It pays to focus on complaints rather than praise

(Photo © Andrey Burmakin)

By Claus Rosenkrantz Hansen

"Yes, I would definitely recommend this hotel to my friends." Hotels along with many other service companies carry out regular customer satisfaction surveys on the assumption that the happier their customers, the higher their revenue.

However complaints are equally relevant when it comes to revenue. The more irate Facebook posts lamenting poor service, the less the hotel earns.

So what matters most for earnings – customer satisfaction or customer complaints? This is the question examined by the article "The effects of customer voice in hotel performance".

Associate professor at CBS, Alexander Josiassen, is one of the authors behind the article.

"We’ve found that customer complaints have a greater bearing on revenue than the level of customer satisfaction, which is why it makes sense for corporate management to focus on handling and limiting complaints instead of principally trying to increase customer satisfaction," says Josiassen.

The researchers have tested their hypotheses on 56 hotels from Slovenia and Croatia for the 2009-2012 period.

Importance of star ratings
The article also examines the importance of hotel size and rating.

"Generally customer satisfaction plays less of a role for a hotel's performance than complaints, although we can see that customer satisfaction does carry a certain degree of importance for major hotels and hotels with several stars,” says Alexander Josiassen.

"On a more subtle level our examination revealed that customer satisfaction matters more for revenue in hotels with a high rating than hotels with a lower rating, where achieving optimum levels of customer satisfaction is not so crucial," explains Josiassen.

He stresses that complaints are nonetheless the more critical factor when it comes to revenue – irrespective of whether the hotel is large or small or has fewer or more stars.

Few complaints – limited impact
However, even though the research shows that it makes sense for hotel management to allocate resources to handling complaints, there is a cut-off point.

The fewer the number of complaints, the less impact this factor has on earnings.

"The fewer complaints there are, the lesser the effect of reducing complaint volume. You might say, cynically, that if a hotel owner can live with a handful of unhappy customers, it pays off to stop using resources on them. It doesn't bring any great plus for earnings. However if the hotel already has a high level of satisfied customers, it is worse pouring resources into increasing customer satisfaction than trying to avoid the slightest complaint,” concludes Josiassen.