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Session 3: Customer feedback

OBJECTIVE: Your ongoing pursuit of feedback from customers, employees and vendors will be a valuable tool to monitor tastes, problems, trends and potential threats. In this session, we'll learn all about customer feedback.

Customer Feedback

The purposes of feedback

Dr. Dan Nathanson Anderson Graduate School of Business UCLA Dr. Dan Nathanson
Anderson Graduate School of Business UCLA
Play Video
What is the most important advice you give to your business school students?
 
Improve your products and services
Feedback occurs when information about a product or service can be used to influence similar occurrences in the future. It is information about a bad meal that will be the basis of the next meal not repeating what ever made it bad. Every time you make a sale, you have an opportunity to learn something either positive or negative from your customer. In fact, your overall reputation is the total summation of feedback. In many cases, especially online businesses such as eBay, feedback has become an essential part of what has made them successful.

So feedback should be included as an important tool to improve performance as you grow. It will serve as a motivation for your employees. It can be an important tool in decision-making. Customer feedback can correct deficiencies and lead you to new products and services. Your decisions can be based on the marketplace and not on gut feelings, intuition or even pure judgment. New business opportunities will still need to be carefully screened. Here are three things to watch out for, from our Starting My Own Business course.

Some feedback is hard to come by. And each business has its own "best practices." For example, in the restaurant business the rule is "You're only as good as the last meal you served." But how is the restaurateur to know? The guest won't say because it would be an unpleasant experience. They just don't come back. And soon their friends don't come back. Word-of-mouth becomes a downward spiral and the owner doesn't have a clue why. The answer is feedback One method would be to watch the plats as they are returned to the kitchen. Or perhaps providing postage paid cards offering free desert for an honest appraisal.

So the best way to get feedback is to ask for it. Here are some suggestions:

  • Make it easy and convenient for the customer to respond.
  • Customers prefer feedback directed to some one, not an institution.
  • Ask for suggestions not applause. Let the first question be: "How could we do better?"
  • Respond promptly and gratefully

William N. Topaz Former President and CEO myownbusiness.org William N. Topaz
Former President and CEO myownbusiness.org
Play Video
How important are communications with employees?
Helps grow your business
Typically, feedback consists of a positive, negative, or neutral rating along with a short comment. Your customers provide you with valuable insights on coming demands, styles or preferences. Or they may have suggestions on what additional products they would like you to be carrying. For example, at a time before Jelly Bellys© became famous, a little girl once asked gift shop operator Daina Johnson why she didn't sell them. Daina picked up on this feedback and became one of the very the first Jelly Belly retailers. For years Jelly Bellys brought throngs of customers into the shop.

Suggest improvements to your present products
Your customers' feedback could be the basis for making improvements or modifications to what you are now selling. Sometimes a firm is so confident of its product it does not ask for suggestions. For twenty years the owner of Lexus LS sedans has been waiting to suggest that the turn-signal clicker should have a volume control to adjust the sound level...but he has never been asked. Are your customers also waiting to be asked?

Avoid obsolescence

"I skate to where the puck is going to be, not where it has been." - Wayne Gretzky

It took 100 years for the steam locomotive to be replaced by diesels. But today, landline phones, TV rental stores, bookstores, and many mom-and-pop retail store are becoming obsolete in just a few years. Feedback will help keep you posted on "where the puck is going."

  • Your customers can keep you abreast of changes and trends. Your goal will be to stay in the "transportation" business and not the "steam locomotive" business.
  • Don't fall in love with a certain way of doing things. Solicit feedback from major leaders in your industry. When you have publicly owned competitors, read their annual 10K report and annual reports to get feedback on where they're heading.
  • In some cases a shift in your customer's preferences cannot be overcome so easily. The future for most retail booksellers is obvious: wooden bookshelves are being dismantled and ending up in landfills. The fast-evolving e-book business is causing Retailer Borders Group Inc. to seek survival by launching an e-bookstore using titles provided by an affiliated e-book retailer. The fast-evolving e-book business resulted in retailer Borders Group Inc. seeking bankruptcy protection.

Deter dishonesty and inappropriate behavior
Feedback can be used in programs to avoid "shrinkage" due to dishonesty. Operators of small retail stores run by a single clerk sometimes have the problem of not knowing whether the clerk will ring up a sale (thereby generating a receipt) or pocket the money. So the customers participate in a feedback system that consists of a sign at the register stating "Your purchase is free with a red star on your receipt." (Cash register tapes are available with intermittent red stars.)

Your best internal feedback will come from outstanding employees. So selecting the best people to begin with becomes critical. Here is a review of how to attract and screen the very best: from our Starting My Own Business session on managing employees.

The sign on the back of a delivery truck that states "How am I Driving?" together with a telephone number gives the driving public the opportunity of providing feedback on dangerous driving practices that could be costly to the employer.

