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Craig Cochran

Quality Insider

Fundamentals of Effective Customer Feedback

Listen carefully, respond quickly

Published: Monday, March 13, 2006 - 23:00

Customer feedback is the single most important type of communication an organization can receive. It is confirmation of the organization’s purpose in life and its ability to deliver on this purpose. Feedback can ultimately determine whether the organization lives or dies. Despite the highly critical nature of customer feedback, organizations often treat customer feedback as an afterthought, something that they might get around to, if time allows. The processes for gathering and using feedback must be moved to the forefront of the organization’ strategy. It’s not optional. Let’s take an inventory of the issues organizations should focus on as they develop and improve their customer feedback process.

Unsolicited customer feedback is a rare gift
Every now and then, a customer will contact you and let you know how they feel. I’ve even done it a time or two, usually when I was really angry or really ecstatic. In other words, I was highly motivated by my customer interaction. That’s the trouble with unsolicited customer feedback—it requires a very motivated customer. Most customers have opinions, but they’re rarely motivated to contact you to tell you their thoughts. They’re too busy, too preoccupied or don’t feel it’s their place to offer feedback. You must reach out to them and ask, “How are we doing?”

Organizations that solely rely on unsolicited customer feedback are fooling themselves. They think customers will reach out and provide feedback without being asked, but that happens once in a blue moon. Fewer than 5 percent of customers who have a strong opinion about a product will take the time to communicate their opinions on their own. This is the case for positive and negative opinions. You’ll be in the dark unless you solicit feedback.

Even when feedback is solicited, many customers still don’t feel compelled to respond. Think about the surveys, questionnaires and comment cards that you’ve received from suppliers. Have you ever thrown some of these in the trash without even thinking about completing them? Of course you have. One of the main reasons you might have done this is that they were too long, too complicated or too imposing. That’s why your tools for capturing feedback must be as simple and as streamlined as possible.

The first two imperatives related to customer feedback:
1. You must reach out to the customer in a proactive manner and solicit feedback. Waiting for the customer to contact you is a fool’s game.
2. Your tools for capturing feedback must be simple and streamlined, or they’ll be ignored.

Customer feedback is a leading indicator
A leading indicator is a measure that tells us the future. Customer feedback is a leading indicator because it reveals whether customers are likely to continue doing business with us in the weeks, months and years ahead. Leading indicators are important because we can use them to gauge the direction of our enterprise and make critical decisions.

Leading indicators are rare in business management, and most organizations use lagging indicators—the opposite of leading indicators—to gauge their direction. Lagging indicators reveal what has already happened, and organizations are full of them:

  • Revenue: All organizations have revenue. Managers may refer to it as sales, donations, grants or funding, but they’re all revenue. Revenue indicates whether the organization has funds to support its operations, but revenue tells you only what has already happened. If revenue goes down, then sales or support has dropped, competitors have made inroads, quality is suffering or customers are unsatisfied. Revenue is an important measure, but it looks backward instead of forward.

  • Profit: This is also a lagging indicator. Profit tells us how much money is left over at the end of the period after all costs and expenses have been tallied—the difference between inputs and outputs. Even nonprofit organizations are interested in profit, because it indicates how well they’re controlling their costs. Just like revenue, profit is a backward-looking measure. A drop in profit may tell us that our costs have risen, our revenues have dropped, we’ve faced unexpected problems, customers value our products less or competitors are becoming more successful at our expense. Profit doesn’t indicate much about the future, but it tells us plenty about the past.

If you rely on lagging indicators to make decisions, then by definition you’re using old information. You’re basing future events on what happened in the past. It’s important to remember history, but in business the past is no great indicator of the future.

Few organizations include customer feedback as a key measure. This is partially a result of the perceived difficulty in capturing and understanding customer feedback. It’s also a result of top management not really comprehending how important a customer’s opinion is. Sure, everyone gives it lip service and agrees it’s important, but it’s rarely used for strategic decision making in the way that lagging indicators are. Customer feedback is information that can tell you what will happen in the future. An organization that tries to understand customer feedback and bases its decisions on what it learns is managing for the future. Basing decisions on lagging indicators is managing for the past, which guarantees failure.

Fundamentals of Effective Customer Feedback

1. Don’t wait for customers to contact you. Reach out to the customer and ask how you’re doing.

2. Keep your tools for capturing customer feedback as simple and streamlined as possible.

3. Remember that customer feedback is a leading indicator, unlike most other indicators that businesses use. That’s why customer feedback is so important to an organization’s success.

4. Take action quickly. The informational value of customer feedback doesn’t last long.

5. Utilize lean tools that can be applied all the time by a variety of people. Don’t make capturing and analyzing customer feedback an event that only happens every now and then.

6. Share the trends of customer feedback with the entire organization. The more people understand customers’ perceptions, the better prepared they’ll be to help improve them. Everybody in the organization can affect customer satisfaction positively.

7. Follow-through on customer feedback. If you don’t take action—and follow through to completion—then the process will produce nothing.

