Best-in-class companies increased customer satisfaction by 26 percent and customer retention by 26 percent in 12 months, as reported by Aberdeen Research in a recent study titled Customer Feedback Management: Mind if I Ask You a Few Questions? To complete this study, Aberdeen surveyed more than 300 organizations in a diverse set of industries between April and June 2008.
With the advent and growing use of social networking and the Internet, today’s customer feedback looks a lot different than it did 10 years ago. Customer feedback can come from numerous sources including blogs, ratings and review websites and peer-to-peer networks, to name a few.
Customer feedback collection and management becomes even more valuable in a challenging economy, in which companies are being forced to reduce spending on store expansion and other new initiatives and focus inward on improving the satisfaction of current customers.
Today’s companies “have no choice but to actively encourage customer feedback and to treat customers as strategic assets in the incessant quest to improve operations, marketing, research, products development and the overall customer experience,” says Aberdeen in its report.
That said, many companies are maintaining or increasing their spending on customer feedback management. According to Aberdeen, 41 percent of survey respondents say they will increase spending on customer feedback initiatives within the next fiscal year. The goals? To retain existing customers, attract new customers and identify new revenue sources.
Three metrics track customer feedback
Aberdeen uses three performance metrics to define its best-in-class companies:
1. Customer Satisfaction = analyzing feedback and responding quickly with necessary changes.
2. Customer Retention = responding to customer complaints and suggestions.
3. Customer-Focused Innovation = using innovative methods to meet the ongoing needs of consumers.
Top companies clearly define their strategies for continuous improvements in these areas, and do so by the following methods:
• Define best practices for using customer feedback for actionable initiatives
• Calculate revenue derived from customer feedback initiatives
• Create an internal customer feedback management team
• Set up a clearly defined method for collecting and responding to customer feedback
• Communicate the importance of customer feedback metrics to all key company stakeholders
To track customer feedback, the best companies use the following four primary channels: email, corporate website/ecommerce cite, call center, and direct mail. Generally, customers appear to be happy to share their feedback. According to Aberdeen, more than half (53%) of all companies say they do not need to use incentives to motivate customers to complete surveys and provide feedback. The key here, though, is to take action based on input from customers, and make sure they know you’ve done just that.
Tools for success
The most successful companies are actively analyzing, reacting and responding to customer feedback. Those that have little or no involvement in customer feedback management must first define the performance metrics, proactively inform customers of any changes resulting from the feedback, and bring on board employees dedicated to customer feedback management.
Once the first steps are in place and are working productively, then a company can look at enhancing the customer feedback strategies by analyzing customer feedback data and defining best practices for using that data.
Finally, companies must be wary not to become stale in their customer feedback management practices. The retail industry is constantly innovating and changing and companies must keep pace with consumer knowledge and needs. To stay on top of industry trends, companies need to continually evaluate the relevancy of customer feedback management strategies. In addition, they must take into consideration the relative value of different types of customers and weight the feedback based on their value as a customer.
“By integrating customer feedback into a centralized database where it can be married with individual customer profile data, including purchase history and lifetime value projections, companies can become increasingly adept at knowing when (and when not) to respond with VIP service,” suggests Aberdeen in the report.