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Are You Making the Best Use of Customer Feedback?

Overhead view of business people in a meetingOverhead view of business people in a meeting

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Every morning, my email inbox is replete with article pitches and interview offers. I typically archive the ones overflowing with marketing jargon for a rainy day, but over time the recurrence of certain phrases gives me pause. Here’s one that has been bouncing around my brain for months: “customer experience management.”

As far as I can determine, the broad goal of customer experience management (not to be confused with customer relationship management, which focuses on nurturing sales prospects) is to get every employee from call-center staff to senior executives listening more closely to what customers are saying. The goal: serve them better, which (by the way) should lead to more sales, new product ideas, etc.

Most companies already spend a lot of time worrying about what their customers think, through surveys or transcripts of support calls—indeed, a recent Forrester Research study suggests almost 85% of businesses regularly gather feedback after some sort of interaction or encounter. But very few of them actually use that information systematically to improve interactions or, gasp, to develop new products. Nor do they consider all the unsolicited “feedback” that companies now receive through social media as part of the mix.

That’s a mistake, according to Sequoia Capital partner Doug Leone, who last July led a $150 million investment in one of the better-known software companies in this space, 15-year-old Medallia. “A happy customer can do you a world of good, an unhappy customer can do you a world of damage,” he told me earlier this month.

Since the Medallia funding, the pressure on companies to become more customer-centric has only intensified. This is far easier said than done, but apparently more companies are determined to try harder. “There is a large and growing population of companies focused on this issue,” said Robert Wollan, senior managing director for Accenture Strategy, who runs a consulting practice focused on customer strategy.

Accenture is one of more than a dozen global professional services firms that use Medallia’s cloud software to build systems for gathering, analyzing, and sharing customer feedback more in a more consistent way.

Medallia formalized its alliance program in early May, in part so it could support larger installations of its software. Medallia said it generated more than $125 million in revenue for its last fiscal year, and companies as diverse as Delta Air Lines, Sherwin-Williams, and Nordstrom use its software to guide interactions. Some of Medallia’s first customers were hotels. La Quinta, for example, used Medallia to successfully research and launch a $20 million overhaul of its breakfast menu and services.

How much are businesses willing to pay for software and services that could help make employees more empathetic to customer needs? One forecast sizes the market at $10.8 billion by 2020, which is more than double what companies spent last year. “Everybody has a screen, the whole company can react to this feedback,” Leone said. “That, by definition, changes you.”