Market Research

What is customer feedback and why it is important?

By 20/02/2019 June 25th, 2019 No Comments

The Voice of the Customer is playing a relevant role in today’s competitive markets. In fact, is common for customers to voluntarily review products and experiences. This source of information is rich in insights but comes if different forms, and it’s often unstructured. This makes it difficult to interpret on scale. In this video our CEO explains the difference between the most common types of Customer Feedback, and I share the 5 reasons why it would be important for your company.

What is customer feedback?

Customer feedback refers to the information that comes directly from consumers about the satisfaction or dissatisfaction they experience regarding a certain product or service. In other words, it is all the information generated by consumers and/or buyers of a certain brand. This information comes in many formats (e.g., text or speech) and through different channels.

Common sources of customer feedback are:

Surveys and questionnaires:

Recently I read a pretty good description of what a survey really is.
It is defined as the measure of opinions and experiences of a group of people about a specific topic. Nothing new, but information is obtained by asking questions. A survey differs from a questionnaire, which is defined as a set of printed or written questions with a predetermined choice of answers, devised for the purposes of a statistical study

Emails and letters:

E-mails are another common form of customer feedback. Some consumers e-mail companies with their experiences after they have purchased or used a product or service. They use e-mails to express their gratitude or the reasons for their dissatisfaction.

Phone calls and call center data:

A call center is a centralized office that processes large volumes of telephone and electronic requests. A call center manages the incoming product support requests or information inquiries from users and something more.

And, probably the most important source…

Ratings and reviews

Online Consumer Product Reviews are written by people who have used a certain product or service. They represent a very important source of customer feedback for brands sold through online retailers. There are two main reasons why Online Consumer Product Reviews are the most valuable form of customer feedback:

First, reviews contain relevant insights about brands, products, and services.

Users write freely about their preferences, aversions and expectations. Managers can use this knowledge to optimize their products or marketing communication campaigns.

Secondly, reviews have the power to potentiate sales.

More than 80% of consumers have stated that their purchase decisions were influenced by what they read on product reviews. In today’s Internet-driven world, consumers have more power than ever. A
single user can broadcast his praises or complaints to an audience of millions. As you can see, Customer feedback can be classified into two different macro-categories:

Number 1. Questions and Answers:

include surveys and interviews. First, someone has to find the consumers willing to participate. Then someone needs to ask them some previously structured questions.

The outcome is a structured set of data and information that is easy to understand (e.g., charts, diagrams, curves) and usually includes key quantitative indicators. Or the results can be written in a storytelling format with qualitative interpretations of the data. Sometimes, these two types of results are combined. The main drawback of using these methodologies is the potential bias that can result from the interaction between the organization (who asks questions) and the respondents (who gives answers).

Number 2. Voluntarily generated:

Include e-mails, call center data and online consumer product reviews. Usually, the information is not homogeneously structured. So, the main drawback of using this type of customer feedback lies within the complexity of the analysis. However, if approached correctly, invaluable unbiased insights can be obtained.

then ….Why is customer feedback so relevant for your business?

Customer feedback is essential to managers and decision makers. It provides actionable market insights that can help them to improve the consumer experience and subsequently, their brand’s performance.

I summarized the most important reasons why for you:

Number 1. Optimize products and services

Consumer input is commonly used throughout the product development process to make sure that the end product will solve a problem or fulfill a need. Listening to your customers is the only way to know if you are offering something that they actually want to buy.

The world’s most innovative companies are making sure that their products meet or ideally exceed their users’ expectations. In today’s competitive environment, the companies who understand the importance of customer feedback and use it during the product development process can build stronger competitive
advantages.

Listening to the voice of customers can help increase brand loyalty and even convert mere users into brand advocates.

Number 2. Measure consumer satisfaction

Monitoring this indicator helps you find out how your product is performing in terms of the consumers’ expectations. Customer feedback provides important information about their satisfaction.

A simple way to measure it is to look at the star-ratings of your products that accompany reviews posted on e-tailers. Usually, if a product has more stars, it means that it has performed most favorably and vice versa.

Some brands use their own interpretation of the star-ratings. E.g, products with a rating of 1-3.5 stars are considered as unsatisfactory , products with 3.5-4.5 stars as neutral and products with 4.5-5 stars as satisfactory .

This specific measurement is a quantitative one and is not enough to explain why consumers actually like the products or not. To deep dive into the reasons behind a certain score, it is important to analyse the full reviews.

Number 3. Insights for a better customer experience

Optimizing the consumer experience should be your main motivation to gather customer feedback. Offering the best possible experience helps you gain more opportunities for up- and cross-selling. Furthermore, consumers that are satisfied with their experiences are more likely to recommend your brand to their friends.

In order to offer the best possible experience for your consumers, you must understand what they want and how they feel. If you can offer a better experience than your competitors, consumers are more likely to remain loyal to your brand.

Moreover, customer feedback can help you understand and better map the consumer journey for your product or brand and subsequently identify the areas of opportunity.

Using customer feedback throughout your product development process brings you closer to fuel consumer-driven innovation and better manage your product’s life cycle.

Number 4. Help improve customer retention

Analysing customer feedback regularly can help you make sure that you have continuous awareness of your performance. Unsatisfied consumers who find better offers from competitors may stop doing business with you.

Listening to your unhappy consumers helps you design strategies to correct current mishaps
and even prevent potential faux pas that can result in customers churning

Number 5. Run consumer data-driven decisions

The best business decisions are based on data. But what if you end up with inaccurate data? Customer feedback is the holy grail of data that helps you understand how customers really feel about your product, service or brand.

Consider making customer feedback your guide to better business and marketing decisions. Consumers will have the best suggestions for your products. I really recommend you to listen to them.

Read about who can benefit from customer feedback in this post.

 

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