Customer complaints: How to resolve and turn them into growth for your small business

Published Friday 24 October 2025

Table of contents

• Opportunity for improvement
• Why you should embrace complaints
• Common types of customer complaints
• Understand the customer's perspective
• Resolve the issue to the customer's satisfaction
• Don't ignore complaints
• Be prepared for anger and emotion
• Look for the underlying cause
• Turn complaints into opportunities for business growth
• FAQs on handling customer complaints

Key takeaways

• Prioritize phone conversations over email when addressing complaints, as direct dialog helps you understand issues faster, reduces miscommunication, and demonstrates genuine care for resolving the customer's concern.

• Ask customers directly what resolution they want rather than assuming you know the solution, then listen carefully to find middle ground that addresses their specific needs and expectations.

• Implement a systematic follow-up process by having staff contact customers one week after resolution to ensure satisfaction and catch any remaining issues before they escalate.

• Analyze recurring complaints to identify and fix underlying operational problems, as addressing root causes prevents future issues and improves your business processes for all customers.

Opportunity for improvement

When your small business receives a complaint, you might feel defensive. Don't take it personally – most complaints are genuine issues from customers who want to help, not harm, your business.

View complaints as chances to improve. Try to see the issue from your customer's perspective. This approach helps you spot ways to make your business better and attract more customers.

Why you should embrace complaints

Customer complaints give you free business insights. When you embrace complaints, you get direct feedback without needing surveys or focus groups.

Here's why complaints are valuable:

• Raw customer insights: Complaints reveal actual problems customers experience with your business operations
• Problem identification: Customers aren't complaining to be rude – they're highlighting issues that need fixing
• Broader impact: Resolving one complaint often fixes problems for other customers who didn't complain

Common types of customer complaints

Understanding the types of issues your customers face is the first step to resolving them. Most complaints fall into a few common categories. When you recognize these, you can respond faster and more effectively.

• Product or service problems: The item is broken, doesn't work as expected, or the service wasn't delivered to standard.
• Long wait times: Customers feel ignored, whether they're waiting for a response, a delivery, or service in person. In fact, a government analysis of U.S. Postal Service complaints found 69% were related to missing or delayed packages.
• Poor communication: Information is unclear, incorrect, or your team is slow to respond to questions.
• Billing errors: The customer was overcharged, received a surprise fee, or has questions about their invoice.
• Unmet expectations: The final product or service didn't match what was advertised or promised.

Understand the customer's perspective

Complaints often come from growing frustration. Customers usually try to resolve minor issues, but if they feel ignored, they may become upset.

This is the typical experience most complaining customers go through:

• They approach you with a request
• They see no movement to resolve the issue
• They complain

Most customers who complain have already tried to find a solution. If their efforts are not addressed, they may become upset.

Customers want to feel heard, especially when they have paid for a product or service. Responding quickly shows you value their business.

Resolve the issue to the customer's satisfaction

Effective complaint resolution can turn upset customers into loyal advocates and help you avoid negative reviews. Follow these steps to resolve complaints:

1. Call instead of email. Phone conversations help you understand complaints faster and feel more personal to customers. This reduces miscommunication and shows you care about resolving their issue.
2. Ask what they want. Do not assume you know the solution. Ask customers directly what would resolve their complaint and listen carefully. You might not grant every request, but you can often find middle ground.
3. Ask about wider issues. Is the customer happy with your service or product overall? What other feedback can they give that might be useful? Asking questions like this helps them feel engaged and valued.
4. Give something back. You might want to do more than just solve the customer's problem. You could offer a discount on their next bill or send a voucher for your products or services. This small cost can help you retain them as a customer and may pay for itself many times over.
5. Confirm your solution. Go through the details of your proposed solution on the phone, then follow up by email or letter. Make sure your agreement is fully understood on both sides. Your customer will feel engaged and it should reduce the risk of disputes and misunderstandings later.
6. Keep in touch. Have a member of your staff follow up with the customer a week later to check that all is well. If it is, you have a happy customer. If not, find out why and repeat the process. They will appreciate your proactive approach.

Don't ignore complaints

Never ignore customer complaints. Responding quickly helps you keep your customers and saves you money compared to finding new ones.

Addressing complaints quickly helps protect your reputation. When you resolve issues, customers are more likely to share positive experiences.

