For owners of traditional brick-and-mortar stores, customer feedback is often immediate and right to the point so that you can act on it. A customer may complain about pricing and after several missed sales, you may adjust prices. A customer may say you don't have a large enough selection and you may consider ordering more inventory. A customer may compliment you about the cleanliness of your store or helpfulness of your salespeople so that you know you are doing something right.

For the rest of small and mid-sized businesses, collecting that customer feedback can require more effort. From online and telephone surveys to written comment forms, from focus groups to customer roundtables, companies have employed a range of techniques to listen to their customers. But while customer feedback survey data does create competitive advantage, the advantage doesn't come from merely collecting the data, it's how you act on feedback that really makes the difference.

"Every day, companies solicit feedback from customers, yet only a few translate that feedback into meaning. An even smaller fraction of companies actually take action or close the loop with the customer, to let them know their voice was heard," says Whitney Wood, managing partner of the Phelon Group, a consultancy that focuses on helping companies better relations with customers. "If you handle it right, the dialog between you and your customers can become the lifeline of your business. To establish and maintain a healthy flow, customer feedback must result in change your customers can see. Change is the most powerful currency to reward vocal and consultative customers."

The following guide will cover why customer feedback is important, how to gather customer feedback, and what to do with that feedback.

Making the Most of Customer Feedback: Why Gather Customer Feedback

Before running out to set up a focus group or launch an online customer survey, you need to understand what your business goals are in gathering this data. Why are you gathering customer feedback? What will you do with it? Are you going to act on what you hear? When is the best time to approach your customers for feedback – when they buy, when they don't buy, when they're using your product or some other time?

One of the main goals of gathering customer feedback is to enable communications between you and your customer. As more businesses go online, there is less of the face-to-face communication you find in a physical store front. "If you have a real shop, you communicate with your customers. You understand what they like and dislike. They can ask and you can answer," says Ariel Finkelstein, co-founder and CEO of Kampyle, which makes tools for website feedback analytics. "In the online world, there's no communication and if you don't have that communication you don't understand why your customers are doing what they are doing."

Customer feedback can help you uncover flaws in your business, whether there's a technical problem with your website or whether your prices are too high. "Keep in mind that customers are not especially interested in anonymity, discounts, or monetary incentives to share their ideas with you," Wood says. "They want to be heard and respected and to have their guidance incorporated into your vision and strategic plan. The best-laid customer feedback programs and initiatives are intuitive, and are most effective when the entire company listens and responds to the voice of the customer."

Timing your approach to a customer for feedback can be tricky. If you bombard a customer with a survey as soon as they walk in the door -- or as soon as they click on your homepage -- they may be put off and leave. But there are less invasive times to approach a customer, perhaps after making a purchase you may follow-up with an e-mail asking for help in improving their shopping experience or by soliciting a quick poll while they are shopping online. "If you want to increase the number of customers who return, identify loyal customers and when they return, ask them why they did," Wood says. "Your organization must always be both listening to customers and observing their behavior so that you can make intelligent connections."

Dig Deeper: Improving Your Sense of Site

Making the Most of Customer Feedback: How to Get Customer Feedback

There are a variety of ways to gather feedback from customers these days, but you can essentially group these methods into the following categories:

Empower customer-facing employees. The key to getting useful customer feedback is not to rely solely on phone, e-mail, and print surveys, but to create a culture in which your employees are always looking and listening, and, at the right time, are empowered to act, Wood says. "Employees are able to be much more valuable when armed with the knowledge and the support or resources to address customer concerns," she says. "And customers are more likely to give feedback to someone they believe is empowered to act." Appoint someone within your company to be the champion of customer feedback and have them consider both formal and informal methods of gathering information, and acting upon it.

Hire a third-party customer feedback provider. Outside consultants can deploy a variety of methods to gather unbiased customer feedback. It's not a bad idea to hire a consultant every few years to make sure you are hearing your customers. Consultants can set up focus groups, design customer surveys, and deploy other methods and then analyze the results to that your company can better meet its business goals. "Customer feedback studies can provide loads of data, but only some provide meaningful insight," Wood cautions. "The conductors of the study have useful information about the voice of the customer, and your time is best spent gathering that input rather than translating all the data together. Some questions you might want to ask: What words did our customers use to describe us? What is the profile of customers who will stay with us, and who is easily tempted by competitors? Which of our products do they love?"

