Top 7 Reasons Why Customer Feedback Is Important To Your Business

Rapidr

Last updated on 15 Feb 2024 • 10 min read

The lifeblood of your business is not the products or services you sell – it’s your customers. A business that meets customers' requirements generates loyal and happy customers. But how do you know which aspects of your product make them happy?

Collecting customer feedback is a definite way to identify customer satisfaction with your business. It is one of the most valuable tools for acquiring new customers and retaining existing ones.

An HBR study found that the more customer feedback a company receives, the better it can understand what customers want. Customer feedback is essential to running a successful business and making informed product decisions.

What is customer feedback?

Customer feedback is information, insights, and opinions your customers have about your products or services. It is a powerful tool for business owners to know whether their customers are happy or unhappy with their products to enhance customer experience.

This could be positive or negative customer feedback, online reviews, or general comments about their interaction with your company. User feedback comes in many forms, including support tickets, customer comments, reviews, testimonials, and surveys.

How do you collect customer feedback?

There are several ways to gather customer feedback. You can send surveys, emails, and feedback forms, embed a feedback widget on your website, conduct phone interviews, gather social media comments, or use customer service and support interaction data.

While there are numerous ways to collect customer feedback, collecting customer feedback is not always easy. Why? Customers are often busy and may not have time to complete a survey or participate in an interview. Furthermore, customers who have had a negative experience may be unwilling to provide feedback.

But don't shy away. One of the best ways to understand what your customers want is by asking them. You can ask them in person, through surveys, or customer feedback portals. They can tell you what they like and dislike about your product or service.

The most common ways to collect different types of user feedback are:

Customer Feedback Surveys
User Interviews
In-app Feedback
Website Feedback
Feedback Widgets
User Feedback Tools
Usability Testings
Focus groups

Why is customer feedback important?

In this article, we’ll list the seven reasons why customer feedback is important for your business and how it can help you improve your product and grow your business over time.

1. Listening to the voice of the customers helps measure customer satisfaction

One of the best ways to identify what customers want is by listening to them. Customers want to be heard and their problems solved. Successful businesses listen to what their customers say and implement their suggestions to improve customer success, operations, and products.

By collecting customer feedback, you can gauge what your users like and dislike and their positive and negative experiences with the product. It will help you develop strategies to meet or exceed your customers' needs and manage customer lifecycle.

Customer requirements are the features of your product or service that your customers believe are necessary. These are what motivates them to buy your product. These include price, quality, convenience, functionality, reliability, transparency, and more.

Meeting these customers’ requirements and showing that you value the customer's voice increases customer satisfaction and loyalty and supports product-led growth. Happy customers spread the word about your product increasing your overall customer base.

According to CX statistics, 86% of consumers are willing to pay more for a better customer experience.

2. It helps identify flaws to improve your products and services

Receiving feedback directly from your customers can help you tweak and tailor your product to be more appealing to your ideal customers, buyer personas, and target market.

Acting on the insights gained from customer feedback and showcasing real progress with a product roadmap will make your customers feel valued and heard and create a healthy relationship with them.

Gathering customer feedback, acting on it, and conveying the updates back to them helps close the customer feedback loop, allowing for continuous product improvement and keeping customers engaged in product development. Closing the feedback loop is a true mark of a customer-centric company.

3. Satisfied customers provide good reviews and support brand advocacy

Satisfied customers tell three friends, unhappy customers tell 10. If your existing customers are happy with your business, they are more likely to recommend your products or services to others, a.k.a brand advocacy.

Brand advocacy is a simple way to grow your business organically through word of mouth.

Collecting and prioritizing user feedback will teach you how to make your customers happy. Word of mouth, a perfect customer acquisition channel for any business, results in positive customer feedback, positive reviews, and more of your customers recommending your product to others.

Only 1 in 26 customers will tell a business about their negative experience; according to customer service facts, the rest simply leave- Esteban Kolsky

Scary, right? Dissatisfied customers are likelier to leave a bad review and tell people about their experience with your company. This can cause damage to your brand image and force you to spend money on advertising to regain your customers’ trust.

Prioritizing customer feedback brings in referrals and free advertising with it. But it is time-consuming and expensive to do them all. With minimum effort, you can use customer feedback tools to collect customer insights and ideas at scale.

4. Customer feedback enhances customer loyalty

Allowing customers to provide feedback shows them that you care and makes them feel a part of the product development process. Customer feedback helps you identify areas of improvement that may be the cause of customer churn.

Identifying and removing such bugs and pitfalls might be your ticket to earning loyal customers. Such an attitude toward identifying your mistakes will portray your brand and reliability, allowing customers to stay with you through thick and thin.

90% of customers read online reviews before visiting a website and 88% of customers trust these opinions almost as if they were personal recommendations.- Invesp

Brand loyalty, in turn, supports positive customer feedback, acquires new customers, and enhances customer relationships. Personal recommendations are always more effective than online reviews.

5. Gathering customer feedback reduces churn and improves customer retention

A bad experience can cost you a customer who never returns.

According to PwC, 59% of customers will leave a company after a series of negative experiences, and 17% will leave after a single negative customer experience.

However, resolving problems generating such negative feedback and experiences would help you salvage the relationship and ensure that all future customers have the best possible experience.