Establish a complaint handling process to minimize negative impact and turn problems into opportunities. Government accountability reports have found that having formal mechanisms for reviewingcustomer feedback is a key element of customer service, though not always implemented.

Be prepared for anger and emotion

Sometimes, complaints can become emotional for both the customer and your team. Support your staff by giving them tools to handle these situations calmly.

Customers often see your business as a single entity. If they feel ignored or treated unfairly, they may take it personally.

Customers don't want to complain, in fact most people try to avoid conflict. So when they find themselves in a position where they feel they have to complain, they are often stressed and angry about it.

Respond in a calm and rational way, not emotionally.

Customers may express emotion in letters, emails, or phone calls. You can reduce tension by following these steps:

• Make it easy for customers to complain: Provide contact details on your website and your stationery. Go out of your way to ask your customers for feedback, good or bad. It'll help you refine the way you do business.
• Respond to complaints quickly: Get in touch with your complaining customers within a week – preferably less.
• Be polite: Always treat your customers with respect. Apologize when it's clear that your business has let down the customer.
• See their perspective: Try to view the events leading to the complaint from your customer's perspective, to understand what has upset them. This will help you resolve the issue.
• Don't deny that there's a problem: Disagreeing with the customer's perspective is the same as calling them a liar. It's unhelpful and will upset them further. You might not see the problem, but they clearly feel there is one. Try to resolve it.
• Have an escape route: When talking to customers who become irrationally angry or abusive, be prepared to say "I'm sorry, we'll have to stop this conversation now." Nobody has the right to treat you or your staff badly.
• Train your staff: Complaints-handling is a delicate business. Send your staff on training courses if necessary, to help them handle customer complaints.

Look for the underlying cause

Recurring complaints can signal problems in your business operations. For example, a Government Accountability Office (GAO) report found that 21 percent of addresses that complained to the U.S. Postal Service had more than one complaint, showing unresolved issues.

Fix the root cause, not just the symptoms. When you address underlying problems, you reduce future complaints and help your business grow. For every customer who complains, several others may experience the same problem but not speak up.

Try to fix the problem at its source. Here are some ways to do that:

• Get feedback: Wherever you can, ask your customers to tell you how well – or poorly – your business is performing. Ask specific questions about different areas of your business.
• Talk to your staff: What issues are they seeing? Are the same problems occurring repeatedly?
• Audit your business processes: Go through the way you run your business, perhaps with the help of a business advisor or mentor, and check that you're doing the right things.
• Make necessary changes: If something isn't working properly, change it. Fixing a broken process might cost money, but it'll save you more money further down the line.

Turn complaints into opportunities for business growth

Use complaints as opportunities to improve your business. When you handle complaints well, you build stronger customer relationships and find new ways to grow.

Train your team to welcome feedback. When your team listens to complaints, they learn what makes your customers unhappy and what makes them happy. Happy customers spend more, boost your reputation, and help you reach your goals.

Effective complaint handling helps your business grow by improving your operations and customer satisfaction. Good systems and processes help you manage customer relationships. Tools like Xero help you track customer interactions, manage follow-ups, and stay organized.

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FAQs on handling customer complaints

Here are some questions to help you better handle customer complaints.

What are the most common customer complaints small businesses receive?

You may hear complaints about product or service quality, long wait times, or billing errors. Other common issues include poor communication and unmet expectations.

How quickly should I respond to a customer complaint?

Try to acknowledge a complaint within 24 hours, even if you do not have a solution yet. A quick response shows your customer you are listening and taking their issue seriously. You may need more time to resolve the issue, but keep your customer updated.

What should I do if a customer complaint is unreasonable or incorrect?

Listen to your customer's perspective to understand their frustration. Explain your side calmly and avoid being defensive. If your customer is mistaken, guide them with facts. Your goal is to make them feel heard, even if you cannot meet their specific request.

How can I prevent customer complaints from turning into negative online reviews?

Respond quickly and make it easy for your customers to contact you. If you solve their problem privately, they are less likely to share their frustration publicly. A positive resolution can turn an unhappy customer into a loyal one.

When should I offer compensation or refunds for customer complaints?

Offer compensation when you are clearly at fault, such as when a product is defective or a service is not delivered. A refund, discount, or store credit can help repair your relationship with the customer. For smaller issues, a sincere apology and a quick fix are often enough.