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The Role of Feedback Management in Becoming Customer
Centric
by Stewart Nash,
QuestBack Boston
Most companies
understand the value of customer feedback and they collect it for good
reasons. Managements realize that how their customers perceive and feel
about them – based on their experiences – can and does impact their
business. Customers have choices of whom to do business with, so if
their experiences and perceptions of your firm aren't positive, they
will go elsewhere. So companies collect data across many customer "touch
points," including feedback on specific "transactions" as well as
general attitudinal data, with the goal of improving the customer
experience.
Why, then, do so few companies make truly effective use of the feedback
they gather? A 2001 Gartner Group study noted that 95% of all businesses
collect some form of customer feedback. They also found that only 5%
actually acted on the feedback they collected. Gartner didn't
explain the reasons for the disparity between feedback gathering and
actions, but it isn't surprising to many front-line managers tasked with
consuming the data and putting it to use. Fundamentally, most customer
feedback goes un-acted-upon because most companies lack an organized,
systematic process or mechanism to make use of it. This article will
discuss why and what to do about it.
What is customer feedback?
Customer feedback is data from customers about their perceptions and
experiences as your customer. It is typically gathered either directly
by companies or outsourced and gathered by market research firms.
Feedback can take different forms and can cover a wide range of topics,
but is often structured and gathered via surveys conducted by mail,
phone, in person or over the web. It is typically focused on aspects of
the customer experience believed to be most critical to customer
satisfaction and loyalty.
How is feedback typically treated?
Once gathered, most customer feedback is typically packaged and
delivered as a report, often with lots of graphs and charts. Typically
they focus on the various attributes of the customer experience or
product offering considered most important. These reports are produced
after lengthy analysis, number crunching, report formatting,
presentation development, etc., and are then disseminated amongst
management and discussed. Often they are complex and difficult to
interpret. Maybe a plan of action is developed and maybe not. Maybe the
plan gets implemented, assuming budgets are approved, resources
allocated, organizations aligned, etc., and maybe not.
One reason much customer feedback is not acted on is that the process of
making it actionable is often unnecessarily complicated. As discussed
above, lots of effort goes into transforming feedback into something
useful for decision making. And actions on the feedback can only occur
after decisions occur. The feedback process itself is biased against
action.
The result: customer feedback is often just that, interesting data that
is theoretically useful, but often is merely interesting because the
costs and effort required to do something with it are too great.
Customer Feedback Management - a new necessity
If you are in business today you probably realize that integrating the
"voice of the customer" into your operations is more important than
ever. This begs the question how to achieve it? The answer is Customer
Feedback Management (CFM).
What is Customer Feedback Management?
Customer Feedback Management is the process by which customer feedback
is incorporated into operational processes. By managing customer
feedback so it is an input to operational processes such as sales,
account management, product management and customer support (among
others), those processes can be made more effective, efficient and
"customer centric".
Customer Feedback Management tools facilitate CFM processes and are
designed to make feedback actionable. Companies that develop and
implement CFM processes are the "5%" in the Gartner report who take
action on customer feedback. These companies don't stop at data
collection; they analyze the meaning of feedback and direct it to
internal actors who can effectively use it in support of business
objectives.
CFM is a process based on the systematic collection of customer feedback
data, the analysis of the data, and defined dissemination and follow-up
actions. When done correctly, CFM can place individual customer feedback
data (both response data and profile data) into the hands of the one
person in your company, in real-time, who is most able to use that data
to further your business objectives.
Business objectives drive CFM implementation
Like any business process, business objectives determine what customer
feedback to collect, how to analyze it, how to disseminate it and what
actions should be taken with it. For example, if your business objective
is to develop and retain a loyal repeat customer base:
-
Data collection might focus on identifying
dissatisfied customers and understanding the reasons for it.
-
Analysis could focus on identifying specific important
accounts with below average satisfaction ratings.
-
Data dissemination might focus on providing affected
account managers with their "low satisfaction" accounts, contacts
and stated reasons for being dissatisfied.
-
Follow up actions might focus on your account managers
reaching out to "low satisfaction" customers with questions,
additional technical support, product or service promotions or other
ameliorating actions.
Relative value
of Customer Feedback vs. Customer Feedback Management
Simply put, customer feedback by itself has value - at times. But based
on Gartner's study, more often than not, customer feedback becomes a
wasted investment. There is a reason that many organizations interested
in simple "feedback" are doing more and more feedback gathering on their
own and are using free web-based tools to collect it. Low value activity
should be done using the lowest cost approaches.
However, companies increasingly realize that if you can
effectively act on insights from customer feedback, its value can be
potentially very high.
CFM enables an organization to take action on customer feedback to
further business objectives. Its value therefore is in proportion to the
business objective achieved. Going back to our example above, if
effective use of customer feedback enables the retention of one
additional key account per sales territory, what value does that bring
to the business? What if by reaching out to "high satisfaction"
customers your sales force can garner one additional reference per
territory? These are the kinds of value adds that CFM brings and which
customer feedback alone can't deliver.
Companies that deploy a CFM process often are able to achieve higher
levels of customer loyalty, higher average revenue per customer and
higher profits. Fred Reichheld, in his seminal article "The
One Number You Need to Grow"
(Harvard Business Review) describes how a feedback management process
based on the "Net Promoter" methodology can be used to increase customer
loyalty, improve revenue and increase profits. A critical point is that
customer feedback must be delivered to individuals who are trained,
empowered, motivated and in position to take meaningful actions for
improving customer relationships. When these individuals take actions on
based on customer feedback good things happen.
Stay tuned for future articles in this series covering the following
topics:
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The role of customer profile data in Customer Feedback
Management
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Improving relationships with your feedback process
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The CFM–Profitability linkage
About QuestBack:
QuestBack is an enterprise feedback management tool for gathering,
analyzing and acting on feedback from critical constituencies. With
unique ASK&ACT(TM) follow-up capabilities, QuestBack makes customer
feedback data immediately actionable and supports the implementation of
feedback management processes. The company is based in Europe and
represented in the US by QuestBack Boston LLC.
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The Role of Feedback Management in Becoming Customer Centric
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