Close the Customer Feedback Loop
Quality guru Edwards Deming taught us that “94% of problems in business are systems driven and only 6% are people driven.” With the right systems, a company will grow and thrive. And few are more important than the “feedback loop.” Unfortunately, this term has been used so broadly that the original and powerful meaning has become dulled. Let’s look at this concept anew to understand the virtue of the customer feedback loop – and why it’s integral to a growing business.
Back to its engineering roots, “feedback” is a measurement used to make a correction. The thermostat in your house is part of a feedback system. It measures temperature. The system compares the measured temp to the desired. With this information, the system initiates an action. Making the house either warmer or colder. This is a “closed feedback system” because the loop closes. We are surrounded by feedback systems, such as the automotive cruise control. But others are even closer.
Your body could not function without feedback loops
The five senses are feedback. Sight, hearing, touch, taste, and smell. Each takes a measurement and returns a signal to the brain. Would you stop using one of your senses? Which one? Sight? Your sight takes a measurement which your brain processes. Hearing blesses us with the ability to appreciate music, or just communicate with each other. How weird would it be if we lost our sense of touch? If you’ve ever had local anesthesia for surgery, you know how hard it is to function when your limbs have no sensation. Taste helps us to determine whether something is edible, not to mention the pleasure this brings. Perhaps we think we could live without smell. But even this can alert us to dangers such as fire, bacteria, or in the modern world – explosive gases.
Nobody would willingly stop using one of their senses. And yet, if your company is not leading product development with customer feedback, it’s doing exactly that.
Let’s look at some feedback examples in business:
- Sales results
- Stock price movements
- Warranty information
- Customer complaints
- VoC – via New Product Blueprinting
All are measurements. Input to the company’s brain. Some will get the leader’s attention right away such as sales results and stock price movements. But what action can be taken? Why are sales down? Why did the stock price go up (or down)? These lagging metrics leave us wanting. However, with warranty data, we learn about product failures. That’s at least actionable.
Further, when we gather customer needs through a voice-of-the-customer process, such as New Product Blueprinting, we’ve also taken a measurement. Just as a thermostat uses a temperature gap as the input to an action, unmet market gaps likewise become the inputs for innovation.
Feedback Loops are Leadership’s Responsibility
Some leaders will find the esoteric nature of “qualitative interviews” or “quantitative research” to be interesting. Others will find it to be less so. Regardless of the personal interest level, it is leadership’s job, all the way up to the board level, to ensure that proper feedback systems are in place. Otherwise, all the work done under the guise of profitability and growth will be just an exercise in busy-ness. Two handfuls of toil and chasing after the wind.
No Company Fails due to Excessive Spending on Customer Insight
Closing the Loop via Outsourced VoC
Outsourced research provides the most unbiased data. Plus, third-party pros will have skills and experience to ensure the research will be done well. However, you’d best plan to spend lots of time with these vendors, ensuring that they have scoped the project with actionable results in mind. You’ll certainly get some nice reports in the end.
Closing the Loop via In-house VoC
Additionally, it’s critical that a B2B business conducts its own research. A little bit of training goes a long way to enable an open-minded person to become quite effective. By doing the research themselves, B2B marketers and innovators will learn market needs first hand, rather than through the lens of another. Your folks will see patterns of customer challenges that third-parties may not notice. They will have the context to understand competitive moves and technology trends. And perhaps most important of all, by meeting with their customers in person, B2B marketers will build engagement. Growing the relationship and building trust. Making them feel valued. Eventually, when the time does come to launch a new product, they will be primed to purchase from their “partner”.
Is it worth it?
Is this expensive? Perhaps. It’s certainly expensive when compared to doing nothing.
Is this time consuming? Yes.
But no company has ever become bankrupt due to excessive spending to understand customer needs. Meanwhile, the vast majority of new products still fail due to poor market insight. A company leader would be wise to err on spending too much rather than too little.
The ROI is Real and Large
Unfortunately, the difficulty for financially-minded firms is that this ROI is difficult to measure. After all, the competitive world changes. They’re too many variables to run an experiment. But for the analytical person, a quick thought experiment is helpful. First, the primary cause of new product failure, in study after study, is inadequate customer insight: a poor feedback loop. But what about the lost years with an inferior product? The lost upside of a new product category? The foregone benefits from great customer engagement? Making it worse, when we battle with an inferior product, we cope by throwing money at the situation with additional spending on sales training, marketing, or just dropping prices. We have to be smarter than that – seeing the big picture – and taking the long term view. We’d be better served to spend that advertising money on VoC instead, so that in the future world, we actually have a value proposition that won’t require all that expense to be a success.
It’s time to close the loop
You cherish your senses of sight, hearing, etc. because you need them to survive. What if some of your company’s “senses” were dead and this “body” didn’t get the feedback it needed? Without customer insight measurement, your company is navigating the world blind and deaf. A crushing disadvantage to your sensing competition. It’s always time to improve the feedback loop from your customers. Turn up their volume. They are telling anyone who will listen about a problem that will ultimately be solved. But will it be solved by you, or your competitor?