Contextual Insight - The Basis for Taking Action on Customer Feedback

Don't do statistical analysis based Customer Feedback Management. 

Every now and then someone produces a really insightful analysis that is both relevant to business managers  and captures the essence of your particular company's solution, in this case QuestBack.  Bruce Tempkin of Forrester Research - via his Blog, Customer Experience Matters, has done just that. 

In the post below, Bruce makes the point that contextually relevant customer feedback doesn't necessarily need to be proven statistically significant to be both highly valuable and immediately actionable.  In fact his point is that contextually relevant feedback, when delivered to precisely the right individual, is both very valuable for its insight and immediately actionable, without any statistics based analysis focused on key drivers.  It's a great read.  I encourage you to visit his blog for the whole article.

http://experiencematters.wordpress.com/2010/02/08/market-research-needs-less-statistical-analysis/


"Contextual Insight" - The Key to effective feedback management systems

Bruce Tempkin - The respected Forrester Research analyst coined this term in a February post on his blog - "Customer Experience Matters".   He defines it as:

Business Context + Relevant, timely data = Actionable insight

Some examples of contextual insight might be:

• An indicator on an information request form suggesting a short term need by a prospect, when delivered to a salesperson
• A "detractor" rating given by a client on a net promoter survey and delivered to an account manager
• An "unsatisfied" rating given by a visitor to a web-site, when viewed by the web master

Contextual insight is always feedback, filtered by some characteristic in the data giving it business context. It is always insightful to a specific role in your enterprise, if delivered in a timely fashion to that person.

Achieving Contextual Insight without in depth statistical analysis.

Customer insight has typically been the province of market research organizations. But, market research organizations aren't often equipped or structured to rapidly generate and deliver highly granular, context relevant, data to business end users. In fact their processes often mitigate against doing so.

But, Business still needs actionable, context relevant and timely insights about customers and prospects.

Feedback Management technology makes Contextual Insight actionable. It allows businesses to pre-determine who should receive specific of feedback and when. Techniques include automated role notification (alerts) and CRM based task assignment. Most feedback management applications include some analytics capabilities which enable rapid, though not automated, action taking on feedback. Most feedback management applications dovetail with more traditional market research tools. And, therefore can be viewed as complementary to the marketing research function.

Some applications (like QuestBack) include the ability to synch up survey based feedback with customer profile and actor profile information.  This allows really powerful alert processes to be fully automated once a survey process is in place.

The Loyalty Effect from Customer Surveying

Research shows, experience validates: Systematically surveying customers and then "Closing-the-Loop" increases customer loyalty

A QuestBack user that regularly surveys their large global customer base found in a recent survey that for those customers who had responded to prior customer surveys, Net Promoter Scores were 19 points higher than for customers who were 1st time survey participants.  We have long believed that a multiple cycle and action supported customer feedback process based on e-mail delivered customer surveys would have loyalty enhancing effects.  Our experience with this process validates a number of earlier research efforts undertaken by different groups.  Our customers' NPS score differentials are in the chart below.  Other research is listed and attributed further on in this post.

The Feedback Management process implemented by this client included action taking based on daily reports during the duration of the survey, which routed dissatisfied customers - i.e. those dissatisfied with various elements of the customer experience - to appropriate internal actors (Support Staff, Account Managers, Product Managers, etc.) at the client for follow up.

Prior surveyed participants had all experienced some form of "loop closing" action in response to their earlier feedback. In this case, surveying and "closing the loop" clearly helped to build a more loyal customer base.

Some research these results appear to validate:

In the second year of a two-year study conducted by Development II, Inc. of Woodbury, CT, researchers found a noticeable increase in the top-box overall satisfaction scores from those customers who took the survey again in the second year when compared with new customers. For repeat customers who received a follow-up call after the first year’s survey, satisfaction levels in their second year increased to 24%. Respondents who believed the company is taking substantive action based upon their feedback, total satisfaction increased to 41%.

And there is the 2002 Study by Dholakia & Morwitz - Published in the Harvard Business Review titled:   "How Surveys Influence Customers"

The research shows that simply asking customers their opinion can increase their profitability over the long term.

