Complaint management profitability: what do complaint managers know?

Despite the great impact of complaint handling on customer retention and the beneficial usage of complaint information for quality improvements, most companies have great difficulty calculating the profitability of their complaint management. As a consequence of this knowledge deficit, complaint management is often not regarded as a profit centre but as a cost centre, which makes it a probable victim for cost reductions by cutting back its activities. Hence, there is a huge challenge to develop methods and to address this issue. This work contributes to this. It is shown how complaint management profitability (CMP) can be conceptualized and several types of benefits and costs are presented. On this basis several propositions about the current practice of CMP calculation are developed. To test these propositions a comprehensive empirical study was conducted among complaint managers of major German companies in the business‐to‐consumer market. The collected information shows that the assumed CMP knowledge deficit is even higher than expected. To reduce this deficit this article provides an approach to calculate CMP on basis of the repurchase benefit.