April was the busiest month in Customerville’s history as organizations ranging from retail chains to medical practices rush to adopt frugal ways to get closer to their customers.

This is a culture change for a lot of these companies, and we’re finding ourselves spending a lot of time talking with them about one lesson we’ve learned in particular: Be sure that your feedback loop stays generally positive in tone.

Drop me a line at misrael@customerville.com if you’d like to chat briefly about our latest thinking on why this is so important to get right.

For now, here’s a reprint of a blog post from last Spring which we think does a lot to explain a pitfall which faces organizations who are new to live customer feedback.

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The Red Flag Trap
April, 2008

Over the past several months we’ve taken a hard look at a subtle – but extremely important – aspect of measuring live customer feedback.What we learned surprised even us.

Slow praise, quick criticism. Companies and franchise organizations use Customerville to allow their own customers to grade them. They check these grades via the web. Our system – and others like it – has the capacity to identify an upset customer, “red flag” that customer’s survey, and alert the appropriate person immediately via email or SMS message. This alert gives that manager a chance to address the situation quickly and save the customer from defecting.

But there can be an unintended consequence: These managers end up getting proactive, real-time feedback about things that are bad, butpassive and significantly slower feedback about things that are going well.

Why it creates problems. The psychological effects on front-line managers seem obvious, though it took us years to fully come to terms with them. In some circumstances and over time, front-line managers and franchisees can come to associate customer feedback with criticism.Worse, this negative emotional association can create an aversion to paying attention to important customer information.

Positively true. Ironically, most customer comments are extremely positive. We generally find that customer comments are either mostly positive or exclusively positive over 85% of the time. At its best, customer feedback is used as a positive, uplifting leadership tool. This red flag trap, as we’ve come to call it, creates a distorted view of that reality.

This year will see us spending even more time studying this pitfall and working with our clients on ways to avoid it. We think this is so important that we’ve focused two out of the next three upgrades currently in development on addressing and preventing the red flag trap. 

Lately we’ve noticed more and more companies with a unique job description: A marketing staff member responsible for monitoring online communities like Yelp for angry customer comments about their brand.This is like mopping up the water instead of fixing the leak.

For years we’ve counseled our clients to be mindful of making assumptions about how customer feedback affects them. “Your customers are already grading you”, we’d say. “You just don’t know what the grades are.”

Not providing a vigorous, visible means for your customers to give you feedback doesn’t eliminate feedback. It just removes you from the loop.

The advent of social networking sites and consumer reviews online has added an even more dangerous pitfall to companies who fail to engage their customers. Before, customers without a readily available means to share unpleasant experiences directly with you simply grumbled to each other. Now they have the ability to grumble to everyone.

Old fashioned feedback systems like comment cards or the “contact us” email link on a website were never really intended to be healthy, two-way feedback loops. More often than not they were essentially complaint boxes. To most consumers it’s easier and more gratifying to go to the web with their grievance.

Asking for customer feedback in a visible, vigorous way pays many dividends. One of them is that a significant portion of customers who have a bad experience with your company will come to you with it before they go to the rest of the world. 

Conributor: Brian Doyle bdoyle@customerville.com

Technology is driving competitive pricing among retailers. The new Google phone can read bar codes and then list the prices of that item in local stores.

I saw the new Google phone the other day and it had one feature which really raised my eyebrows: a barcode reader. Before long, customers will be able to read a barcode from a shop’s floor and see how that merchant’s pricing compares to others nearby. Wow.

Service will have to be the determine factor to attract the customer over a competitor. We see that price and value are key in driving people to stores to buy, but service and customer experience is what is needed to “Wow” the customer and win their loyalty. In the future, more than ever! 

The recent news on the economy has created a surge of companies contacting us, looking for ways of dealing with significant and sudden budget constraints. This month has seen more new companies contact us than at any time in the past five years.

Here’s why they’re calling us, and what’s new about the role Customerville plays in their new 2009 budgets.

Customer Experience…On a reduced budget. It’s going to be harder than ever to get new customers, so it’s never been more important to keep the ones you already have. This will have to be done with less money than ever before.

Our existing clients are moving their customer experience measurement solutions to the top of front-line managers’ agendas. New companies who might have come to us in the past looking to add customer experience measurement as part of a broader package are now looking at us…period. We spoke with one company which anticipates slashing a $1 million budget for mystery shop into the low six digits.

We’re being leaned on hard by clients to find new ways to engage their customers and employees alike at zero or near-zero new costs. This means practically no printed collateral.

Middle Management Strain. One of the most regrettable reactions to any economic downturn is a quick reduction in middle management. This means less oversight at the unit level and significantly more stress on the remaining managers.

Companies are looking at Customerville and tools like ours which allow a reduced middle management tier to smartly allocate their stretched resources. This means using customer feedback to drive travel decisions and manager bandwidth.

Training. Training is rapidly being cut. One national retailer we know just cut their entire training division. Training in other organizations we’re seeing appears likely to be reduced to basic compliance issues, with sales-related training going out the window.

Front-line managers may end up being left to their own devices. We’re being asked to make a fresh effort to keep these managers apprised of best practices on how they can use real customer feedback to motivate, praise, and lead their team members.

This isn’t a substitute for a robust training package, but it can go a long way toward enabling front-line managers to with a powerful teaching tool. 

We’ve been buried in work lately, so sorry for the silent treatment these past weeks!

