How to collect and use customer feedback to improve your business

Customer feedback is more important than ever to businesses. Understanding customer needs, preferences, and satisfaction level is a top priority for businesses focused on success and growth, with one study noting that demand for customer feedback and intelligence will increase by 96% in 2020.

One reason for this is financial—a positive experience is so important to customers that 86% of them say they will pay more for a better customer experience.

What customer feedback should you gather, how can you do that, and what should you do with it? Here's what many small businesses are doing now.

Qualitative vs. quantitative customer feedback

Feedback is usually quantitative or qualitative. For example, quantitative feedback tells you how many of your customers are dissatisfied, while qualitative feedback tells you why they feel the way they do. Your first step is deciding what you want to learn and why. That will determine the right method. Common feedback options include:

• Customer experience. Business owners aren't always objective about the organization's products or processes. Asking customers about whether the purchasing process was easy or difficult or what they would change or improve can offer valuable insights.
• Product features. The makers of Mocha Nola coffee granola solicit input on product specifics regularly for information they use to fine-tune offerings. "We want feedback on taste preferences on different flavors, price points, packaging, how customers are using our granola, and how it compares to other products on the market," says Megan Michele, who co-owns the company with her husband.
• Satisfaction level. A quantitative approach to satisfaction allows for tracking improvement or decline over time. "This gives you numbers around how satisfied people are overall, whether they would recommend you, whether they would buy from you again, and satisfaction with different aspects of the process such as ordering, delivery time, product quality, and customer service," says Elliot Simmonds of DJS Research Ltd.
• Customer reviews. Both positive and negative feedback on review sites provide insights you can use to make changes or get testimonials for marketing campaigns.

How to gather customer feedback

The method you'll use to solicit customer feedback often depends not only on what type of information you need but the nature of the business and customer relationship. Some options include:

• Text/SMS. Text messaging has the highest response rate at around 40%.
• Surveys. This method can be qualitative or quantitative, depending on the questions asked. GetVoIP uses surveys "to determine what the customer thinks we are failing at and ask for opinions on how we can do it better, to identify the areas we are excelling at and can replicate, and to get new ideas that will improve our customer experience," says Reuben Yonatan, GetVoIP's founder and CEO.
• Direct communication. "If you truly want to understand how best to improve your business by taking feedback from your customers, talk to them to understand what you need to improve," says George Hammerton of Hammerton Barbados, a vacation planning company.
• Reviews. "Anytime we help a customer select and set up a VoIP solution, we kindly ask for a review of their experience," says Yonatan.
• Social listening. What are customers saying about your product or service on social media? Unsolicited feedback is often the most honest.

How to use customer feedback

Look for trends in the data to do more of what works, less of what doesn't, and find ways to improve continually.

When Mocha Nola uncovered customer confusion about the brand during supermarket product sampling, the company took decisive action with a re-branding from the original name, Cacao Vita.

"The confusion came from many other products having similar names. In addition, people couldn't pronounce the word 'cacao,' " says Michele. The confusion extended to store employees, too. "When we would ask for our product, many workers couldn't tell us where it was, or got confused with the other brands," she adds.

Still, debating whether you should ask for customer feedback?

"Even if you don't listen to customer feedback, you can bet that Facebook, Google, and Yelp will. If you don't address customer feedback, these ratings will impact your business," says Shayne Sherman of technology blog TechLoris.