Therefore, dissatisfied customers' negative feedback should be viewed as an opportunity to identify and correct product flaws, retain existing customers and attract new ones.

6. Customer feedback helps make informed business decisions

Feedback is an essential component of making sound business decisions. You may be unsure about certain strategic decisions, products, and services and how to present these to your customers.

Actively asking for feedback from customers and teammates using customer feedback tools will provide you with valuable insights to work with. This, in turn, will help you make the best business decisions to improve customer service and, ultimately, the customer experience.

Customers’ desires are reflected through the feedback they give. It also allows you to segment your satisfied and invested customers from not-so-happy to churning customers. These also help your sales and marketing teams to identify leads and the right groups of customers to put their effort in.

7. Listening to customers helps improve customer experience and customer service

“We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.” –Jeff Bezos

Customers want the product to solve their problems and the company to care for them, so show it to them by giving them the best possible customer experience. Seeking customer feedback helps you enhance the customer experience and improve customer service.

You can apply this knowledge to your company to better serve future customers. So, you demonstrate that you value your current customer base and put your customers first by improving your business and tailoring it directly to their needs!

Key customer insights like customer satisfaction score (CSAT) and net promoter score (NPS) help customer support teams improve customer service. You can make it easier to collect valuable feedback by using the right tools and software.

The Benefits of Customer Feedback

Now that we have discussed why customer feedback is important, what are the specific benefits of customer feedback to your business?

1. Improve Your Business

In the age of social media, customer feedback is a crucial part of any business. With the help of customer feedback, you can identify your strengths and weaknesses and work on them. You will also be able to understand what your customers need from you and drive product adoption for your product.

Different types of feedback can help you improve various aspects of your business, from customer service to marketing to product design and development. The endless cycle of the business world is the creative process.

Write down potential changes that could be made to your product or service. Make sure you allow customers to provide feedback through surveys, focus groups, and interviews, and discuss them with internal team members to start implementing them.

2. Increase Revenue(MRR) and Profit

By taking the time to hear the voice of the customer, you are positioning yourself to improve your business and advertise to your target market as well as buyer personas. Bringing in more quality customers and increasing your revenue as well as profits.

It is also important to act on user feedback and prioritize and implement feedback to support your product feature choices.

Businesses can grow revenues between 4% and 8% above their market when prioritizing better customer feedback. -Bain & Company

Taking customer feedback and applying it effectively in your business will reduce churn and boost loyalty, keeping more users and bringing on more customers, ultimately supporting business growth.

3. Target Potential Customers Effectively

With customer feedback, your existing and future customers provide more information about what products, services, or features they want in the ideal product. The more data you have, the more effectively you can market to your target audience.

It takes 12 positive customer experiences to make up for one negative experience. - - Understanding Customers

If, for example, you continue to receive negative feedback about a specific product or service, this may help you focus your business elsewhere and possibly discontinue that service.

Similarly, if you consistently receive positive feedback about a service, you know where your strong points are and can use these as selling points.

4. Provide Insights Into Your Business

Although negative customer feedback is not always pleasant, it can provide you with information about your product that you would not have known otherwise. There could be a fatal bug or a missing workflow that could only be revealed through customer feedback.

Customer feedback also helps understand the type of customers requiring features and products. The feedback clarifies what the customer expects from your product and helps your marketing and sales teams rethink their approach, find leads, and create selling opportunities.

5. Predict Changing Market Trends

Customer feedback is a valuable tool for predicting changing market trends. It helps to understand the customer's needs and preferences and identify new growth opportunities.

Customer feedback can provide information on what customers want, how they behave, and what they expect from products or services. Marketers and product managers can use this information to identify opportunities for growth in their businesses.

Market trends change over time, and by collecting customer feedback, you may spot these trends early enough to adjust your business to catch trends early.

This way, you can position yourself to capture more market share as trends evolve while ensuring your existing product evolves to keep your customers engaged and satisfied. It is easy to fall behind in changing market trends, but you can stay ahead with customer feedback instead of playing catch up.

6. Helps Stay Competitive

One of the biggest mistakes most businesses make is that they don't care much about their customer's feedback. Collecting customer feedback is one way to stay ahead of the competition and ensure that your company offers the best products or services possible.

The market is becoming more competitive, and so are customer expectations. As a result, it is important to keep improving your products and services, start listening to your customers and close the feedback loop.

After more than one bad experience, around 80% of consumers say they would rather do business with a competitor. - Zendesk

When you collect feedback from your customers, you will know how they feel about everything, from their favorite menu items to how frequently they visit. By collecting feedback from previous and potential new customers, you can learn about the types of promotions that work well for your business and which discounts are most appealing.

Conclusion

Customer feedback is a powerful tool for growing your business. It lets you understand your customers' thoughts and feelings about your product or service.

As customer feedback and satisfaction go hand in hand, collecting customer feedback can help improve your business and customer service. However, it's not always easy to collect customer feedback because people are often busy and don’t have time, may not want to, or may not know how.

Luckily, several customer feedback tools make collecting customer feedback easier and more efficient, such as Rapidr. Rapidr’s customer feedback management system allows you to gather prioritized customer feedback, identify and analyze top ideas, manage user expectations with updates, and keep customers engaged by closing the feedback loop.