be in use, more will be done every month. In principle these
changes, if correctly implemented, should lead to better operations, improvement in quality and
reduction in the number of complaints. While it was not within the scope of this study to measure the
Kari Uusitalo, Henri Hakala and Teemu Kautonen
effects in absolute numbers, the management reported clear improvements on those occasions where
changes were made based on the construction.
“Yes, the system is still actively used. It now forms an integrated part of our customer contact
handling in the customer service centre.” (Business Planning Manager, May 2006)
This paper addressed the issue of utilizing customer complaint information as a source for
customer-focused process improvement, which was argued to direct process improvements to those
activities that generate most value to the customer. A previous study by Johnston (2001) had shown
that a well-handled customer complaint process positively correlates with process improvements (the
Engineering route), customer satisfaction (the Customer Orientation route), employee attitudes (the
Human Resource route) and, ultimately, company performance (Figure 1). However, the literature
acknowledged that the problem of 'how' to achieve process improvements by utilizing customer
complaints remained largely unsolved (Johnston and Mehra, 2002). The present paper set out to
address this problem by creating a novel construction that along the lines suggested by process-
oriented management teachings (see e.g. Albright and Roth, 1994; Berry and Parasura man, 1997;
Mizuno, 1992; Reichheld and Sasser, 1990) recorded qualitative customer complaint information
together with the complaint handler’s interpretation, and allowed these to be processed systematically
and linked to the rest of the company’s information system. Hence, both the complaint itself and the
complaint handler’s tacit knowledge became usable as a managerial tool both at operational and
strategic levels. The study thus demonstrated the usability of various process management teachings
and their compatibility with customer-focused thinking when correctly employed.
The construction was implemented in a large Finnish technical wholesale enterprise and the
implementation was studied as part of the constructive case study research method (e.g. Lukka, 2000,
2005). The results attained through the implementation clearly demonstrate that it is possible to achieve
business process improvements by utilizing customer complaint data, thus supporting the
argumentation in previous research which has raised the role of customer information in the
improvement of business processes (e.g. Jones and Sasser, 1995, Kohli and Jaworski, 1990, Slater and
Narver, 1994, 1996). Moreover, in terms of the Customer Orientation, Engineering and Human
Resource routes depicted in Figure 1, the results of the case study showed that these are intertwined
rather than independent of each other. The process improvements achieved became manifest and had
managerial implications on three distinguishable levels of organization.
Firstly, by making the complaint-handling process more effective and staff-friendly, the
construction showed a direct impact on the time and costs associated with handling the complaints. The
complaint handlers also felt that their contribution to the company was finally recognized and their
work became more valued by the management. Thus, in terms of the model in Figure 1, the
Engineering route also impacted the Human Resource route via the process improvement having an
effect on employee attitudes.
Secondly, enabling the operations management to track back each complaint to its source
improved the management’s ability to monitor performance and intervene to remove a problem if
required. The customer complaint data was actively used to make minor adjustments and improvements
within processes. These adjustments decreased the number of errors made and had a direct impact on
costs, thus ‘engineering’ the processes and the Engineering route continuously to become more
Thirdly, the feedback data was also utilized in aid of strategic decision making regarding the long
term development of warehouse operations and the network of transport partnerships. This had a direct
impact on the Engineering route. Arguably the construction also improves customer satisfaction and
thus the Customer Orientation route, although this was not explicitly demonstrated in our case. The
developed construction did not really change the way the company deals with an individual customer
recovery, with the exception of adding the possibility to give feedback via internet. However, as the
customers complain and respective process improvements are made, customers do not experience
similar errors in the future, which will reflect on their satisfaction in the longer term.
Based on the results of the case study, we propose extending the original model adopted from
Johnston (2001) as illustrated in Figure 2. Thus, we propose that process improvements may also have
indirect effects on company performance by positively impacting employee attitudes and customer
satisfaction. The increased customer satisfaction and improved employee attitudes, in turn, are likely to
have a positive impact on enhanced utilization of the customer complaint system and subsequent
process improvement, thus creating a positive loop in the long run. The extended model could serve as
Int. Journal of Business Science and Applied Management /
a foundation for future research on this topic. For example, the constructs in the model could be
operationalized and studied utilizing structural equation modelling in order to examine the imp act of
the different routes to company performance. This is where the limits of the present study become
apparent: we do not have any hard, quantitative data to measure the effectiveness or efficiencies gained
via the construction numerically. The scope of the study was set to describe a construction, a means by
which customer complaints can be linked to processes. The developed construction helps to identify the
weak points or the points of failure within a company’s existing processes and provides a tool for the
management to identify and analyse these points. Measuring the actual effects of such process
improvements remains a task for future research.
Figure 2: Process improvement as a central component of complaint management
Customer Orientation
Human Resource
A further limitation is imposed by the sectoral context of the study, which was set in the technical
wholesale logistics environment and concentrated on the process of delivering the product from the
shelves of the warehouse to the business customer. The complaints in this environment often relate to
'physical' faults, rather than the 'feeling’ of service quality. The developed construction should be
further developed to tackle ‘softer’ faults more common in true service industries. Further research on
the applicability of this type of construction in other companies and other type of business
environments would confirm its broader usability. However, in principle the constructive methodology
does not require multiple cases due to its pragmatic nature. The fact that the construction was
successfully implemented and still in use is relatively strong evidence that the construction works and
is useful for managerial purposes. Finally, it is useful to point out that the construction is not
'automated' and that it cannot be taken out of its context, especially the company’s organizational
culture. The fact that the construction worked in HouseTech Corp was heavily dependent on the
company already practicing process and quality management, and on the management of the company
being committed to the project.
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