The Value of Customer Feedback for Brands: An Interview with Dr Ana Canhoto
Every Thursday, I host a LinkedIn Live, #YOLive, for my connections to gain value. During the lives, I interview guests about a variety of topics. One of the most recent guests was Dr Ana Canhoto. This blog outlines the topics we discussed on the live show, including Dr Ana’s opinion and thoughts on the value of customer feedback for brands.
Meet Dr Ana Canhoto
Dr Ana is a Reader in Marketing at Brunel University London and a Marketing and Corporate Brand Research Group member. Her research focuses on the use of digital technology in interactions between firms and their customers. She holds a PhD from the London School of Economics and an MBA from the London Business School.
Please introduce yourself and tell us about your career to date.
I was a lecturer in marketing at Henley Business School. I have spent several years in media, the entertainment industry, completed my MBA and worked in telecoms.
After a while, I wanted to pursue academia. I wanted to do it for many years but resisted it because I felt I should go down another path.
I am now at Brunel University in London, where I research the role of technology in customer interactions. It involves collecting feedback and customer insight.
How has the research you do changed with what is going on in the world?
I have seen many changes, but there are always changes regarding technology platforms. When Yekemi and I met, it was all about social media, then the Internet of Things and wearables. Now we are looking at artificial intelligence and how that helps us personalise interactions.
Technology has changed. There is more awareness around ethical issues with research and marketing, and COVID has changed everything. For instance, I am doing some work with hospitality companies, and a year and a half ago, it was about customer reviews. Now it is about survival, cutting costs and making customers feel safe.
It has changed dramatically.
What is the difference between customer acquisition vs customer retention?
Customer retention is essential as acquiring customers costs money and time. In most industries, you cannot recover the acquisition costs purely with the first sale. For sustainability and survival long term, you need the customer to come back multiple times. Loyal customers also tend to be cheaper to serve because they ask fewer questions and are less price-sensitive. Of course, customers referrals are more credible than your advertising.
Customer retention is vital in most industries. What is happening with COVID is that customer priorities have changed a lot. Right now, behaviours have changed substantially. Priorities have changed a lot, and this is where feedback comes in. You need to understand customer’s needs, customer perceptions and how they have changed.
In general, retention is crucial!
What is the value of customer feedback, and how can companies go about getting feedback?
Feedback is valuable in three ways. First, we talk about what the customer needs and expectations are to acquire them and retain them. We need these insights so we can deliver a thing for customer satisfaction that will lead to retention. The second one is that you cannot intervene and recover customers unless you know that something is wrong. If you know something is wrong, you can address concerns and recover that customer. You can action something called the recovery paradox. It shows that customers who face service failure and are recovered successfully go onto make more purchases. These customers are 15 times more likely to make recommendations than customers who have never encountered a problem. I must note that it assumes that the customer is successfully recovered and that this only happens the first time.
Feedback is valuable in gathering insight into opportunities for service recovery. The third way it is useful is social proof. Social proof works for public feedback. For instance, feedback is not just a survey. It could be in the form of product reviews, testimonials, or reviews on LinkedIn. Sometimes, firms are wary about comments online. Specific unsupportive comments can negatively impact employee satisfaction. However, these comments create something called social proof and encourage others to buy. It has shown many new products in the early stage of the life cycle that reviews are more important than the product’s success, positive or negative. These reviews not only indicate that others have tried it. But that it’s an established brand and that it gives public awareness.
What are the different ways a brand can get customer feedback?
It depends on a variety of factors; you want feedback that is specific to you. But it depends on three factors. The type of company, the type of customers and what aspect of the experience you are talking about. You want to know what works versus the problems. People feel more comfortable sharing positive feedback versus negative.
How you collect feedback depends on where you have direct contact with customers. The ideal situation is that you have direct contact with customers using your channels. You might have loyalty programmes that give you direct feedback or even sales records and surveys. But do not underestimate the importance of customer-facing elements.
If you do not have direct interaction with your customers, then it is more of a challenge. You will have to rely on third-party data or look to platforms where your customers congregate. Either this or you could try to create these channels.
What are the pitfalls and benefits of these different ways of collecting data?
If you collect data yourself, you can ask questions relevant to you. You can decide who you ask, control the methodology and own the data. The challenge here is having access to the customer, and that customers may not be motivated to talk to you.
The type of customers will also vary. Customers with more education or economic stature feel more confident with expressing their opinion. There is also a social element with confidence. If you see feedback, you may feel more inclined to give a review rather than if there were nothing there. Depending on the level of confidence, they will be willing to give feedback.
Then there is knowledge. The customers more likely to give you feedback is repeat customers. Repeat customers that you know will provide more feedback, whereas new customers will not have this knowledge. At the other end of the spectrum, very loyal customers do not give negative feedback because they empathise with you. If you want feedback from new customers, you need to make more effort for them to become loyal customers.
Some cultures are also very uncomfortable with confrontation and will give feedback to only some and not others. Usually, this does not impact positive feedback, but it affects negative feedback. Overall, it depends on confidence, culture, new, repeat, or loyal customers.
Do we agree there are malicious comments to distract the business?
Yes, there are these cases of whether it is a genuine comment or misleading. You also have the case where you need to understand the circumstances of the customer. Some statements might not be genuine because of factors beyond the product or circumstances of the customer. So yes, there are many factors beyond what you do as a company.
What could individuals be doing to improve their customers’ interactions, manage this feedback to benefit their business and improve the quality of the services they provide?
Customer feedback is crucial. No news is not good news. Feedback is essential as a source of customer insight, as an opportunity for service recovery and social proof. You want to understand your customer expectations and perceptions because what you sell may differ from what people get. Customer perceptions and expectations, yet all changed with COVID: priorities and concerns changed.
Understanding that the customer feedback behaviours change dramatically with the type of customer, company, and experience means you must have many direct and indirect channels. Do not be afraid of social media or social forms because customers will express a specific type of feedback. If the customers are sharing an opinion or voicing frustration, you will need interactive channels to reply. It would help if you had a mix of synchronous channels – some where there is no response and others where customers can respond. Also, please do not underestimate the importance of internal feedback systems, it can be a huge source of insight.
What industries do you work with, and how can someone work with you if they want to get under the hood of their customer feedback?
I tend to work more with service industries than a product—for example, financial services, hospitality, and travel. I also have a blog where I write a lot about this. When I read exciting research, I usually summarise it in my blog and provide links to useful academic papers.
What sort of emerging trends do you see that brands should look out for over the next 12 to 24 months?
Trends will change a lot with industries. There will be more reliance on local businesses because we have seen the risk of being reliant on the global supply chain. There will be more emphasis on local service providers, local products, and local travel due to the restrictions. People want familiar companies, people, and places. I think space and less clutter will be more critical with how you communicate as well.
What we saw with COVID has been a push with businesses that were resisting digitalisation. Many people had to embrace it that had never thought about doing video calls before. If you were in an industry that you felt digitalisation was exciting but not a must, now it is a must.
It is an exciting time for marketing and customer feedback. Thank you, Ana, for taking the time to join me in this discussion.