Customer feedback loops

Written on 01 September, 2006 by Mark Neely
Categories Small Business

Being the first to react to changing customer needs and preferences is often the difference between business success and failure. Witness, for example, how quickly Sony lost its early dominance of the portable music device market to Apple, which responded faster and more innovative to demand for digital audio devices.

Yet very few companies invest the time and resources necessary to implement an effective ‘customer feedback loop’; that is, a formal and actively monitored process for identifying, capturing, analysing, disseminating and responding to customer feedback.

Here’s a quick sketch of the steps needed to create a feedback loop within your business:

  • Which customers? – Not all customers are created equal. It is trite to say that 80 percent of profits come from 20 percent of customers, but in all businesses, there will be a segment of customers who are more profitable, and whose opinions are therefore more valuable. Identify them, and make them your focus.
  • Map existing communication channels – It is likely that your business has an array of channels for outbound and inbound customer communications (e.g. a sales force, a call centre, distributors, email newsletters, etc.). Ensure that each channel is truly bidirectional: create opportunities for customers to provide input at each point of contact, and be proactive in prompting for feedback through regular surveys.
  • Monitor customer communities – Complaining customers are your best friend. They give you an immediate opportunity to resolve a problem (or save a sale). But not all customers are willing to complain… to you. They will, however, trade war stories among themselves. Find out where your customers congregate. It might be on an industry web site, in online discussion and chat forums, at trade functions, or on blogs. Scour their stories for important insights. If such a community doesn’t exist, create one.
  • Recruit key customers – Where possible, involve customers in early-stage (alpha or beta) product testing, so that they can have a real say in improving your products. Don’t limit their involvement to product features – grill them on all facets of the product experience, from design, packaging, distribution and delivery to ‘softer’ issues like branding, marketing, warranties and support.
  • Turn customers into innovators – Customers have always been the greatest source of innovation, but harnessing their potential requires more than just asking what they want and providing it to them. Successful innovation requires establishing a meaningful dialog that brings an array of different perspectives together, both to spark novel ideas and to develop them into a useful form.
  • Make someone responsible – Ask any company, and they will say that it is everyone’s responsibility to listen to customers. True, but unless you make someone responsible – with firm objectives, measurable KPIs and effective tools – you will capture only a fragment of the value otherwise available from truly open customer interaction.

An effective customer feedback loop will lead to better products, more informed sales staff, early detection of industry trends and shifting market dynamics, and provide greater opportunities for targeted marketing and enhanced customer support.

One last piece of advice: eschew technology. There are hundreds of vendors with myriad tools designed to automate and ‘dummy proof’ the aggregation of customer feedback. Don’t even consider opening your wallet until you’ve implemented some basic ‘manual’ systems.

It takes time to determine who you should be listening to, where to find them, what questions to ask and how to measure the success of your actions. Only once you have mastered these basics should you consider an automated system, or you may end up with an expensive white elephant.

About the Author

Mark Neely is a lawyer, technology commercialisation consultant and author of 10 books, including the business internet companion. mpn@infolution.com.au

This article was originally published in Australian Anthill Magazine, issue #18 (June/July 2006).