Improve the Use of Customer Feedback to Increase Customer Loyalty

by Clicktools Guest Blogger, Bob Hayes

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Customer feedback plays a significant role in the success of any customer experience management (CEM) program. In this post, I present specific CEM business practices that are linked to high customer loyalty. By adopting these activities into your CEM program, you improve the probability of your success.

Figure 1. Click image to enlarge.

Researchers found that companies that have customers who are more satisfied with the customer experience (CX) have a better 6-year stock performance compared to companies that have customers who are less satisfied with their experience (see Figure 1). What makes CX-leaders different than CX laggards? In a recent study of CX professionals, I identified the specific practices that lead to higher levels of customer loyalty. First, let’s review CEM programs.

Practices in Customer Experience Management Programs
Companies adopt certain CEM-related practices in hopes that it will improve their how they manage their customer relationships, improving customer loyalty. Some companies might adopt the practice of sharing customer feedback results company-wide, other companies might limit sharing to the executive team. Some companies might use customer feedback to set company strategy while other companies might rely strictly on financial metrics to guide their strategy. The sum of these adopted activities defines the company’s CEM program. These various practices can be grouped into six areas or components (see Figure 2):

1. Strategy addresses how companies incorporate CEM into their long-term plans/vision/mission to help achieve its objectives and goals.
2. Governance describes the formal policy around the CEM program: Rules, Roles, Requests.
3. Business Process Integration involves embedding CEM processes/data into other business operations.
4. Method addresses the means by which customer feedback is collected and what gets measured.
5. Reporting addresses analysis, synthesis and dissemination of customer feedback.
6. Research is concerned with how companies provide additional customer insight by conducting deep dive research using different types of customer data.

These six CEM components essentially illustrate the importance of customer feedback, from how it’s captured and analyzed to how it’s reported and integrated into the broader work environment. Before adopting a specific customer feedback practice, though, you need to know what works and what doesn’t. Using the model in Figure 2, I studied 30 different ways organizations use customer feedback and their impact on customer loyalty.

Identifying Best Practices

I surveyed 104 CX practitioners about their company’s CEM programs (see results of prior research by clicking here). The survey asked respondents to indicate the extent to which their company adopts 30 different CX practices across the six CEM program components. Also, the survey included questions asking respondents to estimate their company’s industry loyalty ranking, information about themselves (e.g., job role, program knowledge) and their company (e.g.,headquarters location, size, and type). You can see and take survey here: bit.ly/cxpsurvey.

Half of the companies were headquartered in North America. The respondents were Senior Executives (18%), Directors (17%), Managers (29%) and individual contributors (14%). The remaining where either outside consultants/employees. The sample consists of primarily small to medium sized companies from a wide variety of industries. Also, the sample is made up of primarily B2B companies (B2B or B2B/B2C – 69%) that have multiple locations (74%).

Results

A total of 62 respondents provided their company’s loyalty ranking (in percentile). Loyalty rankings ranged from 0 to 100. Mean loyalty ranking was 62nd percentile. Median loyalty ranking was 70th percentile.

Figure 3. Click image to enlarge.

Impact of Specific CEM Practices on Customer Loyalty

Next, for each of the 30 CEM practices, I compared customer loyalty percentile rankings between companies who adopted the practice and those who did not. The results appear in Figure 3. Generally speaking, adoption of specific CEM practices leads to increased customer loyalty. While differences for each of the 30 practices are in the expected direction – if you adopt the practice, you’ll have higher customer loyalty, only a handful reached statistical significance.

Next, I take a deeper look at the CEM practices that have the largest impact on customer loyalty.

Customer Feedback Best Practices

Figure 4. Click image to enlarge.

Nine of the 30 CEM practices showed statistical significance when adopters were compared to non-adopters. There were four more practices that approached statistical significance. I have included these top 13 best practices in Figure 4.

There are several ways you can improve the use of customer feedback in your attempts to better understand the health of the customer relationship. First, use customer feedback for executive compensation. Using customer feedback to incentivize executives ensures their decisions are based on customers’ needs. Next, be sure to communicate all aspects about customer feedback to the entire company. The use of Web-based reporting tools will necessarily facilitate the distribution of this information to all constituencies.

With respect to collecting customer feedback, use different types of surveys, including relationship and transactional surveys, and social media methods. If you have a customer base that uses social media, you might consider using social media to resolve customer complaints.

Be sure you are capturing the right metrics; these include different types of customer loyalty measures as well as customer sentiment. Also, provide evidence of the quality of the measures you are using. Using measures that are wrong or of poor quality in your analysis will lead to sub-optimal results.

When using your customer feedback, be sure to benchmark customer feedback results. It’s good to not only know your absolute level of quality, but where you stand in your industry. Also, be sure to be sure to integrate your customer feedback with other data silos including financial, operational and employee. In our world of Big Data, businesses are linking disparate data sources in order to ask bigger questions and acquire deeper customer insights.

Summary and Conclusions

Customer satisfaction and loyalty drive business growth. Companies who have customers who are satisfied and loyal outperform companies whose customers are less satisfied and loyal. Results of the current study showed that adopting specific practices with respect to how you use customer feedback can help your increase customer loyalty.

Achieving the status of loyalty leaders requires the adoption of specific practices to help you use customer feedback data more effectively. The current research provides some specific ways companies can improve how they use customer feedback to improve the customer experience.