Astute Planning, Flawless Execution,
Delighted Customers

Issue #133

Tuesday, November 11, 2008

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:

  • The role of customer profile data in Customer Feedback Management

  • Improving relationships with your feedback process

  • 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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