Spinning Straw Into Gold: Turn Customer Feedback Into Business Success

Executives spend millions of dollars every year trying to figure out how to improve business, yet many fail to tap into a freely available information source that can provide more insight than any consultant ever could: customer feedback

Feedback about the products and services customers purchase and use is an inevitable consequence of the kind of customer-focused approach most successful companies are committed to. Whether initiated or prompted by the customer or by the organization, feedback is a critical signal of customer sentiment and behavior—and a source of vital management information that should be properly harnessed to drive valuable business improvements.

Both negative and positive feedback can change your business. The most common and freely available form of feedback interaction is complaints. Despite what you might think, complaints usually come from loyal customers, rather than disloyal ones. Loyal customers will tell you what’s wrong in the hope that it will improve the situation, so they don’t have to defect to the competition. This point is demonstrated by industry research carried out by customer experience research consultancy Technical Assistance Research Programs Inc., which shows customers who complain and are satisfied by the process are up to 8 percent more loyal than those who did not have a problem (Increasing Customer Satisfaction, U.S. Consumer Information Center, Pueblo, CO, 1986.)

They are more likely to tell family, friends and colleagues how pleased they are that the company addressed their complaint, even if the problem was not resolved to their liking. If the problem is resolved satisfactorily, they will tell even more people than if they had received good service in the first place. When you take into account the cost of acquiring a new customer—on average, seven times that of retaining an existing one—the case for ensuring that customers are sufficiently happy to remain with your business becomes not just good practice but also harsh economic reality.

The value of complaints

Complaining customers give an organization a valuable opportunity to identify and fix problems with products or services, make amends and, most importantly, retain business that might otherwise have been lost. And forward-thinking companies have adopted problem-resolution strategies and software solutions to address this fact—and, when necessary, comply with consumer-protection laws. But where they deal with complaints, they don’t always respond to feedback that isn’t negative. General comments, compliments and requests for information can get lost in the shuffle; the perception is that these other categories of feedback are unstructured and, therefore, too difficult to automate. This doesn’t have to be the case.

Consider a leading insurance company that was able to use customer feedback data to streamline its claims process by subtracting three days from the average servicing turn-around time of vehicles involved in accidents going in and leaving the repair shop. All feedback captured, be it complaint, compliment, inquiry or general comment is automatically fed through a feedback management system back to the Customer Care team. The Customer Care team uses the data to produce reports to identify trends, risk and potential cost savings improvements. This information enables the company to put corrective actions in place and monitor the impact of these changes, providing an immediate benefit to the organization. Process improvements identified through analysis of customer feedback data captured has realized $2 million in savings to the business over just 12 months.

A tour operator based in the United Kingdom specializes in escorted vacations, offering everything from a weekend in Paris to a 30-day round-the-world extravaganza, and brings approximately 200,000 people to exciting places each year.

Executives invested in an enterprise feedback management system, recording all customer feedback—good and bad—to the tune of about 11,000 letters and emails a year. In one case, feedback collected and culled out by the system showed that people were unhappy with the service and not getting the personal attention and comfort the company had promised. Executives realized that the tour groups were too big. So they offered smaller groups traveling over a longer period. The feedback management system identified the problem. The company addressed the issues and since then has had no negative feedback about that particular tour.

The benefits of analysing feedback data to determine business improvements also extends to supplier relationships. A supplier relationship management project conducted by the same tour operator led the organization to customize its feedback management system to record compensation payouts against suppliers. The recovery project helped the company to trace a complaint back and identify who was at fault. This put the tour operator in a good position when it came to negotiating with the supplier.

Getting it right first time

Bernd Stauss and Wolfgang Seidel have found that a company with 500,000 customers that provides poor customer service and makes no effort at customer retention will have to find a new customer every two minutes of every day of every year just to stand still. (Complaint Management: The Heart of CRM, South-Western Educational Publishing, 2005)

Companies simply cannot afford to get their customer service strategies wrong because, while customer satisfaction levels are improving in many industries, customer expectation levels are also correspondingly much higher. By implementing a flexible and responsive complaint and feedback management system, companies can begin to meet their customers’ expectations by sharing data at an enterprise-wide level and understanding how to identify areas for improvements.

Successful problem resolution is about addressing both sides of the complaint in pursuit of an outcome that is right for business and customer, alike. By arming themselves with information from complaints data and customer feedback, businesses can ensure they deal with customer issues in an appropriate manner—all the while developing a better understanding of the needs of their customer base in general.

For most companies, the future lies in putting customer service at the very heart of its business functions, sitting alongside other key areas such as sales and marketing. Only by embracing the power of customer capital (the sum of all the worth of all the present customer relationships) and building up the infrastructure to deliver the service levels customers expect will businesses be able to realize the long-term profitable growth they desire.