Monitor customer behavior. In the online world, it's easy to see what your customers are doing and draw conclusions from their behavior. Using Google Analytics and other Web analytic tools, you can spot problems in the shopping experience. You may find that 90 percent of customers exit your website on a certain page and that should be a red flag for you to troubleshoot. You can also use these tools to understand shopping cart abandonment, whether customers are finding what they are looking for and other customer issues just by observing behavior.

Use customer feedback tools. That data you gather by observing customer behavior on your website can be enhanced through a variety of online tools to gather customer feedback. The tools range from feedback forms featuring happy faces and sad faces from Kampyle to instant polls and online surveys. The feedback forms can be strategically placed on different webpages so that the customer can show that they think a price is too high, for example. "The way you ask for feedback partners up with the vehicle you're using," says Eric Groves, senior vice president of global market development for Constant Contact, an e-mail marketing firm. "If there is a simple poll sitting there that your customer can choose to answer or not and also see how other people answered, it might be an appealing way to get their opinion about something." In addition to polls, companies can solicit feedback through e-mail newsletters or online surveys that are sent to customers via e-mail.

Another technique companies are finding helpful in hearing what their customers have to say is monitoring social media, such as Twitter and/or Facebook. Constant Contact has staff monitor Twitter for mentions of the company to spot potential trouble. Support staff will engage customers quickly if they learn of a problem and help the customer solve that problem, Groves says.

Dig Deeper: Communicating Directly With People Who Buy Your Product

Making the Most of Customer Feedback: How to Use Customer Feedback

Once you gather customer feedback, it's important to use that information to address specific challenges. The action you take is what makes the customer feedback truly powerful, after all.

When considering a survey, define your scope so that you can get relevant feedback about a particular challenge, Wood says. For example, she says, if you realized that your customers are constantly demanding that you lower your price, and when you don't, they go to your competitors, you might decide to leverage an outside firm to help your management team better understand what's going on and what to do about it. One plan of attack might be to interview 10 existing and major customers, and survey 100 current accounts and 100 past (or defected) accounts, asking particularly about repurchase decisions and price. "Your problem is specific, and so is your game plan," Wood says.
Act on customer feedback. Getting the organization ready to act requires dividing customer feedback into what Wood calls "strategic horizons," which correspond to the way in which you will act:

  • Horizon One: Immediate tactical adjustments, such as quick wins, red-alerts, and lifelines
  • Horizon Two: Revenue interlocks, including actions that impact revenue not this month, but over the next year
  • Horizon Three: Game-changing ideas and suggestions for the long term

Once the feedback is divided into action buckets, Wood says, ensure that each organization or function in your company has three roles to play: to receive the feedback, to be conditioned by the findings, and to participate in the determined course of action.

Devise and test smart solutions. When coming up with solutions to issues you uncover through customer feedback, think in stages. First, consider the insight and gather input for change from front-line employees and senior managers, Wood says. Next, define the plan for change and test it against your budgets and resources, and talk to your best customers to determine if the idea or change is even worth testing. Finally, Wood says, benchmark the test's success with metrics over a reasonable period of time and assess how well targets were achieved.

Close the loop with those giving feedback. It's amazing how many companies neglect to get back to customers even after they've implemented changes. When you have made a change that is customer-driven and meaningful, close the loop with the customers (personally or via other channels) who were part of the feedback process, Wood advises. "This step is critical, because customers will be encouraged to give input if they know they are being heard and know they may be driving change." You might set up your customer feedback mailbox to generate an automatic response initially thanking customers for their feedback, but you still need to follow up after the problem is corrected and get back to that customer with a more detailed response. "One of the most important things to remember is that these are human beings and if you don't have that kind of communication and close the feedback loop, you don't have the human touch between yourself and the customer," Finkelstein says. "That's a very big loss for any company."

Track the results. Customer feedback can spur everything from short programs and initiatives to business transformation. "The chore is not in the listening, but in the implementation and follow-up," Wood says. "As you launch feedback-driven changes, track which and how many of your customers offer up additional ideas and input. In my experience, the more you can get the right customers to participate, the better your business is growing."

Dig Deeper: How to Handle Customer Complaints

Making the Most of Customer Feedback: Additional Resources

Make the Most of Customer Feedback
Article on, by Ariel Finkelstein.

Customer Think
Blog and online community of business leaders striving to create profitable customer-centric enterprises.

Making the Most of Customer Complaints
Wall Street Journal report on customer service.