How to handle customer complaints in a small business

How do you handle customer complaints? How can you stop complaints from ruining your reputation? Life isn’t perfect and most small businesses can have a temporary or minor setback from time to time. It may be product defects, slow post, poor service, or even a misunderstanding that makes the phone ring. What is important, though, is having a plan to handle customer complaints in advance, when dealing with issues around product defects, service or delivery.

Looking at complaints in a new light

We may all joke about the old saying, ‘the customer’s always right’, but, in reality, there’s often a strong temptation to act defensively first, and apologise later. However, if your team understands the value of showing true sincerity and empathy with a disappointed customer, then you’ll be in a strong position to not only remedy a situation but to turn a negative situation into a positive one and to learn from the experience.

There’s another way to see complaints: you can call them ‘unprompted, positive feedback’. A complaint is a direct notification from your customer about part of your business’s process that can be improved. That’s incredibly valuable. After all, people don't (usually) complain just for the sake of it. If you can resolve a problem for one unhappy customer, you may be mitigating a disaster elsewhere in your business too.

Turn complaints into compliments

Things may go wrong from time to time, but with the right approach and a plan of action that everyone in your business has signed up to, it can be a golden opportunity to cement a customer relationship for the long term.

The first step to handling a complaint positively is to make it personal, without becoming emotional. Your customer may be ready to scream and shout, but reacting with equal vigour is counterproductive. By handling a complaint calmly, the whole process becomes easier. The key is to be calm, not condescending or placatory: most of us can see through a complaints ‘script’, and insincere comments or responses can often exacerbate a situation unnecessarily.

If you can, empower your team to take responsibility and make positive decisions that can remedy an outcome. Give them firm parameters to work within. Set up ‘Executive Complaint’ boundaries – known points at which they need to refer the problem on for a more considered approach.

Which would you prefer: time spent resolving the problem for an angry customer who makes contact with you, or time and resources wasted in production because other customers didn’t have the energy or inclination to make the same complaint?

Listen carefully to your customers

  • Let the customer get irritation out of their system. Nobody likes being let down. Don’t argue, challenge, or put the blame on somebody else.
  • Most importantly, if your company or product or service has failed, and customer needs have not been met, then you should make a genuine apology.
  • Empathise. Highlight the fact you’re taking the problem seriously – and make your response feel personal (rather than form or process driven).

If you’re not sure who’s right or wrong in a specific situation, there’s much to be said for giving your customer the benefit of the doubt. It can protect your business’s reputation, and it may save a commercial relationship.

If something has gone wrong, take action to put things right

  • Give your customers some control over the outcome. One of the most powerful options available to you is asking, ‘what would you like us to do?’
  • Emphasise what you can do, not what you can’t. Highlight your commitment to delivering on a make-it-better promise.
  • Bear in mind that an exchange or a refund may address the immediate complaint, but a relationship can only be repaired by human interaction.

While you’re in the process of putting things right, make it clear that there are no strings attached. Nobody should have to pay for a problem that you’ve caused.

Care. Care. Care.

  • Follow up after you’ve been through the complaints process and find out what’s happened. Share those learnings business-wide.
  • Get a confirmation that your customer is happy with the outcome. If they’re not then find out what else you need to do to make them happy.
  • Show your genuine appreciation for the fact your customer has voiced a concern directly, rather than simply choosing another supplier.

Genuine aftercare is worth its weight in gold. It’s your opportunity to confirm what works and what doesn’t in terms of customer retention and conversion.

Learn from your mistakes (even the ones you don’t make)

As a small business owner, complaints should be few and far between. But if you’re handling a crisis situation – such as a bad batch of products or circumstances beyond your control – then you may need a team of people dedicated, for a while, to dealing with inbound communications. That may be by email, social media, or over the phone.

It takes firm resolve to handle customer complaints, day-in and day-out. Give your team the support they need to treat every complaint with sincerity, and a personal touch.

Make a plan. Share the plan – explain how you’d handle any complaint professionally, graciously and, hopefully, to mutual advantage: resolving a situation for your customers and gleaning valuable customer insights in the process.

Remember, customers who give you another chance are your strongest advocates. With the right approach, you can turn complaints into compliments.

Make a plan for handling complaints

When you receive a complaint – record it in detail. Check your facts, your products, procedures and processes against the details you’re collecting.

Try to understand not just where but also how and why you’ve let your customer down. Only by understanding the problem in full can you remedy the situation AND derive a positive outcome for your business too.

A complaint should be taken just as seriously whatever the method they choose to use when communicating with you (phone, email, social media or letter). Having a plan in place for handling those complaints is essential because your customer is in the dark until you make proactive contact.

Step 1

Say thank you – your customer has taken the time and trouble to make contact. You should acknowledge that, and confirm that you’re taking the complaint seriously. Give your customer a firm indication of what the complaints process looks like from here-on in, and when and how they should next expect to hear from you.

Step 2

Investigate. Has the customer provided you with enough information? If necessary, follow up and ask for extra information that lets you carry out a thorough investigation.

Step 3

If you’re in the wrong – say so. And say so clearly. Customers who make complaints are always looking for a positive outcome. Deflection never helps, and can in fact make a bad situation worse.

Step 4

If you’re not in the wrong, take care to manage your customers’ expectations politely and pragmatically. Make them feel as though their concerns are valued – which they should be – and that their contact matters to you, whatever the outcome.

Top takeaways

  • In a small business, every complaint is an opportunity to learn from your customers’ experiences and improve your products and processes.

  • People don’t usually complain for the sake of it. Take every complaint seriously and handle each one individually.

  • Be personal. An exchange or refund may solve a problem quickly, but you’ll build a much stronger relationship by focusing on the way you handle the complaint.

  • Record information about the details of every complaint and share those learnings regularly with your team.

  • Empower the right people in your business to take action on their own initiative to solve complaints promptly.

  • Whenever possible, try to see the resolution to a complaint as an opportunity to impress your customers – and convert that experience into something positive.


Please note that these guides are provided for information purposes only and not as advice or recommendations. Before deciding to undertake any course of action you may wish to seek independent professional advice.