When analyzing customer feedback, three considerations must be top of mind: the value of information declines with time, each individual speaks for many people, and don’t look at your data without seriously considering the best way(s) to first segment the respondents.
Time Value of Information
If someone detects a fire in a building but waits until the next day to call 911, you would think they are idiots, antisocial, or possibly arsonists. After all, we all know that the sooner the Fire Department is reached, the more likely the fire will be controlled with minimum damage or loss of life.
On a more grand scale, think about the Normandy invasion by the Allies on June 6, 1944. The Allies established a phony Army commanded by the real General George Patton near the Southeast corner of England. The purpose of the Army was to convince General Rommel, the German commander of the defense forces, that the Normandy landing was a distraction and that the main dock was at the Pas-de-Calais. It took Rommel until the end of June 7 to figure out that Normandy was the real deal, and by then, it was too late to redeploy his reserve Army effectively. The outcome of the war was just a matter of time.
The same phenomenon happens with customer feedback. If a customer complains about her mobile network and the company waits weeks or months to respond, they are likely to care no longer – they switched carriers. This graph, included by permission of Tibco Spotify, clearly explains the time value of data:
Each Respondent is Speaking For Many Customers
I recently worked with a large medical distribution company and helped analyze their survey data. About 4500 customers, out of nearly 90,000 that interacted with the shipping function, completed our survey. The results were statistically valid with a margin of error of ±1.42% at a 95% confidence level. As I was thinking about the story I got from the data, I realized that each respondent represented 20 customers – 90,000/4500 (themselves and 19 others). So, when 20 people said their last order was missing an item, about 380 other people had exactly the same experience.
While this simple observation seems obvious, the people I generally talk with never internalize that significant numbers of their customers (i.e., real people) have problems; they talk about “invisible” statics. Never lose sight of the fact that customers feel real pain and make accurate decisions that will impact your business for years.
Always Segment Your Data Before Drawing Conclusions
When I first learned about segmenting customers it was always Tier 1, 2, and 3 based on annual purchases. Since I knew about Pareto’s Law and ABC inventory management, this approach made sense to me. Then, when I moved into managing a Customer Service profit center, I started segmenting my customers based on their service needs. For example, 24 x 7 support, 8 to 5 Monday to Friday, self-service, or I’ll call when I need your help. This taught me about designing services for different segments of my customer base and helped me grow revenue and customer satisfaction.
When I talk to B2C clients, we talk about segmenting customers by demographics and value to the business and needs. For example, age, gender, education level, income level, part of the country where they live, and digital comfort level. Leading retailers focus on individuals and create custom offers to address individual needs, which is where the world of Big Data interacts with the business.
Even if you are a small to midsize business, you can break your customer base into manageable, homogeneous groups and create products, services, and loyalty programs just for them. As you also consider overall importance to your business, you should identify the top 1, 10, or 100 customers whose departure would dramatically hurt your business (your key accounts). Then create and implement programs specifically designed to earn their long-term loyalty.
Summary
when looking at customer feedback:
- Remember that each response represents many more than one people
- Consider how quickly you can and should analyze and act on your customer feedback
- Don’t just lump all your data into one bucket, but group people into groups that will allow you to support many people with one action.
About Middlesex Consulting
Middlesex Consulting is an experienced team of professionals with the primary goal of helping capital equipment companies create more value for their clients and stakeholders. Middlesex Consulting continues to provide superior solutions to meet the needs of its clients by focusing on our strengths in Services, Manufacturing, Customer Experience, and Engineering. If you want to learn more about how we can help your organization create or retain more customers, please contact us or check out some of our free articles and white papers here.