What does customer feedback mean to you? Is it simply a box-checking exercise?  What happens to the feedback once your company collects it? Does someone actually review all the information? Are you using it to drive change in your business? 

Slowly but surely, organizations are starting to realize that feedback is more than customer complaints and outlandish suggestions.  It’s a tool that can have significant impact on the company’s bottom line. This is illustrated by the fact that while overall IT spend is down, IT spend on voice of the customer and other feedback programs is on the rise. A report by market research firm Gartner Inc. ("Predicts 2009: CRM Customer Service and Support") predicted that feedback management technologies will be the top investment made in 2009 to improve the customer experience. This dovetails with a survey from Aberdeen Research which found that in this recessionary time, when many companies are curtailing their IT spend, 41 percent of survey respondents indicated that their budgets for customer feedback management initiatives will increase in the next fiscal year.

Why is this the case? Because it pays to invest in customer retention strategies. Today the danger is not merely losing your customer base to your competition, but losing them to their savings account.

I’m not sure what is says about me as a customer, but whenever I receive a request for feedback on service, I always respond. Sometimes the experience was a terrific one, such as when Housekeeping at the New Yorker Hotel in Manhattan found and returned the phone charger I’d left in my room. Or it may have been a poor one, as at a Washington hotel that couldn’t get any of my food orders right during my week-long stay.

Just as my experiences as a customer vary between providers, so do companies’ responses to the feedback they receive. The New Yorker customer services manager wrote me just a few days after I sent her my feedback, telling me how proud she and her staff were to receive it. Not only did her positive response to my comments create yet another good customer experience, the hotel used the feedback to create a great employee experience.

The other hotel still hasn’t replied to me, six months later.

It turns out I’m not the only one who rarely hears back from service providers after sharing feedback on my experience with an organization. Gartner shows that while 95 percent of companies surveyed collect customer feedback, fewer than half of those bother to alert staff, much less let their customers know how they used their feedback. In fact, only five percent of the companies surveyed close the loop by responding to their customers’ feedback. So the majority of businesses provide absolutely no incentive for customers to respond again in the future, because these companies give customers the impression that their feedback disappeared into a black hole.

Far more than price- or product-based differentiation, there’s a real opportunity for the savvy customer champion at nearly any global enterprise to differentiate her business on quality of service based on how she handles customer feedback. Loyalty and repeat purchases depend on the quality of service a customer experiences when asked for feedback, the speed with which the provider responds to that feedback, and whether the customer feels the business took her opinions, desires and attitudes seriously.

Businesses that want to capture and act on feedback must do so in a structured, programmatic way. The companies that can easily (and automatically) request feedback from customers at the point of experience will derive the most value from that feedback. According to Gartner, businesses that proactively seek feedback immediately after a transaction is completed collect data that is 40 percent more accurate than feedback collected 24 hours after the event.

Furthermore, by automatically escalating any urgent or problematic individual customer comments, companies can handle and resolve specific situations before they damage their reputation. By tracking these issues, businesses can also monitor which issues come up most frequently and improve processes to prevent them recurring.

Businesses must also consider that the feedback process is, in itself, a customer experience. As such, the feedback process must be positive, even if the original transaction was not. In today’s connected world (how clichéd is that phrase?) consumers increasingly express their opinions wherever they have the opportunity. In many cases they do so in public forums - Facebook, Twitter and blogs (oh my) – locations over which a company has neither control nor always an expectation to look for it.

As companies offer a range of channels through which they communicate with their customers - their Web site, contact center, face-to-face - they must offer a similar range of feedback channels. If the feedback collection method doesn’t suit customers, they simply won’t provide feedback.

The best way to keep customers in the fold is not to try to predict their future behavior from their past behavior, but rather to ask them about their experience with your organization and show them you’re listening and acting on what they’ve told you.

After all, at which hotel do you think I’m going to stay again? The one who told me how much it values my feedback? Or the one that showed me how much by ignoring it?

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