Effective customer feedback management is crucial to the success of your CX strategy. While contact center reporting and analytical tools offer an excellent overview of specific CX metrics like average handling times and team performance, you need to go deeper to outshine the competition.
After all, 93% of customers say they’re more likely to make repeat purchases with companies offering excellent service. The only way to know whether you deliver the experiences your customers want is to speak to them directly.
Collecting, analyzing, and acting on customer feedback is how you constantly improve your relationships with your target audience and increase customer loyalty. Here’s your beginner’s guide to excelling at customer feedback management.
What is Customer Feedback (and Why is It Important?)
Customer feedback is the information your customers share about their experience with your team, product, or service. Companies can collect feedback in many different forms, including:
- Customer loyalty metrics, Such as NPS scores and churn rates.
- Satisfaction scores: Direct metrics like CSAT (Customer satisfaction scores)
- Survey answers: Responses to specific questions in surveys
- Reviews and testimonials: Provided to your sales or marketing team or shared on third-party review websites.
- Changes in customer shopping behavior, such as unsubscribing from your mailing list or reduced purchasing behavior.
- Usability testing metrics: Insights into customer effort scores and satisfaction with software and services.
- Brand mentions: The things customers say about your company, products, and services on social media and other channels.
So, why is customer feedback important? Simply put, the only way to learn what drives customer loyalty is by listening to the voice of your specific audience. While you can make assumptions about what increases retention or churn rates, your customers can only give you precise, contextual insights into their purchasing and loyalty behaviors.
Using customer feedback management strategies gives you a way to understand what you’re doing right and what you’re doing wrong. This means you can make data-driven decisions that help to increase revenue, reduce churn, improve your products and services, and boost the ROI of your marketing and sales campaigns.
Plus, collecting feedback gives you the resources to create marketing campaigns that contain social proof in the form of testimonials and statements from happy consumers.
What is Customer Feedback Management?
Customer Feedback Management (CFM) is collecting raw customer feedback via multiple channels and transforming it into actionable insights. A customer feedback management strategy allows businesses to take a customer-centric approach to growth.
You use the information you collect from your customers to deliver better products, services, and experiences and reduce your churn risk.
The strategic approach to leveraging customer feedback management is usually called the “customer feedback loop” or the A.C.A.F loop. It includes four stages:
- Ask: Ask for feedback on a product or service.
- Categorize: Categorize feedback into different segments based on business goals.
- Act: Leverage the input to take strategic action and grow your business.
- Follow-up: Follow up with customers and let them know you’ve heard their insights.
At each stage in this “loop,” companies use software and technology to gather, organize, analyze, and act on valuable feedback.
Why is Customer Feedback Management Important?
We’ve covered why customer feedback is essential, but why do you need a CFM strategy? Effective customer feedback management delivers many benefits, including reduced churn, increased revenue, better products and services, and stronger customer relationships.
It’s also crucial to develop a comprehensive view of the customer journey and the factors that drive buyer decisions. Perhaps most importantly, listening and responding to customer feedback ensures you retain crucial customers.
While finding new customers for your business is essential, a simple 5% increase in customer retention can increase profits by up to 95%. When you collect and act on customer feedback, you show your customers you care about their satisfaction.
Around 68% of customers leave a business simply because they feel companies don’t care about them. However, 83% of customers say they’re more loyal to brands that resolve their complaints.
The Steps Involved in Customer Feedback Management
While the approach companies take to customer feedback management can vary, there are a few core steps involved in every process:
Step 1: Collecting customer feedback
The first step is the “Ask” stage of the journey, where you actively collect consumer feedback. There are various ways to solicit feedback from consumers, such as:
- Holding focus groups
- Customer interviews
- Conducting surveys
- Examining third-party reviews
- Asking for reviews via email, live chat, or social media
- Requesting feedback after a customer conversation
Customer interviews and focus groups are the most traditional options for collecting in-depth customer feedback. However, innovative software can help companies get a more holistic view of their audience. Today’s AI-driven and automated tools make collecting information about how customers feel in seconds easier.
AI tools can ask customers to rate their likelihood of recommending a service to a friend and then transform those insights into NPS metrics. They can ask customers to rate satisfaction on a scale of 1 to 10 or ask people to score the difficulty of their interaction.
Companies can also contact customers through live chat, text, and email to constantly seek insights. Plus, with social monitoring tools, it’s easy to track how customers talk about your business, products, or services across multiple online channels.
Step 2: Analysing customer feedback
The next step is evaluating customer feedback and organizing it into segments based on your business goals. Customer feedback management software offers businesses a way to combine various forms of feedback into a single overview of the customer.
With these tools, companies can get a rapid overview of everything from their average satisfaction and NPS scores to emerging trends and issues with the customer experience. While software makes it easier to track customer feedback in one place, companies still need to determine which metrics and insights they need to monitor.
For instance, some of the most common metrics to watch include:
- Customer effort score: CES looks at how much effort it takes for customers to achieve their goal, such as rectifying a problem or making a purchase.
- Customer satisfaction score: CSAT looks at the overall satisfaction level of your customers and how happy they are with your service.
- Net Promoter Score: NPS examines how likely your customers are to recommend your product, service, or business to another consumer.
Once you know which metrics and insights you’re monitoring, you must determine how to categorize your feedback. For instance, you might categorize the insights you receive based on whether they relate to a specific product or service. You could also categorize input based on customer demographics or whether they’re related to sales, marketing, or customer support.
Step 3: Acting on customer feedback
Once you’ve analyzed and categorized your insights, the next stage of effective customer feedback management is acting. Usually, this starts with sharing feedback with relevant teams, such as your customer support, marketing, sales, and product development teams.