Importance of Customer Feedback and Strategies For Collecting Them

The state of the industry is changing. There’s a ton that is governing the success of your startup. One thing that is constant amidst all this is reliance on customer feedback. Adapting to changes and keeping up with competition will make much sense when your customers are happy with your product or service.

By actively soliciting and analyzing feedback, companies can drive growth and innovation and enhance customer loyalty by demonstrating that they value client input and are committed to meeting their expectations. 

This guide offers an overview of effective strategies for gathering meaningful feedback, enabling businesses to transform insights into actionable improvements that foster lasting customer relationships.

Key takeaways

• Customer feedback is one of the most important action items for your business
• Brands with better customer experience earn 5.7x more than competitors
• 90% of brands use feedback-related tools for analysis & reports

What is customer feedback?

Customer feedback is the information provided by clients regarding their experience with a product, service, or brand. It plays a crucial role in shaping business strategies and decisions, as it highlights customer needs, preferences, and areas for improvement.

It helps understand customer needs, resolve issues, and deliver better experiences. Effective strategies for collecting and acting on customer feedback can lead to increased customer loyalty and retention.

Companies can their various channels to get their customers to share feedback with you. Feedback in the form of experience, concerns and preferences, provides a window of improvement for your startup.

Why Customer Feedback Is Essential

Customer experience is important for businesses, big and small. So much so that brands with better customer experience have 5.7x more revenue than competitors. On the flip side, 90% of brands that use customer feedback-related data analytics & reports improved their ability to deliver a great customer experience.

• Better Decision-making

By understanding what works well and what doesn't using feedback, businesses can make data-driven adjustments that enhance overall quality.

If you want to grow your business ahead of the competition, use customer insights as the primary source. Unreal-world business relies on real-world experience to improve their product or services.

• Builds Trust and Engagement

Actively addressing customer pain points through feedback fosters a sense of loyalty and fosters trust and engagement. 

When existing customers see their feedback being implemented, it strengthens their relationship with your business. This is similar to what Apple faced when implementing the Type-C charging module in the iPhone 15 series.

Further, you can leverage positive feedback as reviews or testimonials, and display them for social proofing your brand. The point is that you can drive up your business credibility significantly by taking feedback productively from your customers. 

• Drives Innovation & Customer Satisfaction

Feedback is a rich source for identifying new trends and unmet needs in the market. By listening to customers, businesses can innovate and develop new products and services that align with evolving preferences and demands.

A smart business owner focuses on customer feedback that’s parallel with the touchpoints you want your customers to have. For example, as an e-commerce startup, you can ask for feedback from customers right after they complete a purchase. There is a very high chance that they'll share the feedback.

Both positive and negative feedback are essential for continuous service/product improvement. Positive feedback helps identify strengths, reinforcing what works well within a business. Conversely, negative feedback highlights areas needing attention and improvement, guiding changes that can lead to enhanced customer satisfaction and loyalty.

Speaking of brand reputation, the feedback your customers have helps you get more customers at almost zero cost of acquisition. How good is that for a startup, especially if you’ve just started?

Different Types of Customer Feedback

Understanding the various types of customer feedback is crucial for effective data collection and insightful analysis. Here are the main categories:

• Direct Feedback

This type includes actionable insights gathered through various means such as surveys, customer reviews, feedback forms, and support tickets. 

Direct feedback allows businesses to ask specific questions and receive focused answers that can drive improvements and adjustments based on customer experience.

• Indirect Feedback

Indirect feedback consists of insights gleaned from social media mentions, online reviews, and behaviour data. This type captures customer sentiments and opinions expressed online, allowing businesses to understand public perceptions and identify trends without directly soliciting feedback.

• Structured vs. Unstructured Feedback

Structured feedback includes numerical ratings and multiple-choice questions that can be easily quantified and analyzed. In contrast, unstructured feedback involves open-ended responses that provide richer, qualitative data, offering deeper insights into customer sentiments and experiences.

You can also use direct/indirect customer feedback in your marketing channels. You can reach out to customers and collect testimonials from them, which you can then integrate on your website, social media, etc. 

According to a study by BrightLocal, 79% of consumers trust online reviews as much as personal recommendations. This underscores the power of testimonials in building trust. 

There are various tools for collecting customer testimonials, and one of the best ones is Testimonial Donut. Testimonial Donut provides you with a dashboard for not just collecting testimonials but also integrating them into your branding channels by using easy widget URLs and embedded codes. 

The best part is that the Testimonial Donut is free! Moreover, its dashboard is quite smooth, easy to use, and user-friendly. So, do check it out and display shiny video testimonials and Google reviews from your customers on your website and other media channels. 

The best ways to collect customer feedback

Most businesses wouldn’t be open to spending time and money on getting to know what their customers are saying. Knowing customer’s preferences is as important as your business itself. 