The full article is available at:
www.neokoncept.com/onlineSurvey/pdf/How_Surveys_Influence_Customers.pdf

Some excerpts from the article:

• Marketers have long appreciated that surveys engage people; a single yes-or-no question on a direct-mail envelope can induce them to look inside. But can a company survey influence customers’ loyalty or buying habits? Research over the past two decades has shown that it can, but the studies have been narrow–looking at how surveys affect attitudes in the short term or influence one-time behavior, like a single purchase.  We set out to study the scope of this survey effect, and we were astonished by what we found.
• A year after the survey was conducted, the customers we surveyed were more than three times as likely to have opened new accounts, were less than half as likely to have defected, and were more profitable than the customers who hadn’t been surveyed. These differences reached their maximum levels several months after the survey was done and persisted throughout the year. Even at the end of the year, surveyed customers continued to open new accounts at a faster rate and defect at a slower rate than the people in the control group.
• Several theories of consumer psychology might apply. The simplest is that satisfaction surveys appeal to customers’ desire to be coddled, reinforcing positive feelings they may already have about the surveying organization and making them more likely to buy its products. Surveys may also increase people’s awareness of a company’s products and thereby encourage future purchases.  More subtle is the idea that the very process of asking people their opinions can induce them to form judgments that otherwise wouldn’t occur to them–that they really do like a company’s estate-planning services, for example.  These so-called measurementinduced judgments, the theory holds, can influence later behavior.
• Our findings may dismay marketing researchers, who strive to gather information untainted by their survey instruments.  But they raise the compelling possibility for marketers that conducting surveys, especially when customers are satisfied with the organization, can also enhance loyalty and profitability.

5 Reasons "Closing the Loop" on Customer Feedback is Hard to do

In practice, it turns out that "closing the loop" with customers who provide feedback is often a challenge.


In this post, we hope to provide some insights on why.

Some data from our recent survey:
87% of respondents chose "customer loyalty /satisfaction" as the #1 (75%) or #2 (12%) priority for their customer feedback.

• 74% say "closing the loop" is "Critical" or "Important" for their business' success.
• 54% rank "prioritizing customer feedback for follow-up action" as their Top or 2nd biggest challenge with respect to "closing the loop" with customers.
• 44% rank "determining the appropriate type of follow-up to provide" as their Top or 2nd biggest challenge with respect to "closing the loop" with customers.

Clearly, survey respondents believe their customer relationships are key to being successful. Yet, they often report struggling with using customer feedback to generate relationship improving actions. We think there are several reasons for this, some which are institutional and some more practical. Our thoughts follow.
5 Reasons "Closing the Customer Feedback Loop" is a challenge.
Five contributors to customer feedback not being employed optimally for improving customer relationships.

• Corporate hierarchies. Known as inhibitors of information exchange. Information flows up the hierarchy from analyst to manager to executives. When it flows back down the hierarchy, it's usually in summary form and attached to some new Standard Operating Procedure. Hierarchies tend to remove the individual, actionable, components of customer feedback. And they also add a timing element the process that inhibits relationship improving action taking. It takes time for information to flow up and down the hierarchy, which often delays or makes irrelevant subsequent actions.
• No centralized "Ownership" for customers. Enterprises often organize around functions like accounting, marketing or operations. Customer feedback collected by these business functions tends to be "silo-serving" and not necessarily about the broader enterprise need to holistically understand the customer relationship. Information collected within silos often stays there, or is presented in such a way as to make it difficult to interpret and act on outside the silo.
• Out of context data. For example, many enterprises - and especially those with automated CRM platforms - collect much of their customer feedback based on transactional surveys. To conserve resources they try to measure customer relationship quality using the same survey and process. Data collected in this way is often biased by the transaction. Even worse, "ownership" for action is often unclear when the feedback is not about a transaction. Out of context data is also a characteristic of silo based customer feedback.
• Customer survey processes and platforms that are not designed for "loop closing". Many organizations use web-based survey tools that are not designed to enable "loop closing" and when deployed make it needlessly challenging. These tools often lack embedded analytics, mechanisms to identify customers, necessary workflow automation, etc.
• Management practices. Perhaps the biggest challenge of all. Most organizations don't currently align management incentives with customer relationship quality. Therefore customer relationship is always subordinate to other operational metrics, as well as typically being "someone else's" problem.

What you can do to implement "Closed Loop" Customer Feedback processes:
Some of our thoughts....

1. Be sure to look at customer relationship in a broad context.
2. Establish executive ownership for the customer relationship.
3. Choose a customer relationship metric like: Loyalty, Satisfaction, etc.
4. When designing your customer surveys, plan for "loop closing" based on combinations of response and customer profile attributes.
5. When planning for loop closing activities - determine internal ownership for the various types of loop closing activities that you will undertake.
6. Use a survey platform that enables and facilitates the necessary analytics and workflow your loop closing activities will require.

Many firms need help establishing a "Closed Loop" Customer Feedback process. It's what we do at QuestBack, so if you'd like help please call us.

