Most companies go to great lengths to get inside the minds of customers. They track sales data, identify trends and extrapolate hypotheses. Yet they often overlook the direct approach of soliciting customer participation. When companies do reach out to customers, often the goal is to create brand evangelists for existing products and services — rather than gathering input for making improvements. The rationale is that positive word of mouth drives new customer acquisition while building loyalty among those engaged in creating the buzz. This approach has merit. But our research, published in the Winter 2014 issue of MIT Sloan Management Review, shows that encouraging customers to provide direct feedback helps tie them more closely to the business than word-of-mouth activity.
Besides allowing companies to identify customers’ unmet needs, inviting their input and feedback creates a strong sense of participation that keeps customers coming back and spending more — regardless of whether they spread positive word of mouth. Companies can even recapture defecting customers simply by contacting them and encouraging them to participate. Put in terms the CEO can understand, if you had to choose one, emphasizing customer participation over word-of-mouth activity would be good for the bottom line. Here are six guidelines to consider:
1. Let go of fear. Many companies do not ask for feedback because they fear their customers might overload them with impractical suggestions. Other companies fear they won’t know how to respond. The key is to let go of the assumption that the company always knows best.
[This article has been reproduced with permission from Knowledge Network, the research journal of Thunderbird School of Global Management https://thunderbird.asu.edu/knowledge-network/]