The tools of feedback

Maureen Costello Maureen Costello
Wholesale Distributor
Play Video
What mistakes are made by independant retailers?
Feedback tools - Here are some methods of gaining feedback
  • Ask your customer. Ask them what they like, don't like and would like to see.
  • Take surveys. There is a large field of evaluation specialty firms. Go to "evaluations" on search engines.
  • Secret shoppers can be used for overall evaluations including product, store cleanliness, honesty, employee attitude, etc.
  • Ask your operating managers. Stuart Frankel, a Subway franchisee in Miami came up with an idea that raised sales by double digits...a good idea that was not generated at headquarters.
  • Use of feedback forms including business reply comment cards or suggestion box.

Incentives
In some instances, hard to gain feedback of special importance can be gained by offering something of value including money. It is usually better to offer a high value incentive to a percentage of the total recipients than to spread out the reward evenly. For example, offering one in ten people who complete the survey with a $100 gift certificate works better than offering each participant $10.

What do your smart competitors do?
As in many instances when competing with a large successful competitor, it's a good idea to follow the practices they have already figured out by trial and error. A good place to start with feedback is to use the methods they are using rather than inventing the wheel yourself.

Online feedback

Feedback on the Internet can be damaging
In some businesses, important feedback is taken out of your hands. In the restaurant business it could be the online restaurant rating site Zagat. Hotels are evaluated by Expedia and other sites. If you're adversely impacted, such sites at least let you know where you stand with your customers.

Use the available online tools
You can be sure that your large competitors are providing easy access to online feedback. For example, both Apple and Cisco provide links that are seeking out both problems and new ideas. Apple includes a "feedback type" box where you enter the type of feedback you will be providing.

The Internet has transformed feedback to a treasure trove of information anytime a customer buys (or decides not to buy) from your online business. There is an array of feedback tools on the market. Each time a customer buys they will share the experience.

You can engage more deeply with your customers and even bring a human element to your website. You can find out what your users think about your site with branded, intuitive and unobtrusive feedback. Online tools can help you:

  • Solicit, manage and reply to feedback, all in one central place
  • Protect and nurture your online reputation
  • Leverage the power of Facebook and Twitter
  • Get your feedback page ranked by search engines
  • Reduce shopping cart abandonment and increase sales by asking for feedback at pain points and critical junctions

Every time you make an online sale you have an opportunity to learn something either positive or negative from your customer. In fact your overall online reputation is the total summation of feedback. In many cases such as eBay, feedback has become an essential part of what has made them successful.

EBay members develop a feedback profile (or reputation) based on the comments and ratings left by other members. Usually feedback will consist of a positive, negative, or neutral rating, along with a short comment.

Employee feedback

Employee feedback can be achieved either by giving constructive feedback to the employee or by giving an employee praise and criticism. The problem with praise and criticism is it relies on personal opinions regarding performance. On the other hand, constructive feedback deals specifically with information and issues. Here are some pointers about giving constructive feed back to your employees:

  • Focus in a straightforward way on specific issues.
  • Avoid a message that there is a problem but not be specific.
  • When praise is appropriate, refer it to the specific accomplishments that have been achieved.
  • If the feedback to an employee is negative, the idea is to create awareness in a helpful way, dealing with the specific issue.
  • Employee feedback, either positive or negative, should be communicated promptly. The quality of the results diminish quickly with lapse of time.

Employee feedback should be conducted on a regularly scheduled performance review basis, usually not less frequently than every three months. These reviews will also be useful in decisions on salary, promotion and the overall valuation of the employee in achieving company goals.

If you have employment contracts with any managers, the performance review process should be spelled out. The goals of a performance review should include furnishing the employee feedback on performance and the review of any training needs.

Create a permanent feedback team

Gwyn Myers Gwyn Myers, Ph. D.
Management Consultant
Play Video
What should you do when a business is in crisis?
Allocate resources
Your feedback program should be an ongoing part of your business to monitor tastes, problems, trends and potential threats of new competition.
  • Determine what feedback systems work best for your operation
  • Assign a management committee to oversee feedback as an ongoing function
  • Solicit feedback from all company employees as well as from customers
  • Give the committee the budget and authority to implement programs
  • Have the committee report to the CEO
  • Notify customers and employees who submit feedback about the actions taken
  • Report on the outcomes of feedback including product or service improvements
  • Reward company employees for the successful feedback

Top Ten Do's and Don'ts

THE TOP TEN DO'S
  1. Create programs for customer feedback.
  2. Ask your vendors for industry trends.
  3. Reward employees for suggestions.
  4. Welcome and acknowledge negative feedback.
  5. Use feedback to evaluate new products.
  6. Seek out and find needs for the future.
  7. Build in feedback features on your website.
  8. Provide customer incentives for feedback.
  9. Create a permanent feedback team.
  10. Modify your business plan based on feedback.
THE TOP TEN DON'TS
  1. Maintain closed mindset for making improvements.
  2. Recommend "My Way" as company theme song.
  3. Forget to monitor online feedback websites for your industry.
  4. Kill the messengers of bad news.
  5. Assume your reputation is flawless.
  6. Assume your customers are always satisfied.
  7. Think you can't learn from your competitor's mistakes.
  8. Depend entirely on feedback to improve operations.
  9. Ignore the importance of giving incentives.
  10. Disregard the importance of learning from your competitors' mistakes.

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