Building customer feedback loops into your growth strategy

Happy May! 🌼

This week I’m continuing to pound the pavement about how important it is to actually talk to your customers.

Without hearing directly from your customers, you’re really just guessing what they want. Maybe you’ve taken it a step further and have run enough proper tests to have some data to back those assumptions, but there’s still no substitute for a proper feedback loop.

I’ve heard founders say that because they are their customer, further feedback isn’t necessary. While a founder experiencing the same problem their company aims to solve is often how they come up with their initial business idea, once you’re too close to your product, you’re just not experiencing it the same way your users are.

So what’s a startup to do?!

Luckily, I chatted all about how to implement customer feedback loops with fractional COO Lidiya Becker.

• Lidiya is an operator with 15 years of experience across e-commerce, logistics, CPG, industrial, and IoT products

• She scaled Happiest Baby (maker of SNOO) from $0 to $50M in annual revenue, with a hyper-focus on the customer experience

• Currently, she advises and consults for high-growth brands at Build It Labs

Here’s what you’ll learn about:

1. Why feedback loops are so important if you care about your customer

2. The different types of data you should be considering

3. The right time for companies to implement feedback loops

4. Getting cross-functional buy-in when implementing a new process like this

5. Surprising insights that have come out of customer feedback loops

_{Our conversation below has been edited for length and clarity.}

Amanda Berg: Can you explain what a customer feedback loop is, and how you've used them?

Lidiya Becker: We’ve all heard that it's important to listen to your customers. But interestingly enough, I think few companies are doing this systematically.

This means systematically listening to a customer's feedback and pain points, to understand whether the product or service is solving a real problem and providing value. I think it's dangerous to build assumptions about what customers want without truly listening to them. 

Rather than coming up with some internal POV on what customers are saying, it's about going directly to the source and limiting bias. So it's not a big surprise that the best companies really understand their customers’ pain points, and build solutions to address them. Feedback loops enable us to get close to a customer's voice systematically, and without investing an inordinate amount of time.

• Step one is to listen to a customer's voice, using both metrics and anecdotes, on a regular cadence.

• Step two is to turn those datapoints into insights, and take action on those metrics or anecdotes, and then repeat the whole process again — listen, learn on a regular basis, derive insights, and take action.

AB: Can you talk about how you've used these feedback loops, and how you've set them up?

LB: Generally speaking, you'll have some sort of measurement, like a dashboard or report that's shared on a regular cadence via email or a meeting or in a collaborative tool like Notion. The owner could be, for example, a customer experience or customer care lead.

Most importantly, there's an insight and POV provided by that owner. Facilitating some sort of dialogue, and ensuring there’s an action plan, means this can be built into a repeatable process and cycle of continuous improvement.

That said, this process shouldn’t just include quantifiable metrics. Anecdotes, and listening to the customer’s voice in their own words, are incredibly important and complementary to the data.

AB: Something I see a lot of earlier stage companies struggling with is figuring out that “how” piece of implementing a process like this. They’re asking whether they need a tool to do this, if they should send out a survey, how to incentivize folks to get on the phone with them, etc. How do we actually get from “we know we need to do this,” to actually actioning on it?

LB: I don't think there's necessarily a secret, but it's important to experiment with a lot of different approaches and determine a way that you get some sort of reasonable sample size. It also has to be repeatable. 

There are a few different approaches to hearing exactly what the customer is saying:

• Go into your social channels and see what customers are writing in your ad comments, in your messenger. You’ll want to do what’s called sampling — sample a set number of transactions, every set number of weeks, and focus on finding themes.

  • You might just focus on social and see if you can observe any patterns, like what customers are or are not happy about. This approach may not be scalable, but it's important because you're getting really close to the customer.

• And of course, there's your customer service system, like a Zendesk, where customers are emailing or chatting or calling you. The leader of a customer care organization should be reviewing those transactions on a regular cadence, and using a rubric to understand and measure whether you’re serving your customer well. 

• Lastly, from a marketing perspective, you can send out surveys and you can do focus groups and those can be quite interesting as well, but those require a whole different set of resources.

  • For surveys, I’ve recommend thinking strategically about the questions you ask in order to limit bias. Talking to Humans is a great read that addresses this.

AB: At what stage should companies think about implementing these feedback loops? Is it ever too early? And secondly, what sorts of resources, whether it's budget or tools or headcount, are really needed to do this properly?

LB: The right time is yesterday! As early as possible is my answer, with 15 exclamation points! Before you launch, you want to understand if your product is solving a true pain point, and that customers want it. So gaining feedback is incredibly critical from that point on. Even if you don't have a product yet, you can have potential customers react to something that's close to your product.

In terms of systems, you don’t need anything fancy or a lot of investment to do this. Things can get more complex as you scale, but early on, having some high level metrics, or even proxy metrics, is enough. It's easy enough to track customer satisfaction (CSAT), to send out an NPS survey, to collect reviews. There's a lot of tools that do these things pretty out of the box, making it easy for you to review them and take action.

AB: How do you think about assigning metrics, even if they're softer metrics, to the more anecdotal side of feedback?

LB: I love the idea of rubrics. We look at an interaction with a customer, and we evaluate it and codify it. A rubric allows you to systematically define what good looks like, with checks like — are we providing a good experience? Are we making it easy to do business with us? Are we talking to customers in their own language and avoiding jargon? Things that aren’t necessarily quantifiable.

AB: I love what you said about how these metrics aren’t always quantifiable, because supplementing things like your CSAT and NPS scores, your star ratings, with more anecdotal and less quantifiable metrics will give you a really full picture, that looking at just one or the other wouldn’t give you.

