One of the most important obligations for any business owner is to ensure that his customers are satisfied. Often times, that includes talking to a customer who, for whatever reason, is angry. Being able to help an angry or frustrated customer and keep him as a customer is both a skill and a gift. Tactics for dealing with an upset customer over the phone is something that can be taught. Possessing this skill will help make you a very valuable employee. Here's how to handle an irate customer on the phone.

[edit] Steps

Listen, listen, listen. Let the angry client talk through his problems and get it all out of his system. This step is important because the more time a customer spends airing his grievances, the more time he has to calm down.
Allow the client to express his opinions. Do not yell or curse at the customer. Do not, however, allow the client to be abusive toward you.
Maintain your personal integrity at all times. If the customer is abusive, say calmly "I understand you are frustrated, and I want to help you, but let's remain professional."
Be sympathetic. Make sure the customer knows that you understand his frustration and acknowledge the mistake that has been made. Recognize the customer's feelings about the mistake - how it must have felt to be the customer in this situation.
Be empathetic. Listen actively. Restate the customer's complaint, "reflecting" his or her feelings back to him or her. That will let him/her know you are listening and that you understand his or her feelings.
Ask questions. After he completes his story, ask about the facts and details of the matter at hand. Move into problem solution mode -- know when to ask open-ended questions, when to stick with "yes" or "no" questions.
Apologize. Let the customer know you are sorry they have had a tough time (even if it's not really your company's fault - many times, an irate customer just wants to know someone cares that s/he is inconvenienced). A simple, "I'm so sorry this happened" will do. If you find that your company is at fault, definitely apologize again. Be sure to be sincere.
Offer to try to fix the problem. Imagine that this was happening to you, and what you'd want done.
Ask what will make the client happy. If he is without any ideas, recommend some.
Have the client agree to a possible solution to the matter. He will be happier if he feels he had some say in how his complaint will be handled.
Always "recap". Restate again every change you've made, and every new charge/adjustment you've made.
Write a clear, concise log of the incident so the rest of your staff is prepared in case there is follow-up needed. What would you want to find in the notes if this customer called back?

[edit] Tips

After the complaint is handled, follow up and be sure the solution worked.
Keep a complaint log. If you see the same thing keeps popping up you can recommend a change in policy that will improve things.
Don't forget to thank the customer for taking the time to speak with you and work on a solution. A complaining customer has done you a favor. He has identified a problem in your business and he has given you the chance to keep his business. If you lose a client, you lose both his business, the business he would have referred to your company, and any people he might scare off by word-of-mouth.
Always say "I'm sorry" even if it's not your mistake so that he/she will calm down and realize that your helping him by looking into his problem and you will act soon on his concern.

[edit] Warnings

Problem customers can become expensive if they continually make harsh demands. Keep records of complaints made and determine if you really want to keep a particular client.
Some customers use complaints as a way of getting discounts or credits. Beware of the client who is constantly grinding you for any little thing he can think of. You'll know if it starts happening. As in the item above, some clients are not worth keeping as they cost you more than you make from them. That's not good business on your part. Handling legitimate complaints in a responsible, professional manner is part of doing good business. So is firing opportunistic, manipulative clients who are trying to scam a higher discount off you.