One great new feature we’ve just added to Customerville’s platform is our long-awaited Red Flag Watchlist. For years our Red Flag feature has been a client favorite. Survey responses with a very low grade or “I was disappointed” check box would cause a text message alert to be sent to, say, a Regional Manager. That manager can then call the customer on the spot and save the day…you get the idea.

Our new Watchlist allows our clients to provide a list of words which can also trigger a red flag when detected in a customer’s comments. For instance, a restaurant operator might include words like “cold” or “soggy” in their Watchlist.

What words would cause you to sit up and take note if your customers used them to describe an experience with your organization? 

 Young people overwhelmingly view the web as the center of their social interactions – including giving and receiving feedback – according to the recent study by the Pew Internet & American Life Project. This should sound warning bells if your organization relies on hiring, retaining and developing young people. Do you have a feedback system that is relevant to them?

As we wrote last week, Pew found that some 93% of teens are internet users – and the vast majority expresses a knack for giving and receiving feedback via the web. Teens are also prodigious creators and consumers of web-based feedback. Nearly 2/3 of teens are online content creators, and the majority gives and receive feedback on the web.

The implications for employers hoping to use customer satisfaction information to guide employees couldn’t be more important. America’s youngest generations are uniquely able – and they prefer – to receive live customer feedback given to them via the web. They trust it, and they’ll act on it.

The inverse to this is a resistance to receiving feedback that isn’t perceived as genuine. We see this time and again in interviews with clients hoping to buttress existing mystery shop programs with live feedback. As willing as young people are to receive live feedback directly from your customers, they seem resistant to anonymous feedback or mystery shop feedback from hypothetical customers.

 A recent study published by the Pew Internet & American Life Project is serving as a wake-up call for many American companies who seek relevance among America’s youngest generations.

The study, based on nearly a thousand interviews with teens over 2007, validated the increasing extent to which the web and its derivative technologies in cell phone technology have become a central part of American young peoples’ social lives.

Some 93% of teens are internet users – and the vast majority expresses a knack for giving and receiving feedback via the web. Perhaps more compelling was the extent to which young people themselves are content creators and consumers of web-based feedback. Nearly 2/3 of teens are online creators, and the majority gives and receive feedback on the web.

Think about this in the context of any enterprise seeking to engageAmerica’s younger generations. People tend to gravitate to those relationships and institutions that mirror their own preferences for communication. Without a web-based means of listening to these customers’ feedback, how can any organization expect to be perceived as genuine by them?

All the marketing and PR in the world won’t convince a younger customer that you’re genuine if your feedback mechanism doesn’t reflect their sensibilities.

Next week: The consequences for employers. Does your organization give feedback in a way your employees can absorb?

 Keeping customers actively engaged in grading any organization takes some planning and creativity. As we’ve written in the past, a smart, well planned enter-to-win drawing goes a very long way in this regard.

But don’t let this little promo stop working for you once it’s done the job of getting customers to grade you. One of the things we love to see is when our clients really do a great job of making hay with the process ofawarding the prize.

Hats off this week to our friends at Skyline Chili in Cincinnati. They used an enter-to-win drawing to spread the word that they were looking for customer grades. At the end of June, we drew a winner for them and they had a great celebration with the winner, Mrs. Cathy Headworth of Goshen, OH.

The pictures — and a genuinely touching thank-you letter from Mr. and Mrs. Headworth — will do a great job of creating excitement among Skyline’s franchise community. We wouldn’t be surprised to see Mrs. Headworth’s picture show up in future Skyline enter-to-win drawing collateral materials, either!

Great work, Skyline and Congratulations to Cathy Headworth!

 Gymboree Play & Music is a fantastic company with a rich history spanning over three decades. Anyone with kids knows the brand — and why Gymboree is known as the world leader interactive learning programs for kids. Customerville has been privileged to work with Gymboree for several years.

This month marks a new milesone for both of us. Gymboree’s expansion into China has been a real success story, with that country boasting some of the busiest, most successful Gymboree Play & Music centers in the world. And, taking a page from Gymboree’s playbook in the US, Gymboree China is now measuring their customer satisfaction in real time using Customerville’s new multi-language platform. (More about that here.)

 One of the biggest challenges a growing chain faces is to not lose the authenticity that made the company successful in the first place.

At some point in every very big organization’s history it was small. Customers didn’t just view the people they met when they walked in the doors as employees of the company. To those customers, the employeeswere the company.

But as the organization grew, customers stopped seeing employees as individuals. Instead, they started seeing the company as a brand – an organization dedicated to replicating the feeling of authenticity.

Is this perception always true? Not always – especially in great companies. The people who really make the business tick are as important as ever. They’re still the company. The problem is often that the systems a larger organization needs to function can sure make itlook to its customers like a faceless bureaucracy.

A Picture Says A Thousand Words. Of course, we believe a vibrant feedback loop between customers and front-line employees is essential – that’s our business. But how to make sure that even this feedback system doesn’t give the appearance of just another big corporate initiative?

This year we’ve seen a series of our clients incorporate compelling photography into that feedback loop in a new way. They’re featuring photos of actual employees on their survey pages as a means of reinforcing that local connection between customer and employee.

Have a look at three examples below of the art which we used on each of these companies’ survey pages. No splashy logos or product shots here. Instead, we’re showcasing the employees to whom a customer’s feedback is directed.

The message to customers is clear: We’re local, we’re real and we’re listening.