It’s not something you should take lightly, see what the former CEO of Zappos has to say.

With that said, here are a few ways you can collect customer feedback to grow.

Surveys

You can implement short, targeted surveys post-purchase, on your website, or via email. Use a mix of question types (e.g., multiple choice, Likert scale) in your Customer Surveys to gather both quantitative and qualitative feedback without overwhelming customers.

Tools for collecting surveys:

• Typeform
• SurveySparrow
• Survey Monkey
• Survicate
• Google forms

Live Chat and Chatbots

Utilize live chat features on your website and chatbots to obtain real-time feedback during customer interactions. These tools enable immediate responses to queries and allow for spontaneous feedback collection.

Chatbot data analytics has advanced now with the help of AI. You can use tools like Calabrio Analytics, Intercom, Hubspot Chatbot, etc. 

Tap into Social Media

Social media is a great way to connect with your customers. You can look at the brand mentions, respond to comments, and promote your brand voice. You can do Sentiment Analysis and use Social Listening Tools like:

• Simply360
• Locobuzz
• BrandMentions
• Symbal AI
• Sprout Social
• Sprinklr, and more.

Depending on the platform your customers spend most of their time, you can use the features to your advantage. Instagram stories, LinkedIn & Twitter polls, or YouTube community posts are a few of several ways you can create engaging channels to collect customer feedback.

Create a community for existing customers: Focus Groups & Interviews

Tracking brand mentions and queries on social media can be hectic and time-consuming. If you can have a community for your customers to engage with & help each other, this will not only create trust among themselves, but it will also act as social proof. 

The feedback, preferences and insights are a bonus that you will get out of it. Focus groups can be another great way to create micro-niche focused groups within the community. You can incentivize participation for more engagement.

Automated Emails

Emails are the closest you can get to your customers. Use emails to collect feedback from customers. Here are some ways you can put automated emails to good use.

1. Post-purchase survey: Send personalized emails based on the purchase made by your customers. Encourage them to share their purchase experience with tailored questions related to the product or service they’ve purchased.
2. Journey-specific feedback emails: If you have tracking systems in place, you can send personalized emails based on the stage your audience is in their journey. Duolingo is a classic example of this. Instead of emails, the multilingual learning app uses push notifications. Another example would be to send a personalized email after a user signs up for your Newsletter. Since they’ve shown intent by signing up, they will likely respond.

You can also use email templates to make this process easier.

You can also send personalized follow-up emails to customers after transactions or interactions, encouraging them to provide direct feedback. Personalization increases engagement and the likelihood of receiving responses.

Check out our article on how to ask your customers for testimonials. The tips in this article will also help, for sure.

• Website Analytics

Analyze customer behaviour using tools like heatmaps and user data. By understanding how customers navigate your site, you can identify pain points and areas for improvement without direct feedback.

Best website analytics tools:

• Google Analytics
• Adobe Analytics
• Mixpanel
• Kissmetrics
• Hotjar
• Datadog
• SentinelOne

How to Develop a Strategy for Collecting Customer Feedback?

If you’ve never done this before or if the one you’re utilizing right now isn’t working, I have 3 strategies for you that could help you develop a customer feedback strategy.

#1 Identify clear objectives 

When you’re taking care of growing your startup using the feedback shared by your users, it’s important to have a predefined objective clear & handy. Do you want to increase engagement, improve product quality or the satisfaction users have while using your product? 

Although each of these will help you grow, the course of action varies. Define KPIs and align the feedback with business goals to get the most out of it.

#2 Choose the right channel

Just like you, your customers are busy. They won’t engage with your survey or any such channels for feedback. There’s nothing in it for them - it’s you who’ll be on the better side of the deal. 

Evaluate the channel your customers prefer, if your customer base is small, ask them directly. If you’re a medium-sized business, you should rely on a multi-channel approach to get people to speak their minds. 

Social media listening, survey emails, and website popups are a few of the most effective ways to get feedback from customers. You can also analyze the demographics and behaviours of your customers to dig into their preferences based on their engagement.

#3 Create surveys with a clear intent

Surveys are the most common, convenient and effective way to get feedback from your customers. Yet, there’s a high chance that you might get it wrong, especially if you’ve never done this before.

Use concise, clear and top-the-point questions that mean something to your business. Questions where they can share their objective behind using your product or service should be prioritized. Avoid vague questions that might result in biased responses. Consider mobile-friendly designs for your survey form. Most users would see your survey on their smartphones.

When preparing questions for the survey, keep in mind to include open-ended questions. This will invite users to share the best feedback without any constraints. You can also implement rating scales for quantitative data and internal training. The next time when you have to evaluate a new set of responses, you’ll have a benchmark to compare it with.

