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Feedback management: From listening comes wisdom

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29th Aug 2007
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Feedback can be initiated by the customer or by the organisation. Either way, says CDC Respond CEO James Heavey, it is a free source of vital management information that should be properly harnessed as part of an enterprise feedback management strategy.

James Heavey, CDC Respond

By James Heavey, CDC Respond

The letters E, F and M are the latest to join the alphabet soup of business acronyms. Together they make EFM, or enterprise feedback management, a comprehensive set of related software applications deployed across an organisation to support those processes designed to ensure enterprises fully engage with their customers.

EFM encompasses both organisation-initiated and customer-initiated forms of feedback and is deployed across all channels of customer communication and at all customer touchpoints. Put another way, EFM is a new and evolving approach to encouraging, capturing and analysing customer sentiment to drive business improvement, customer satisfaction and competitive advantage.

Improving customer satisfaction is a high-priority for most businesses but many fail in this endeavour due to poor processes and technologies, or simply because they underestimate how difficult it is. Even the most customer-focused organisations can struggle to know what a satisfied customer actually looks like. Others simply fail to recognise the real value of the feedback their customers give them in the form of complaints, comments and compliments, focusing instead on efficiency-based metrics like how long it takes to resolve the complaint or how quickly a letter is replied to.

But by focusing on efficiency gains as a means of driving improvements in customer satisfaction, businesses can simply find themselves doing the wrong things faster.

Understanding feedback

It is not possible to understand EFM without first understanding what is meant by ‘feedback’, although even this is easier said than done. The most obvious form of feedback is complaints, which are relatively straightforward to deal with. When a customer makes a complaint it is understood that it is in everybody’s interest to respond to it promptly and appropriately: the customer will appreciate the efforts that have been made and will be better disposed to come back for more business; the company on the receiving end of the complaint will benefit not only directly from satisfying its customers’ needs but also indirectly both from word of mouth recommendations and lessons learned that should prevent similar grievances in the future.

"You can’t avoid receiving feedback: it is freely given and businesses will receive it whether they want to or not."

Partly as a result of this but also, in some cases, to comply with best practice and regulations designed to protect the rights of the customer, complaint management strategies and software solutions are beening widely adopted. But companies with a defined strategy for handling complaints find it less clear how and why they should be reacting to more general comments: customer feedback that does not have the specific negativity of a complaint or clear processes for redress.

Whereas complaints tend to be structured, typically focused on a particular detail that can be addressed to lead to a specific resolution, other forms of feedback tend to be more general and unstructured. It can be customer-initiated interactions with an organisation in the form of compliments, comments or requests for information, or feedback can be organisation-initiated interactions in the form of surveys or market research.

It might be positive (“My replacement credit card arrived the very next day – it was a real life-saver”), neutral (“Couldn’t we have our bins collected on Tuesdays?”) or of course negative (complaints). It could be a targeted comment about a specific individual or a general impression about a whole product or department. Either way feedback is seen as messy, difficult to collect and hard to manage. Small wonder, then, so few companies adopt a feedback management strategy.

But you can’t avoid receiving feedback: it is freely given and businesses will receive it whether they want to or not. It therefore makes sense to have a strategy in place to deal with it and those companies that do decide to capture and analyse feedback soon find themselves reaping the benefits. The top-level business arguments are relatively easily made – the customer is, after all, always right – but the perception remains that feedback is by its nature difficult to collect and analyse and therefore resistant to any sort of automation and a drain on resources. This need not, however, be the case.

CRM and EFM

A common mistake is the assumption that feedback management is just a part of CRM and that a CRM system will automatically cover a business’s feedback management requirements. While EFM does certainly extend CRM, they are better dealt with as separate, albeit complementary, disciplines.

"CRM is focused primarily on ‘talking’ to the market and customers, while EFM focuses on ‘listening’ to customers."

CRM applications typically focus on the acquisition phase of the customer lifecycle. That is, marketing and sales force automation, contact and opportunity management. A CRM system provides tools that help to segment a mass market, plan and execute campaigns to selected targets that generate interest, leads and prospects and ultimately ends in successful sales to individual customers. Most CRM applications run out of capability in the post-sale, customer service area as the organisation migrates into the customer retention phase.

