Closing the gap between complaint volumes and service ratings to save £m’s

Reducing complaints is a multi-million-pound opportunity for energy suppliers, as we head into winter with impending regulatory pressure to transform service standards, and rising bills in an already challenging market for customers.

Analysis of suppliers’ customer service ratings and complaint volumes reveals little correlation - a good Trustpilot score generally doesn’t mean complaints are low – but there are many opportunities to close this gap.

Through their new Consumer Confidence programme, Ofgem have made it clear that existing service standards aren’t deemed acceptable, and neither is ‘good’ service. Suppliers will be expected to uphold exceptional standards as the programme rolls out, with Ofgem citing Banking’s highly-rated service standards as the goal – a sector our team holds experience in.

Achieving the uplift required by Ofgem cannot happen overnight. Those who prepare proactively can not only lead the way for the energy sector, but also make significant cost savings, at a time when margins are continuing to be squeezed. Complaints is an area with huge improvement opportunities, being the most expensive exchange a supplier and customer can have per interaction.

Based on our analysis, taking an average handling cost per complaint and applying this to supplier complaint volumes (using Ofgem’s complaints per 100k customers for Q2-24), reducing complaints by 10% could save £5m-£7m per year for the typical supplier. The key to achieving this is not only focusing on enhancing customer service interactions, but supporting this with broader systemic improvements, which we’ve explored in more detail below.

What’s causing the gap between complaint volumes and customer service ratings?

Customer service excellence is a capability which suppliers should strive to achieve, but by nature it’s reactive, meaning it measures how well agents respond to issues that have already arisen. Complaint volumes are driven by a combination of underlying process failures and negative service experiences, not just service quality alone.

In many cases, customer service teams are left to manage issues that stem from poor internal processes, such as billing errors, missed deadlines, or technical failures. While agents might handle these interactions well - resulting in a positive service rating - these are still reactive responses to problems that should never have occurred, and should be addressed at the root cause.

For example, a customer might have a pleasant call to resolve a billing dispute, and rate the service interaction positively. But if that same error happens again next month, the frustration accumulates, potentially leading to a formal complaint despite consistently good service ratings.

Actions to reduce complaint volumes and close the gap to service ratings

We’ve outlined five actions below to help close the gap between service ratings and complaint volumes, enabling potentially significant cost savings:

1) Prioritise root cause analysis over service metrics

Instead of measuring success solely by service KPIs (e.g., customer satisfaction scores or call handle times), switch the focus towards understanding why customers are reaching out in the first place.

Practically, this could involve implementing a comprehensive root cause analysis programme, which categorises complaints by origin (e.g., billing, technical issues, communications gaps) and identifies recurring themes. This helps shift the focus from how issues are resolved, to what needs to be resolved permanently.

2) Identify and map out critical areas in the customer journey

Customer service is just one touchpoint in a broader customer journey. Map out key areas identified by root cause analysis of the problematic areas, and use the mapping framework to pinpoint where customers are encountering friction. Solutions can then be built around these high-frustration points to minimise friction in future processes.

For example, if billing errors are a common complaint driver, focus on correcting billing processes and automating quality checks to prevent these errors from occurring in the first place.

Our billing and complaints experts recently helped a large supplier to map key processes and identify over 50 points of intervention, giving line of sight to significantly reduce their incoming complaint volume, as well as helping to improve billing performance.

3) Align service goals with complaint prevention goals

Make complaint reduction a shared responsibility across departments. Customer service teams, operational units, and process improvement teams should collaborate to reduce systemic issues.

Do you have a forum for front-line agents to recommend changes to processes? Or to feedback on common types of complaints that may have occurred since a change? There should be an avenue to recommend changes that aren’t necessarily based on KPIs, but customer journeys, which are primarily noticed by front-line staff.

It's also effective to create shared KPIs and OKRs that span across departments, reflecting both service quality and long-term complaint reduction (e.g., decrease in repeat complaints, lower number of high-impact complaints).

4) Implement proactive communication and problem resolution

Trust is the foundation for all customer service interactions. Without trust, a customer is a lot more inclined to complain. With effective processes in place, the other avenue to showcase trust and customer care is through an effective communication strategy.

If a common issue is identified (e.g., delayed billing or recurring system outages), reach out to customers proactively with solutions and updates. Proactive outreach can turn a potential complaint into a managed interaction.

For example, a simple, “We’re aware of the issue and are working to resolve it by date X” can significantly reduce the likelihood of complaints, even if the problem itself isn’t immediately solved.

Communication strategies will become particularly important with the introduction of Market-wide Half Hourly Settlement (MHHS). As we see an increase in the need for information sharing through additional consumption data, and the availability of more complex products, customers will be required to place more trust in their supplier than ever before.

5) Focus on customer effort and satisfaction with resolution

Customer Effort Score (CES) is an alternative indicator of long-term satisfaction. Rather than measuring how satisfied a customer is with a brief interaction, like NPS, CES is a measure of a product or service’s ease of use. A combination of robustness and usability ingrained in processes will ensure customer satisfaction.

By aiming to minimise the total number of interactions required to resolve an issue, suppliers can reduce overall friction and enhance satisfaction, even when the issue is complex.

Combining customer service excellence with process maturity

Addressing immature or overly complex processes is a theme throughout the actions above, which can sometimes be masked by a supplier’s performance in customer service metrics.

By adopting these approaches and maintaining a focus on customer service excellence, suppliers will be better placed to close the gap between service ratings and complaint volumes – enabling potential annual savings in the £m’s.

To assess where you should take action, ask these key questions:

• Do you have visibility of all of your processes? Have you mapped out and identified customer pain points? Do you regularly improve processes via feedback? Do you conduct root cause analysis to find the true root cause of complaints?
• Do agents have a forum to provide feedback? Is there a reward or incentive scheme in place for front-line agents to provide feedback on customer pain points or regular issues they are observing?
• Are your front-line agents always informed of business changes so they can inform the customer themselves? Are they trained in handling calls empathetically? Are they measured not only on business KPIs but also on call quality?

If you’d like to know more about how to reduce complaints in your organisation, contact Rachel Littlewood.