John Sviokla on How to Take Advantage of the Web for Customer Connection

Most companies don’t really know what their customers think of them. And the Internet is making the feedback gap worse.

Customers, through websites, often have just as good or better information than your customer service representatives do on product information, order status and financial incentives. Most of the traditional methods for gathering feedback–such as surveys and focus groups–have become hopelessly slow now that customers have instant access to services and products over the Web. Companies need to catch customers in the act, while they are ordering on the website, to find out what they think. Capturing this feedback in context, while the customer is engaged, is critically important–it’s like turbo word of mouth.

An industry is gathering around instant feedback over the Web. The industry is an extension of traditional customer response mechanisms. Organizations like the U.S. Consumer Protection Agency, Underwriters Laboratories (the UL seal of approval on appliances) and Consumers Union (publishers of Consumer Reports) have filtered, organized and coalesced customer opinion into megaphones capable of bringing powerful companies to their knees. Take those traditional opinion mechanisms and make them faster, more convenient and always available for customers and you can begin to see the impact this industry will have on your company.

BizRate and PlanetFeedback.com (on whose board I sit) are two examples of companies that offer instant customer feedback on the Web. They make money by selling software and support to companies that want to gather and examine the onslaught of feedback that is available through the Web. BizRate’s pop-up windows ask for feedback from consumers as soon as they hit the send key on a BizRate client company’s order page: Was it good for you? What would you change? PlanetFeedback has an application customers can download to their PDA with names and addresses of companies, agencies and legislators so that they can air their opinions in that same turbo context.

Think about the possibilities here. You’re on an airplane, angry with the rude service of the flight attendant. You whip out your handheld, ask the flight attendant for his name, and right there, using the form and the database that has the name of the company president, you log a letter of complaint with time, details and place. Hit send, and the next time you sync your PDA, the letter goes to Planet Feedback’s website where the airline’s record is there for everyone to see. You can also snail mail or e-mail it to the company.

Companies like PlanetFeedback and BizRate aren’t just cataloging nasty e-mails, however. They are slicing, dicing and sorting the mountains of information into meaningful categories. For example, PlanetFeedback creates a grading system for each industry and each company within that industry from A+ to F-. I hear the average grade is somewhere near a C. Not only do companies have grades, but the top compliment and complaint categories are exposed for all to see. For fast-food restaurants PlanetFeedback structures the questions to include things like attitude of the wait staff, quality of the food and cleanliness of the restaurant. Of course, you can also have your own unconstrained opinions as well. PlanetFeedback also keeps tabs on which companies are responsive to customer communication and which are not.

So how should you deal with this new customer megaphone? The first thing is to practice engagement: Understand what customers are saying about you and who is saying it. For example, PlanetFeedback had some evidence of complaints about Bridgestone/Firestone tires before the story of shredding treads broke. Monitoring the comments about your company can be an early warning system, which can tell you about your product or service problems before they become big. You can buy or build an instant feedback mechanism for your own website to track opinions. You can also hire the instant feedback sites to slice their feedback to fit with your own internal measures and goals. For example, McDonalds could gather feedback on Burger King, comparing store performance by region.

Though customers will have a natural tendency to complain through instant feedback, there should also be some compliments. Gathering the good along with the bad means you can give good customers–who tend to talk less than bad ones–a megaphone to sing your praises and help win over others to your brand.

Good customers can also help you find problems. Many of the great technology companies, like Yahoo and Microsoft, use their lead customers to help create new products and test them. Having an instant feedback infrastructure will make it easier for these customers to help you. If you engage them, they can be the best watchdogs for your new CRM system, for example–as long as you build a culture willing to listen to that real-time feedback, good or bad.

Feedback can be a great motivator or a great demoralizer. But you must find a way to take it in. Professor James Heskett of Harvard Business School has shown that for each complaint you receive, there are 20 unreported problems. Therefore, if you get 500 complaints on PlanetFeedback, you know that your customers may have had more than 10,000 problems! It is often painful to look at this data, but denying it will not make the troubles go away.

Remember that we are entering the age of the scarce and scarred customer. Real prices in many consumer categories, such as washing machines, cars and stereos, have seen little price increase in real terms during the past 10 years; in some areas–cars, TVs, clothing and sporting goods, for example–there have even been price decreases. Technology (including the Internet) has brought tremendous competition by allowing customers to see price and supply across many different markets. Technology has also made businesses more productive, which means they can give the customer more for the same dollar. In other words, demand is not keeping pace with rises in productivity and capacity. One way to get more of this shrinking pool of demand is to get customers’ feedback at the moment they want to give it.

The greatest shortage we have in today’s economy is not spare parts or raw materials, it’s feedback. Whether we like it or not, customers are more in control now than they have ever been. They will not only demand more for less, but they will give you a grade on your CRM during the process. The question is, are you driving for an A or are you going to slide by with a “gentleman’s C”?