Customer Feedback management is not Market Research …and NPS not the Holy Grail

You’ve probably read hundreds of posts, articles, and books about market research. Over the past several years, another form of asking opinion to customers has also eased into the discussion: Customer Feedback Management (CFM) mainly associated to a specific key performance indicator (KPI): the Net Promoter Score (NPS).

Customer Feedback Management (CFM) is often wrongly associated with Market Research (MR), but it has nothing to do with it. Unfortunately, two main factors have contributed to this confusion:

  1. The inability of practitioners to see and explain the difference (I’m one of those “unable-to-explain” practitioners)
  2. The fact that pure Market Research vendors have tried to sell their survey solutions in the field of Customer Feedback Management. (Like if Excel wants to compete vs Word, of course, you can try to write letters using Excel …and do tables and spreadsheet with Word!)

Marketers and companies, in general, need both, but at different points and for different purposes over customer journeys development and customer lifecycle. So what is the difference between CFM and MR?

MARKET RESEARCH: A LONG STORY SHORT

I was impressed by a book written by Darell Huf: “How to lie with statistics”. It is a book published in 1954 – by the way very interesting. It means in 1954 there was already a big discussion on how to tell stories and support them with statistical analysis and charts. According to Wikipedia, Market Research was conceptualized during the 1920s. It will turn soon in a 100 years discipline. Whoever in the realm of Customer Experience will tell me Market Research is useless, I kill him. Market Research is one of the important pieces of the puzzle to understand your clients. In the early days of Customer Feedback Management platform, there was a tendency to say MR is useless. Well, it is not.

DIFFERENCE #1: TWO TAILS OF THE DISTRIBUTION vs CENTRAL TENDENCY MEASURE

The first difference between the two methodologies: Market Research is correctly obsessed by the centralized measure of the distribution (usually a mean), while Customer Feedback Management focuses on the two tails – the two extremes. On a complementarity point of view: market research is measuring a mean inferring your whole population, while Customer Feedback Management tries to discover the main drivers of satisfaction and dissatisfaction that can influence the central distribution in MR.

DIFFERENCE #2: ACTIONABLE 1-2-1 INSIGHTS vs GENERIC INSIGHTS

This difference must be considered in the light of the previous one. Both methodologies produce actionable insights. It is, in the end, your organization that must act on insights for both methodologies! In the first case – CFM – you have two degrees of actionable insights: close-the-loop and enterprise improvements. With close-the-loop you go back immediately to the client, solve its issue or capitalize on a sale opportunity, while the whole collection of feedback is the base to get insights to improve the internal processes, change the communication, policies, etc. (enterprise improvements). Now you are confused, when you get insights from MR is it not something similar to “enterprise improvements”? Yes, it is. But remember difference #1, in case of MR your insights are focusing on what the average customer likes, while in CFM you see the extreme unsatisfied or satisfied, and you put in place changes that will influence later the average satisfaction.

DIFFERENCE #3: CENSUS VS SAMPLING

In CFM you are really interested to hear the voice of ALL CUSTOMERS. In MR you select a sample that represents the whole population. It probably looks like an obvious difference, but it is not. If you don’t build a representative sample the measure in CFM doesn’t represent the average measure of your population. If you are looking for a central measure such: “What is the NPS of my whole customer base?”, then remember to sample correctly!

DIFFERENCE #4: THE BIAS VS THE REPRESENTATIVE SAMPLE

Who is usually sharing your feedback with you in CFM? Usually are the customers extremely satisfied or unsatisfied (as we said, the two tails of the distribution). This creates, what in statistical terms is called, a bias. The people you are collecting feedback are not a part of a random sample representing your whole population (customer base). They are representative of extremely happy and unhappy customers. Be careful to infer that measure to the whole population. In MR you usually avoid that issue controlling tightly the sample.

DIFFERENCE #5: EXPLORE SOMETHING NOT KNOWN vs TESTING AN HYPOTHESIS

The MR process usually starts with a hypothesis. Whatever hypothesis you want to test: “Are my young customers more willing to buy the red phone?”, for instance; or something more complex: “What kind of features related to fly experience ar more relevant to my clients?” Then you design the research around that hypothesis. In the end, you will “accept or reject the null hypothesis” (talking technically).

In CFM you don’t test a hypothesis. In CFM you are interested in finding unknown drivers of satisfaction or dissatisfaction. You don’t design a research around a hypothesis, but you just ask a feedback to your clients. You don’t design the questionnaire around that hypothesis, you simply ask an open-ended question to get a feedback.

DIFFERENCE #6: SHORT REQUEST OF A FEEDBACK vs LONG QUESTIONNAIRE

Usually, a request for a feedback should be a short – max 2-3 – questions. I would say the best is two questions: a scale and an open-ended question. In market research, usually, you ask many more questions. The point is related to difference #5, in one case – MR – you are testing a hypothesis following a precise methodology, in the other case you simply capture feedback without a hypothesis. The design of the questionnaire is totally different.

DIFFERENCE #7: REAL-TIME vs WAVES

CFM captures the voice of the customer 365 days 24/7. Your feedback requests must be live on every channel of your customers choice and ready to capture, analyze, act and measure. MR is usually organized around specific timeframe and waves. The scope of the two processes are different: capture and act vs test a hypothesis and precisely measure. Two different goals.

DIFFERENCE #8: LOVE UNSTRUCTURED TEXT vs PREFER CLOSE QUESTIONS …AND POSSIBLE NUMBERS

CFM – especially if you use external sources (social networks, websites, forums, etc.) – needs a strong Text Mining process. You must identify topics and sentiment in real-time. MR is designed more to capture valuations in numerical form. Then statistical analysis helps to produce strong outputs.

CAPTURE THE VOICE OF THE CUSTOMER vs INFER FROM A SAMPLE

CFM captures the Voice of the Customer from different channels – not just direct feedback. It includes websites such, for instance, Google Reviews, Amazon Reviews, TripAdvisor, SeatGuru, etc. MR is limited to the specific sample it was created to fulfill the test of a specific hypothesis.

CONCLUSIONS

CFM often overlaps with Market Research, particularly for customer behavior or products research. But is extremely important not to confuse the final goals of the two methodologies. Bot methodologies are extremely important to succeed in the market with your product or service. CFM is more operational and helps you to better understand the two tails of the distribution, while MR is used to test a hypothesis and check if we have to accept it or reject it.

Unfortunately, in the past years, there was a big confusion between the two concepts. The rise of Net Promoter Score as Holy Grail of all customer behaviors measure has not helped that differentiation. A serious approach to Customer Intelligence must include both methodologies.

Customer feedback data is simply too valuable and too powerful to ignore. But please do it in a concious way. Don’t pretend to simply replace MR with CFM: are two different methodologies. For sure, once your business begins to harness this information and use it to make important decisions, it stands to gain on various levels from customer retention to improved products and services.

Moreover, once your business establishes a routine for text mining customer feedback data, it benefits over and over again in all the areas of the organization.

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