LB: In companies of all sizes, I see this tension between anecdotes and metrics all the time. We have a CSAT score of 95%. But you see really negative reviews, so you know there's some sort of disconnect. 

Jeff Bezos actually has a really good quote on this. It’s something like “when the anecdotes and the metrics disagree, usually the anecdote is right.” 

The point is that the anecdote is pushing you to dig deeper. Maybe either the metric or the anecdote is a one off that represents a tiny portion of your customer population, and you should do nothing about it. But it could also be that we're missing something. We're missing a high risk situation. It could be that we're measuring things incorrectly. We could not be thinking about things the right way.

So it's definitely worthwhile to push the organization to really understand what's going on, to ultimately serve a customer better.

AB: When it comes to actually building these feedback loops into an operational process, how do you ensure that there's cross functional buy-in and that teams actually adopt these frameworks?

LB: Buy-in is so important, because customer experience is a cross functional effort. It's never just a finance problem, or operations problems, or a marketing problem. We have to be very aligned and work well together to support the customer.

There are a few ground rules that enable some companies to be very effective at serving the customer, without which it’s going to be challenging.

First, a growth oriented culture is important. Feedback loops of all kinds work exceptionally well in a culture that values learning and improvement, and minimizes finger pointing and blame. It's such an important example to set from the top down.

As soon as there's blaming and shaming, people will be much less willing to speak up, offer novel ideas, expose problems, and this is such an important thing to protect. I can't stress this enough, because anything else you build will probably crumble if you don't have this kind of culture.

AB: Just to level-set a bit, I think companies need to know that no matter how great their business is, customer feedback is never going to be 100% positive.

There's always going to be a person who's not happy, and maybe that person just isn’t your customer and that's okay. Or maybe there’s actually something that went wrong. And it’s so important for companies to be open to feedback, and accept that improvement is a requirement.

LB: 100% agree. It’s always hard to hear negative feedback, but having this attitude of curiosity and openness and understanding is key. Like you said, there’s always going to be negative feedback — but these are really opportunities. And it might be an opportunity to further define who your ideal target customer is and who is not. It’s okay to make some customers not happy, because they might not be your target customer, and you're not going to optimize your business for them.

Back to ensuring adoption of a process like this, the second thing you need is setting up the right level of visibility to enable collaboration. So we need to show the right information to the right people in an easy to understand way, so it can be actionable. That means translating insights into a hypothesis, or a rubric score, so teams can learn and react. Again, feedback loops are all about learning. 

The third thing is that ultimately people want to be part of a winning team, and are motivated when they see progress. When I led operations at Happiest Baby, this was key to implementing a system of a variety of feedback loops, not only customer-driven. Being a part of the process means you see improvements over time, which is really motivating and creates an ongoing flywheel.

AB: Surfacing what doesn't work is important for improvement, but surfacing what does work is just as important so you do those things consistently. Identifying those wins so you know what NOT to change, especially when you’re early, is so important. 

LB: It's so important to share wins because I think just as humans, positive feedback is so meaningful for the people on the team doing the hard work. I've seen this drive very quick and meaningful progress, over and over.

AB: Are there any common pitfalls you've seen when companies try to implement these feedback loops?

LB: A few:

• Focusing solely on metrics and ignoring qualitative feedback, like customer anecdotes. Quantitative and qualitative data are complementary, and then anecdotes give valuable context and often expose blind spots. 

• I’d also say lack of follow through. I've seen this happen time and again in various companies I’ve advised. They’ll build this beautiful dashboard and then forget all about it, or even if they look at it every month, there's no insight that drives an action. Our process is only as good as our commitment to follow through. If we observe a trend or an issue, we have to make a hypothesis and take action to test something.

  • Let’s say we have a higher abandoned cart rate than average in the industry. We might make a hypothesis that we think there are too many steps in the checkout process, so we're going to try to streamline it. And then I've seen a lot of companies take action, but forget about what happened as a result. There’s a level of discipline needed to track experiments, monitor their results, and to mitigate that risk. It’s important to assign a single accountable party that oversees testing initiatives, and then setting a concrete time to follow up.

AB: What’s one of the most surprising or valuable insights that you've learned from customer feedback, that you wouldn't otherwise have uncovered?

LB: So many — customers are smart and savvy and helpful. I believe that customer trust must be earned over and over. 

One of my most valuable experiences in my career has been working at a company called McMaster-Carr. They're a hundred-plus year old, billion dollar company. They operate at an incredibly high profit margin, and are hyper focused on the customer. I’ve seen that companies who operate like this with integrity and with empathy for their customer really thrive. The lesson that doing the right thing for the customer tends to lead to a good outcome for the company too is one I’ve taken and applied to other rapidly growing startups. 

In terms of a specific insight, one of the most surprising, that I’ve since seen over and over again, is that McMaster customers were more satisfied overall after we made a mistake, but recovered well. So if you drop the ball during a customer experience, and if you really care and do a good job recovering, their satisfaction scores are even higher on average, which to me was so surprising.

AB: Wow, they’re more satisfied than if everything just goes right from the start? That’s so interesting.

LB: Exactly. So we have to have a soft landing, we have to recover gracefully. There's still such a huge opportunity to win the trust of your customer, even if there’s been a poor initial interaction. This has proven true time and time again.

AB: Any last closing thoughts on feedback loops, or anything else that's super important for companies to know if they want to implement these things or improve their processes?

LB: I think the most important points we've gone over are:

• The marriage of quantitative and qualitative is so important.

• The commitment to growth and learning is so important.

• The principle of companies being customer obsessed ends up serving the business well.

• And overall, I think the process is an Agile-inspired operational process. It aligns with a lot of Agile principles, like transparency, collaboration and continuous improvement.

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