Customer Feedback Management: Best Practices and Tips

The beginners guide to customer feedback management

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Customer Feedback Management Best Practices and Tips - CX Today News
Loyalty ManagementVoice of the CustomerInsights

Published: January 19, 2024

Rebekah Carter

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:

  1. Ask: Ask for feedback on a product or service.
  2. Categorize: Categorize feedback into different segments based on business goals.
  3. Act: Leverage the input to take strategic action and grow your business.
  4. 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.

Most companies regularly share feedback through daily, weekly, or monthly alerts or meetings. After sharing feedback, business leaders and sector supervisors collaborate with team members on strategies to address issues or improve customer experiences.

For instance, if you discover customer effort scores are increasing for a new service you offer, you might introduce new onboarding strategies and AI tools to assist customers in rapidly achieving their goals. After implementing new strategies, you’d monitor your metrics to see whether they improve or decline after you do something new.

Some of the critical steps involved in “acting” on feedback include:

  • Assigning tasks to specific groups or team members.
  • Implementing automated systems to track the results of changes.
  • Setting timescales and new SMART goals for customer experience.

Step 4: Following up on customer feedback

The last stage of effective customer feedback management is returning to the source and following up with your customers. 53% of shoppers believe their feedback doesn’t impact their service experiences. You need to make customers feel heard to improve customer loyalty and retention rates.

Respond to customer surveys and reviews with messages thanking customers for their input and insights into how you will implement their suggestions. You can even consider implementing user forums, where customers can track the work that you’re doing to address their recommendations.

For instance, Microsoft has its own feedback hub and online forums where people can suggest new features, ask questions, and share their comments.

Where possible, it’s helpful to personalize messages when returning to your customers to let them know you’re genuinely paying attention to their thoughts. This leads to higher levels of customer loyalty and improved brand reputations.

X Customer Feedback Management Best Practices

We’ve covered what customer feedback management is, how it works, and how it’s essential. Now, let’s take a closer look at the steps you can take to improve your CFM strategies.

1. Evaluate your Current Processes

Before implementing new customer feedback management strategies, evaluate the existing processes. Are you automatically asking customers to rate their experience at the end of a call or a message-based interaction? Are you using automated SMS and email to collect reviews?

What strategies could you implement to make your CFM process more efficient? For instance, could you use an AI tool to ask your customers to review their experience at the end of a customer service call rather than relying on your employees to ask for feedback directly?

2. Set Clear Goals

Knowing what you’re trying to achieve is essential when establishing a customer feedback management strategy. While collecting as much feedback as possible on a range of topics is tempting, it helps to have a clear focus and goal to work towards.

Consider whether you’re looking for insights into improving your product or service, increasing customer loyalty, or eliminating friction points. Determine what information you want to collect and which metrics are most important.

3. Gather feedback from multiple channels

The voice of the customer is spread across a range of channels in today’s digital world. If you’re only focusing on one channel, like collecting insights from reviews left on your website, you’re going to get a limited view of the entire customer experience.

Experiment with various channels, from conducting interviews and focus groups to sending out emails and SMS requests to customers. Ask for feedback from your sales, service, and marketing teams, and use social listening tools. Where possible, automate customer feedback collection to reduce pressure on your team members.

4. Use customer feedback management tools

Customer feedback management software is one of the most valuable tools you can access when listening to the voice of the customer. Tools from vendors like NICE, Qualtrics, Verint, and SurveyMonkey can give companies a range of valuable resources to work with.

These tools can automate feedback collection, help you organize your insights into a single environment, and even assist with categorizing customer comments. Even AI-powered tools can generate comprehensive CSAT scores based on proprietary data to help elevate the insights you get from direct feedback.

What’s more, these tools can help you share feedback with team members and even integrate with project and task management tools so you can track your progress.

5. Act promptly on feedback

The quicker you respond to customer feedback and act, the faster your business will grow. The key to success is knowing what to prioritize. Based on the goals you’ve set for your business, identify the most valuable feedback in your ecosystem.

Prioritizing critical concerns directly impacting customer loyalty and your bottom line will drive a faster return on investment. After you’ve addressed these core issues, you can start to think about innovative ways to address less pressing concerns.

Ensure your team members have a clear insight into the role they’ll play in implementing changes and the metrics they should monitor to evaluate the success of each effort.

6. Track and follow up on Results

Finally, customer feedback management is an ongoing process. You need to constantly monitor the results of your efforts and make changes based on the data you collect. Examine how the alterations you make to your product, service, and other processes influence customer success.

Follow up with your customers and monitor their reactions to changes. Most importantly, ensure your customers know you’re actively invested in implementing their suggestions. This will improve your relationship with your audience and your chances of more consumers sharing their feedback with you in the future.

Mastering Customer Feedback Management

Customer feedback management is something no business can afford to overlook in today’s world. The voice of your customer is an incredible resource for your organization. It gives depth and context to the metrics you collect and use to drive intelligent business decisions.

The more you listen to your customers, act on their suggestions, and respond to their feedback, the more they’ll reward you with loyalty and support.

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