 

Customer feedback has a short shelf life
Shelf life is a concept that people often relate to food items, but the concept is also applicable to customer feedback. Feedback is nothing more than information, but it’ll go bad faster than a ripe peach. If you don’t analyze and act on customer feedback quickly, its value will diminish to almost nothing within months. Use it or lose it.

Customer feedback has a short shelf life that’s rooted in its nature. Feedback is based on perceptions, which are highly subjective. Perceptions can be derived from fact, fancy, fantasy or fables, and perceptions are often composed of all these things. People’s understanding of their own perceptions can change or diminish very easily. What someone perceives today may be different from what the same person perceives tomorrow. Because perceptions change so quickly, the value of reacting to perceptions also changes quickly. If your organization doesn’t act on perceptions quickly, the customer will have already acted, usually by finding a different organization to fulfill his or her needs. Customer feedback is a valuable product that expires quickly after it’s generated.

The short shelf life of customer feedback is one of the best reasons for utilizing simple tools for capturing and analyzing customers’ perceptions. The more complex the tools, the more time will elapse before you take action. Some organizations spend so much time and effort capturing and analyzing feedback that they never take action. They exhaust their time and interest, and in the end they do nothing.

Before capturing customer feedback, the organization must commit to acting quickly on what it learns. You may wait to take action, but your customers won’t.

Gathering feedback shouldn’t be an event
The notion of creating long, unwieldy customer surveys is very appealing to many organizations, and they treat the process of gathering and analyzing customer feedback as an event. Maybe that’s what comes to their minds when managers think of gathering customer feedback. “We send out our survey once every two years,” is a typical remark I hear. Why make it a grand periodic happening, like the Olympics, when this almost guarantees that the chore will be enormous, requiring lots of time and money? We’ve seen how few customers have any desire to complete surveys of this sort, guaranteeing a low response rate and a big waste of time. A better approach would be to make the gathering of customer perceptions a continual process, something that happens all the time in different ways throughout the organization. This enables quick action on feedback, which we’ve already seen is a key to success.

The gathering of feedback should also be performed by a wide range of people in the organization. Mobilize everyone in capturing customer perceptions. If your tools are simple and concise (which is what you need to strive for), then they can easily be administered by almost anyone. Relying on a core group of experts to administer the customer feedback process by themselves will work, but it’s not the best way. The more people are involved, the more they understand the nature and importance of customer feedback.

Trends in customer feedback shouldn’t be a secret
The grapevine within organizations is very effective. People hear what’s going on even when formal communication doesn’t carry the message. Because people are going to find out what’s going on anyway, it makes sense to come right out and tell everyone, especially with customer feedback. After all, your employees are probably hearing informal feedback from your customers all the time, but they’re probably not hearing and understanding the trends in customer feedback. Employees hear part of the story, not the big picture.

Trends in customer feedback should become a regular part of the organization’s communication. If you have a newsletter, trends in feedback should be regularly featured. Bulletin boards should include trends and specific feedback. Meetings of all types should highlight feedback. Any opportunity to communicate is a great chance to share customer feedback. Don’t be concerned that information on feedback will get into the wrong hands. People are going to hear bits and pieces of customer feedback whether you want them to or not, so smart organizations are going to package it in an understandable format and communicate it widely.

When employees are exposed to trends in customer feedback, they’re better prepared to help improve their processes in a way that positively affects customers. Customer satisfaction becomes engrained in everyone’s minds. Communicating too much about customer feedback is almost impossible.

Follow-through on feedback is critical
Gathering and analyzing customer feedback is critically important. It takes a significant dedication of time and effort, but if you don’t act on feedback, its gathering and analyzing will have all been a waste. Follow-through is where organizations drop the ball.

There’s nothing terribly sophisticated about acting on customer feedback. Follow-through takes discipline and a guiding process, and it generally comprises these steps:

  • Analyzing trends in feedback

  • Identifying the most promising opportunities or most ominous challenges

  • Assigning an owner to the opportunity

  • Obtaining needed resources

  • Investigating the underlying issues and identifying the causes

  • Determining the action necessary to make improvements

  • Implementing actions

  • Evaluating effectiveness

  • Communicating improvements to customers

The final step, communicating improvements to customers, is critical. If customers don’t realize there’s been an improvement, there hasn’t. Make sure to let your customers and the marketplace in general know the important improvements your organization has made.

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About The Author

Craig Cochran’s picture

Craig Cochran

Craig Cochran is a project manager with Georgia Tech’s Enterprise Innovation Institute. Cochran is the author of The Seven Lessons: Management Tools for Success; Problem Solving in Plain English; ISO 9001 in Plain English; Customer Satisfaction: Tools, Techniques, and Formulas for Success; The Continual Improvement Process: From Strategy to the Bottom Line; and Becoming a Customer-Focused Organization, all available from Paton Professional. His most recent book is ISO 9001:2015 in Plain English, also available from Paton Professional.