"Closing-the-loop": Critical for Success, but hard to do

Closing-the-loop on customer feedback is considered "Critical for Success" by many people in customer facing roles. Yet, in practice it seems to be difficult to do effectively and consistently.

A couple of statistics from our recent survey:

• 87% of our respondents chose a relationship metric - "customer loyalty/satisfaction" as the #1 (75%) or #2 (12%) priority for their customer feedback.
• 74% say "closing the loop" is "Critical" or "Important" for their business' success
• 16% say they "always" close-the-loop on relationship feedback

Organizations seem to be particularly challenged with "closing-the-loop" effectively on relationship feedback. We think process issues are inhibiting effective follow-up on feedback and we infer from the data that two process issues are contributing factors:

- Connecting customer feedback with other customer data: i.e. Profile data, Customer value information and "Responsible internal actor" information.
- Determining an action to be taken on customer feedback, then routing the feedback data to the "Responsible internal actor" for action.

When we examined these issues some thoughts occurred to us about why they might occur:

• Many businesses collect customer feedback centrally via one or two internal departments, very often product marketing or customer support. But, "loop-closing" activities must be performed by other departments (Sales, Marketing, Shipping, Accounting, Etc.).
• Often, data collected is not designed to facilitate a "closed loop" process (i.e. market research), may have a very specific type of "loop-closing" process attached (closing a support case, for instance) or requires a decision from another department prior to loop-closing actions taking place.
• Relationship feedback in particular seems to suffer from these challenges, as its a simple matter to insert a satisfaction or loyalty question into a multitude of surveys. But, based on the feedback provided, complex to "close-the-loop".

In our opinion, solving these "Loop Closing" issues begins with a better planning process. When feedback is solicited a process with ownership for follow-up should be defined for each key piece of feedback collected. And, mechanisms should be employed that facilitate getting feedback data to the correct internal actors in a timely fashion. This is especially important in the case of relationship feedback, where "Closing-the-loop" is often not only respectful, but is a known driver of higher customer loyalty.

Experience: Closed Loop Customer Feedback Processes

We recently surveyed a group of mainly customer facing business people regarding their practices and processes for "closing-the-loop" with their customers who provide them with feedback. We asked respondents to categorize their experience on three dimensions of customer feedback - Transactional, Relationship and Product/Service. Some interesting data came back from the survey.

• 75% report customer relationship quality (loyalty/satisfaction) as their main feedback objective.


• 74% view “closing-the-loop” with customers as “Important” or “Critical for Success” to their businesses.


• Three main challenges surfaced to “closing-the-loop” with customers providing feedback:
  - Prioritizing customer feedback for follow-up action
  - Determining the appropriate type of follow-up to provide
  - Following up with customers in a timely fashion


• ~25% indicated they had well automated processes for “closing-the-loop” with customers providing feedback.


• 19% of respondents “Always” close-the loop” on Transactional customer feedback
  - 16% and 13% respectively report they “Always” close-the-loop on Relationship and Product / Service customer feedback
  
• In all cases, survey respondents reported more effective practices and processes for "loop closing" with customers when transactional feedback was referenced.

A couple of thoughts:

In interpreting the data, there appears to be a gap in customer feedback processes that inhibits effective “Loop Closing” activity. While most respondents realize the importance of, and measure for, customer relationship quality, they don’t regularly take the loyalty/satisfaction building step of “closing-the-loop”.

Three main challenges were identified to closing-the-loop activity. All three suggest process issues in dealing with customer feedback after it is received, especially when the feedback isn't transactional in nature. Significantly, over 20% of respondents report their main challenge as just identifying whom to follow up with. We think that these challenges speak to an inability to truly identify who feedback providers really are, as that information would make determining follow activity much simpler.

The survey shows that over 50% of all customer feedback is collected via internet based technologies (web forms, web survey, e-mail surveys) across all three dimensions measured. So, identity shouldn't (and the survey shows it isn't) be a primary challenge. However, it appears as though two issues exist:

1) Connecting customer respondent identity to other information about that customer that helps to determine how to best "close-the-loop".

2) And, once connected, getting the feedback information to the right person so prompt closing the loop action can take place.

Since a majority of respondents report they either "struggle with analyzing customer feedback for action" or use manual feedback analysis methods (spreadsheets), it would appear that for most organizations, better "loop closing" processes will need to start with combining feedback and feedback analysis into a more automated process.

The summary read out from our survey can be viewed at the link below.

https://webreports.questback.com/isawebrep/webreporter.aspx?auth=E0AD8A0B7A0D30BFE7929E04571BDEB20372E901&rid=1991386