Customer service is the crossover point from most CRM applications and the starting point for customer-initiated complaints and feedback management applications. These applications are designed to be rich in features for the management of individual feedback cases and to ensure prompt and proper evaluation and resolution of issues while ensuring compliance with any regulatory framework. After the fact, individual cases will be aggregated, reported and analysis performed to determine, prioritise and fix any underlying issues with products, services, personnel or other systemic failures. These actions will typically involve change projects or programmes, part of whose justification will be the evidence produced as a result of analysing and interpreting trends and emerging issues within complaints, compliments and other types of feedback.

CRM is focused primarily on ‘talking’ to the market and customers, while EFM focuses on ‘listening’ to customers. Combining the data from CRM and EFM applications leads to a powerful, holistic understanding of customer sentiment and intentions. The output of this is actionable insights and organisational learning.

Feedback value chain

Feedback is an inevitable consequence of the kind of customer-focused service most successful modern companies are committed to, the natural extension of which is true customer collaboration. You can only collaborate with your customers if you listen to what they have to say. But of course the real goal is to turn the feedback into an asset: knowing what your customers are saying is not the same as paying attention to it.

Those companies who do listen, who refine and structure the feedback they receive until it becomes the useful asset it always promised to be, soon realise its potential as a driver of change, an early warning system of trouble ahead and – crucially – a demonstration to new customers that their opinions will make a difference. Those who don’t soon find that unless they want to annoy their customers by ignoring them completely they have to devote unbudgeted resources in disparate departments to responding to the feedback they inevitably receive. The perception may be that it is expensive to manage feedback, but in fact doing nothing turns out to be the costly option.

"The best way of addressing the inherently unstructured nature of feedback is to do what you can to force some structure upon it."

Key to the effective management of feedback is planning. The best way of addressing the inherently unstructured nature of feedback is to do what you can to force some structure upon it. Successful feedback management strategies begin with fundamental decisions about what information will help most, where that information will come from and what is the most appropriate way of getting it. All customer touchpoints will need to be brought into the concept in order to capture the information and in many cases a culture change within the organisation will be needed to deliver on the strategy.

Everyone within the organisation has a role to play in the effective management of feedback and as the most revealing and useful information is often only delivered via an anecdote, so it is important customers are given the freedom to tell their story when and how they want to. There is an important balance to be struck between knowing what questions you want answered and preventing your customers telling you what they really think. Without effective processes in place the feedback you receive will incur costs but be of no benefit.

Tactical and strategic benefits

The information gathered during an individual feedback case - be that compliment, complaint or survey result - can be useful in many different ways. The value that it brings to the organisation can be multiplied if it is exploited fully, with the ultimate aim of increasing customer loyalty and driving service recovery and customer advocacy through the elimination of the causes of dissatisfaction.

Initially, the data is used by frontline and dedicated feedback handling staff to effect a ‘transaction’ between customer and organisation. The key objectives at this level are operational efficiency and effectiveness, and staff need appropriate tools to help them manage individual workloads and ensure a consistently good experience for the customer.

"There is an important balance to be struck between knowing what questions you want answered and preventing your customers telling you what they really think."

Once the individual transaction is completed the emphasis switches to the aggregation and analysis of the data. For example, a single complaint about credit card charges needs to be properly resolved but is not, in itself, significant for the organisation overall. However, several similar complaints should prompt action to investigate the root cause of the dissatisfaction and correct the problem at source.

EFM provides the necessary tools to proactively manage feedback in any form, across all functional departments and multiple end-to-end processes. The result is the ability to provide enterprise-wide analyses of customer concerns, issues and behaviour; deliver actionable insights arising from root cause analysis that lead to business change projects and improvements in performance; and promote organisational learning.

In short, feedback is valuable at both a tactical and a strategic level. Granted it can be messy and is more often emotional than rational, but with powerful feedback management applications, businesses shouldn't be deterred from leveraging feedback as a powerful instrument for change.

James Heavey is CEO of CDC Respond

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