When people complain about a mortgage product or service, it is often a highly emotive moment.
Ben Garratt is director of retail banking at Huntswood
When people complain about a mortgage product or service, it is often a highly emotive moment.
Badly handled complaints not only lose customers – they can damage reputations.
If managed well, however, firms will benefit from a deeper relationship with the customer in future.
While the housing market has enjoyed a surge in demand thanks to the stamp-duty cut, the financial uncertainty of COVID-19 has resulted in an annual fall through rate of 43%.
This is, in part, due to firms enforcing stricter lending rules and even declining offers in principal when financial situations have changed.
The same forces have led to there being 5% more homeowner mortgages in arrears in Q3 2020 compared to Q4 2019, with over 2.6 million mortgage payment deferrals approved by the end of 2020, while just under 140,000 were still in place at the end of October.
Issues surrounding mortgage prisoners also remain, with three amendments to the Financial Services Bill that were written to assist the hundreds of thousands of people trapped with their current lenders being opposed in a parliamentary debate this month.
In all of these situations, both the emotional and financial costs to the customer are high.
When things go wrong, it is likely that the advice given will be called into question and a complaint made.
It is therefore critical that firms look at how they can rebuild trust through the complaints process.
Showing empathy and sensitivity, especially in these difficult times, will not only help mortgage firms with loyalty and retention, but it will allow them to differentiate themselves from the competition and drive customer advocacy.
Using complaints to build loyalty and advocacy
In Huntswood’s 2019 Complaints Outlook report, we found that there is significant commercial value in delivering complaints excellence.
With the financial fallout from the pandemic likely to continue to impact the mortgage market moving forwards, customer service experiences such as complaints will play an increasingly important role in why consumers choose, stay with and recommend a broker or provider.
Currently only one in 20 complainants become an advocate for the company as a result of their complaint experience.
However, Complaints Outlook 2021, suggests that this can be increased to as high as one in four when customers are extremely satisfied with their overall experience.
Firms, which respond to complaints with empathy and clear communication, therefore have an opportunity to regain customer trust and earn customer loyalty.
To gain greater insight into how this value can be unlocked, Complaints Outlook 2021 maps the emotional journey of customers through the complaints process for the first time.
The report is informed by a YouGov survey of 2,522 customers who made a complaint to a broad range of financial services and utilities companies, complimented with Huntswood’s own research into the experiences of 500 complaint handlers and 54 firms.
As complaints are made when trust is at most risk of erosion, it’s important that firms handle communications with empathy and customers feel like their feelings are valid.
Of the consumers surveyed for Complaints Outlook 2021, 17% more would recommend their broker or firm to others if they felt valued while making a complaint.
Ensuring complaints are dealt with quickly and consistently, whether that be through face-to-face contact, over email, via social media or other channels, is also key to rebuilding the customer relationship.
This is because although 64% of customers will feel frustrated when they first discover an issue, frustration rises to 74% if the process of making a complaint is difficult.
How quickly firms respond to a complaint has a serious impact on retention, with 80% of customers being retained if a complaint is resolved within the first two days.
Some complaints will always be more complex than others though.
If resolution is taking longer, brokers should be proactive in their communications with customers and ensure they are kept up to date on the process - three out of four customers feel angry when they have to chase for an update on their complaint and do not receive one.
Our data also found that consumers respond better to firms that take responsibility for their actions – with customers 17% more likely to stay with a provider if it can apologise when it is at fault.
It seems obvious but, despite this, 25% of firms are still not doing this every time.
Consumers will also be looking for firms to show they are willing to learn from their mistakes, with 29% more likely to remain a customer if they feel their complaint has made a difference to how the firm operates.
Putting customer experiences at the heart of business
Despite the resource challenges presented by COVID-19, our report identified three key opportunities for firms moving into 2021:
1. New ways of working allow for more flexible resource capacity, increasing access to talented call handlers who can empathise with customers and resolve complaints quickly.
2. An increasing use of technology and automation can support customer service teams, allowing them to keep customers updated and focus resource on areas where the human touch is most needed.
3. Improvements in root cause analysis will help firms to identify the cause of complaints and address the problem and prevent recurrence.
If mortgage firms can harness these innovations to build an operational model that demonstrates empathy throughout the complaints process, there is a clear opportunity for them to repair the damage and turn customers who feel unfairly treated into long-term advocates.