#4 Use the Right Tools & Technology: AI & Analytics

AI-powered surveys can adapt to responses for personalization, while sentiment analysis tools gauge emotions in feedback. Predictive analytics help anticipate customer needs, and chatbots can gather real-time insights during interactions. Data visualization tools make it easier to identify trends, and AI can aggregate feedback from various sources for comprehensive analysis. 

By incorporating these technologies, businesses can streamline their feedback processes, improve data accuracy, and extract actionable insights that drive strategic decisions and enhance customer experiences. Many free tools are available, like Google Forms & Analytics, Slack, Survey Monkey, and more. 

Best practices to get & manage customer feedback

Once you have your customers sharing their preferences and insights with you, & now it’s time to take action. With action, comes questions. To save you some time, we have gathered some best practices to get & manage your customer’s feedback.

#1 Train your customer support team

Train your customer support team in a way that they keep looking for constructive feedback. This way, they not only will handle the queries, but they will also capture feedback that will help grow your business. You can implement redundant tasks to AI-powered chatbots and leave the customer support team for more delicate & specific queries only.

#2 Feedback analysis and sentiment tracking

Use AI tools to train on the feedback data to analyze the emotional context & sentiments of your customers. Use the data to identify trends, positive and negative sentiments and areas of improvement in real time. Use Natural Language Processing (NLP) to categorize comments & feedback.

#3 Monitor feedback closely

Set up SOPs and systems to monitor the feedback shared by your customers. Look for recurring issues mentioned by your customers. The systems in place should enable you to review feedback data and identify the evolving preferences of your customers.

One form of customer feedback is a testimonial, which is usually a statement or endorsement provided by a customer that reflects their positive experience, satisfaction, or opinion about a product, service, or brand. It often highlights specific aspects of the experience that others might find helpful or persuasive when making decisions. Testimonials serve as a way for customers to share their experiences and for businesses to showcase positive feedback to potential customers or clients.

We, at Testimonial Donut, make collecting testimonials from your customers or employees easier for you. We have the entire workflow sorted out with templates, guidance, an interface for testimonial submission, and more. Do consider our services if you're keen on collecting testimonials. 

How to Analyze and Act on Customer Feedback

Effectively analyzing and acting on customer feedback involves several key steps:

• Identifying Trends

Group feedback into actionable categories such as product, service, and customer experience. This organization helps to uncover common themes, issues, and opportunities for improvement that can inform strategic decisions.

• Prioritizing Improvements

Focus on the most impactful feedback to identify quick wins and long-term gains. Evaluate feedback based on factors such as frequency, severity, and potential impact on customer satisfaction to prioritize what needs to be addressed first.

• Closing the Loop

Communicate with customers about how their feedback has led to changes or improvements. This step not only shows appreciation for their input but also reinforces their involvement in the process and builds loyalty.

• Sharing Insights with Teams

Make feedback a company-wide resource by disseminating insights across departments. Regularly share findings and trends in team meetings or through internal communications, fostering a culture of continuous improvement where every team member understands the value of customer feedback.

By implementing these practices, you can transform customer feedback into actionable insights, leading to enhanced products, services, and overall customer satisfaction.

Common Challenges and Solutions in Collecting Feedback

• Low Response Rates

You can employ several strategies to improve participation, such as creating shorter, more engaging surveys that respect customers' time and focus on key areas. 

If you get low participation, you must personalize feedback requests by addressing customers by name and timing the requests appropriately (e.g., immediately after purchase).

• Handling Negative Feedback

Responding to negative feedback with empathy is crucial for setting up a character and a friendly relationship with customers. Acknowledge the customer's concerns and express genuine regret for their experience. 

Use negative feedback as an opportunity for growth by analyzing the underlying issues, making necessary improvements, and communicating these changes back to the customer, demonstrating that their opinions matter.

• Overwhelming Volume of Feedback

The sheer quantity of feedback can be daunting. Implement tools and systems that automate feedback analysis, such as CRM systems that categorize and prioritize feedback for you. 

That can streamline the process and ensure that valuable insights are not missed amidst the data. You can also hire a business analyst or a data analyst to work on that. 

Final Thoughts

Customer feedback makes or breaks a business, which is why many businesses first only launch an MVP (Minimum Viable Product) or a prototype and based on customer feedback, develop their products and services. 

We have seen how significant feedback is for customer satisfaction and how you can use surveys, focus groups, social media data collection tools, chatbot data, and email to gather the right insights and feedback from your customers.

Some of this feedback will be positive, and you want to take advantage of that to build social proof and a solid brand reputation. For that, you can use tools like Testimonial Donut, which lets you integrate positive feedback as testimonials, on your website. 

It lets you easily collect video testimonials and Google reviews from your customers and gives you a dashboard for managing them. So, do try Testimonial Donut.