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Why is customer feedback important?
9 Reasons.

Most of us have a ‘gut feel’ that customer feedback is good for business. But if pressed, we struggle to go into detail about exactly how feedback helps a business grow.

We’re here to help.

But before we go into the 9 (count them!) ways that feedback improves any business, we need to clear something up: Sometimes we hear people talking about “the benefits of customer feedback”, but what they mean is the benefits of market research.

Research is great, but don’t fall into the trap of calling it feedback.

Feedback is giving all your customers a chance to tell you what you need to do to keep their business – and dealing with the individual responses.

Research is asking lots of questions of some of your customers and reporting on the results (for example to influence strategy or inform new product developments).

When we see bad customer surveys, it tends to be because someone with good intentions is mixing up market research and customer feedback.

Finally, before we dive head-first into the benefits, remember that the businesses who see all nine of these benefits have put in a lot of hard work – getting buy-in and training their people – to get where they are today. But they all had to start somewhere.

If you’re not happy with your existing feedback process, use our guides to start improving things – it’s never too early or too late!

1. More repeat business

Customers have a choice who they spend their money with. You want them to welcome your offers and promotions, not trash them.

So it’s important to make sure that your customers are happy, so that your marketing doesn’t fall on deaf ears.

Don’t rely on an ‘annual survey’ to gauge overall happiness levels. Make sure you check if each and every customer is happy to buy from you again. If that sounds costly, compare it to how much you spend in sales and marketing to win a new customer!

2. More new business

Word of mouth recommendations grow your business, and cost nothing.

But giving a recommendation has a high bar – your customers need to really trust you won’t damage their reputation by giving bad service after they recommend you.

So collecting, and (more importantly) acting on feedback helps guarantee that everyone is 100% happy, and will recommend you given the chance.

3. Less lost business

You can ask customers how things are going face-to-face, and they’ll say ‘fine’, even if that’s not what they’re thinking.

Small niggles can build up over time and make customers more receptive to a pitch from a competitor – it’s better to make the grass always greener on your side by making it clear you always welcome candid feedback.

4. Easier Outbound Sales

Case studies and testimonials are the oxygen that your business development teams need to thrive.

When you collect feedback, you have a brilliant source of raw material for your case studies. Depending on how your business runs, you might be able to use unfiltered feedback on your website as reviews (after getting explicit consent from your customers to do so, of course), or you could just use feedback to identify your “super fans”, and pass them to your marketing team as leads to follow up for case studies.

5. Win in competitive bids

If your business submits competitive bids and tenders for work, feedback has two huge benefits

First, it’s great to have a body of evidence from your current customers that you’re great to deal with. From working with our customers, we know that most feedback you’ll collect is overwhelmingly positive, so it doesn’t hurt to add a sample to any competitive bid.

But more subtly – when you collect feedback, you have all of your current customers, in their own words, saying what’s important about your business to them.

This will be very similar to what’s important to the prospective customer you’re bidding to – and expressed in a language they’re familiar with. Don’t underestimate how powerful this can be.

6. Stronger reputation

We’ve already touched upon why acting on feedback ensures that customer-by-customer, people are happy to come back, spend more, and refer their friends.

But what’s harder to quantify, and equally important, is the cumulative effects of all this goodwill.

When lots of customers are fans of your brand, unexpected things happen. The whole is greater than the sum of its parts. When many people are aware of you, and have a ‘good feeling’ about your brand, unexpected business opportunities start appearing more often… And your team start feeling better about where they work.

7. Cross-sell & up-sell opportunities.

The best time to try selling something new is when customers are happy with you. So it’s a good idea to have an open dialogue with all your customers, so you know who’s happy, who’t not, and why.

One way to delight customers, rather than just make them ‘happy’ is to fix their problems. Which means finding out if they have any problems… Which means asking for feedback.

8. Morale and motivation.

Getting praise from a customer gives teams a real boost. It gives them confidence that business is on the right track, and peace of mind that another customer account is secure.

Every time a customer gives praise, someone in your business feels like a hero.

9. Improved skills

Receiving verbatim comments from customers means there’s nowhere to hide. All the training courses in the world are no substitute for lessons learned through personal experience.

A tough comment can feel raw, but as long as you learn from it and put things right, you’ll never make the same mistake twice. And it’s easier for the feedback to come from a customer than a colleague, because the person receiving the feedback knows there’s no agenda.

Don’t fall into this trap…

Sometimes we hear this ‘benefit’ given as a reason that it’s important for a business to collect feedback. But there’s a huge problem with it.

Benchmarking isn’t a benefit

If you think benchmarking against your competitors is a benefit of customer feedback, then think again.

We know that you’re curious about how the competition are doing. But finding out isn’t going to make you more profitable. What does it matter if you’ve got an NPS score of 20, and your competitor has a score of 50? It’s the direction of travel that’s important. A NPS of 20, up 5 points from last quarter is a much better indicator of future success than a score of 50 which is dropping like a rock.

If benchmarking is your objective, you’ll pretty quickly find yourself breaking the golden rule of making your feedback process 100% customer-centric. The project will become more of a research exercise than a genuine effort to make things better for your customers.

This might bit sound like the worst thing in the world, but it’s the golden rule that lets you reap the nine benefits above. It’s not important to “collect feedback”, it’s important to have a customer feedback process that your customers love.

So you can sacrifice all these benefits in pursuit of benchmarks… Or you could experiment with not pursuing satisfaction benchmarks, and seeing if your organisation ends up better for it. We’ve worked with hundreds of teams who’ve let go of benchmarking, and we don’t know of one who would trade their delighted customers for the “gossip” of knowing how they’re doing against their competitors.

And if you ever feel you need a helping hand around your shoulders, we’re here for you.

Read more:

Dealing With Complaints

Complaints are bad, right? Not quite. If you approach them in the right frame of mind, you’ll wish your customers complained more. Learn how.

The three golden rules of customer feedback.

Wondering about NPS, CSAT or Customer Effort Score? The key is not what you use, but how you use it. Three Golden Rules...

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