Last year was a hard one for me!
To reset and recharge, I booked a 2-week retreat in a remote part of Peru.
To get there, I had to take a flight to San Salvador, stay there overnight, board onto another flight, take a boat trip, and then walk for 3 hours into the jungle.
As usual, I am most productive on the road, and this was a long one!
So here I am, getting ready for my trip, when I realized that the popular (paid!) note-taking app full of my notes only works when I’m online! Imagine the stress!
This meant that for the majority of the next 36h I won’t have access to my notes.
Frustrated and angry, I posted my feedback on Twitter for the app for everyone to see in the hopes that the company hears my feedback!
No response came back, and most likely no action taken…
Why companies don’t invest into feedback analysis
I’m always surprised by the excuses I hear for not having a proper customer feedback strategy in place.
True, there is simply more feedback available than ever before. These days, it’s easier than ever for us to give feedback, and despite the survey fatigue, we often do.
Feedback now comes in through multiple channels, product analytics platforms collect volumes of implicit feedback, and third-party platforms collect and display reviews and discussions for all to see.
It’s also true that yesterday’s tools haven’t kept up.
Voice of customer platforms collect solicited feedback only, and store it siloed away from public feedback and all other customer data.
Legacy text analytics solutions try to squeeze feedback into industry taxonomies. Most commonly, they deliver expensive insights that are too high-level to be actionable.
In-house analytics resources can be slow and cumbersome to work with, and many companies don’t have them.
Understanding and responding to the growing volume and complexity of customer feedback is a real challenge. We frequently hear people say that they have given up altogether.
The main reason? Cost.
Companies often balk at the time and resources required to truly understand customer feedback, and many times they simply give up trying. Others resign to making gut-level decisions based on keyword searches in spreadsheets.
There is some truth to this perspective. However, the cost-benefit ratio of understanding customer feedback changes significantly when you ask one important question:
“What is the cost of not understanding customer feedback?”
Six areas of risk when feedback is ignored
We’ve identified six areas where a poor understanding of customer feedback can negatively impact companies.
Many of these can be easily calculated, and including just one of these areas in your decision making process can highlight the true cost of not understanding customer feedback:
1. Increasing churn costs
First off, churn costs include both lost revenue AND lost acquisition costs.
Studies abound on how much more it costs to acquire a new customer than to retain an existing one. Gartner reported that for every 1 customer that complains, 26 churn for the same reason without giving any feedback.
This means that at least 26 people had issues with using that note taking app on flights.
That’s easily thousands of dollars in churn costs!
Each time customers provide improvement feedback, they are giving valuable insights into how to reduce churn.
Simply calculating the lost acquisition costs and revenue associated with company’s churn rate highlights the value of needing to understand the reasons behind that churn.
2. Building and investing in the wrong things
When Mind the Product asked product managers “What’s your #1 single biggest product management challenge right now?”, 49% of product managers responded “setting roadmap priorities without real market feedback.”
For enterprise software PMs, this figure jumps up to 62%.
Understanding existing customer feedback has the potential to reduce wasted development and investments that are spent on the wrong things.
3. Limited visibility into what’s working
Do you have a continuous pulse on customer feedback? Without it, it’s difficult to understand how new product features and investments are performing or show what kind of impact they are having.
New features that appear to be working on the back-end often have shortcomings from the perspective of the customer that aren’t captured by product analytics.
For example, analytics can easily capture login errors, but they cannot capture issues with navigating the product.
Meanwhile product ratings, CSAT and NPS scores have multiple drivers, making it impossible to understand the impact of new features on an overall score.
One of our customers was able to solve this problem by using Thematic to uncover the impact of a screen resolution problem on user ratings in the weeks that followed a new release.
Everything looked fine on the back end, but users with certain devices were complaining about the font and color, as well as difficulty using the new interface.
Once the issue was fixed, Thematic was able to quantify a reduction in contact center volume tied to this specific issue.
4. Increasing survey fatigue
Addressing survey fatigue has become an in-house discipline in many organizations.
While adjusting variables like frequency, incentives, and survey length can be helpful, many of these same companies miss out on the biggest opportunity to improve survey response rates: listening and responding.
Customers aren’t stupid. When their feedback isn’t acknowledged or addressed, they understand that it isn’t being acted upon.
By investing in the capacity to understand and respond to customer feedback with tickets and follow-up communication, you can ensure that your customers feel valued and appreciated for sharing their perspective.
5. Disadvantaged competitive positioning
Thanks to the increase in third-party review sites and social media, you can now see what your competitors customers are talking about!
And guess what – your competitors can do the same to you!
After speaking with several product managers we learned that many (though not all) do this on a regular basis.
If you are not analyzing your competitors’ public reviews, you are missing out on some of the lowest hanging fruit for improved competitive positioning.
For example, the image below shows app store ratings given in April and May of 2019 for a popular banking app (Simple) and an analysis of the comments that accompanied them.
While the overall rating stayed the same, an analysis of the comments highlights specific and actionable issues that prevented it from rising.
With a tool like Thematic, it’s easy to identify these kinds of signals and incorporate them into a competitive roadmap.
6. Hits to your reputation
Guess who else is reading your public customer feedback: your potential customers!
88% of customers rely on online reviews when making purchase decisions.
Nearly every category, from online food delivery to enterprise software now has third-party review sites.
Understanding what is driving these ratings is key to making sure they stay competitive.
So, how does your current feedback strategy stack up?
Regardless of whether each of these risk areas are applicable to your organization, the simple act of asking what costs are associated with not understanding your feedback can change perspectives and outcomes.
What does not understanding customer feedback cost your organization?