Customer engagement and feedback are powerful tools for every company—but many startups see them as an afterthought, focusing all of their energies on selling more products and gaining more users.
But what these companies are missing is that customers are their best advocates. Consider the facts:
- Nearly 60 percent of consumers like to tell their friends and family about new products they have tried.
- 92 percent of people believe word-of-mouth recommendations trump traditional marketing and advertising.
- 89 percent of people have stopped using a service or product because of a bad service experience (up from 59 percent in just four years).
The customer service experience is becoming even more crucial to company success, too. According to Walker Information, a consulting and research firm for B2B companies, customers are more empowered and informed. By 2020, the service experience they’re given will grow in importance, while their view of products and price will stay about the same.
One survey of SaaS founders found that some 75 percent don’t send customer development surveys each month, less than 10 percent have qualified buyer personas and only 50 percent do multivariate and A/B tests—yet they still think their companies are getting customer development right.
The startups with the best service will win, and that means taking customer development seriously. Here’s the evidence to convince the unbelievers.
It costs more to get a new user than to keep an old one
Studies vary widely, depending on what industry you’re in, but research has found that it costs 5 to 25 percent more money to bring in a new client than to keep an existing one.
Customer attrition or churn is the rate by which a company loses customers. It’s easy to calculate, by dividing the number of customers who stopped using a product or service during a given time period, by the total number who used it.
Even the slightest improvement in churn can lead to bigger profits: one study found that a 5 percent decrease in churn and increase in retention can up profits by 25 to 95 percent, depending on the field.
Though growth rates are very important to investors, especially early on when expanding is the name of the game, many also look at attrition and customer lifetime value (CLV) rates because they can impact long-term revenue growth. In other words, if your startup is only focusing on the former and ignoring the latter, they could be losing out long term.
Customer development doesn’t always mean change
Some startup founders eschew development because they think that soliciting feedback will mean making a bunch of promises—from changes to the product to new features— that they can’t keep or don’t have the budget and time to fix.
But feedback and development doesn’t have to mean you make every product change someone asks for. Soliciting opinions can make clients feel happier with the product overall, because they’re given the chance to be heard.
CEOs of major companies have recognized this and even made themselves available for user feedback:
- BaseCamp’s Jason Fried was inspired to announce office hours where anyone could call him, after Jason Knight, then-CEO of Wesabe did the same.
- When Stripe was starting out, the founders offered 24/7 live service chat.
- At Amazon, Jeff Bezos makes his email available and is known to forward user complaints to the right contacts in the company.
Newer startup founders can learn from successful CEOs, by responding to critical support conversations every so often (be genuine about it—don’t fake it). If your startup is big enough that you’ve delegated customer support to other people, do this anyway.
Being available to your users may not solve every problem, but it will inspire confidence. They will appreciate knowing that top execs at the startup care about them.
Support is where you’re closest to your customers
One of the other oft-overlooked benefits of a strong support and development arm of a startup is that it gives your company the chance to actually interact with customers one-on-one.
Marketing and sales teams may talk to users, but customer support is where the action is on a more intimate level. It’s where you hear about where your software is failing, where people struggle to use it and what features they like and don’t like.
At Kayako, our marketing team does at least 9 voice of the customer interviews, which we call win/loss interviews, to talk to clients about why they chose us or why they picked a competitor. Marketing then reports clients’ reasons for leaving (business needs changed, switching to internal help desks, etc.).
On the support side, our team compiles two exceptional cases of users leaving Kayako for a monthly churn report. This gives us the chance to learn why customers aren’t happy and how we can improve our service.
Through support, you can also learn what clients are facing in their lives and businesses to potentially inspire ways that your software can address problems and concerns.
For tips on how customer support professionals can sell product requests and changes to features to management, check out our eBook: The Ultimate Guide to Communicating Product Feedback.
Feature requests can improve your product
Though your startup shouldn’t be making promises for fixes and changes to every client who complains, they should be using the opportunity to learn about the people using their products and follow through on feature requests when it benefits a lot of users.
Such requests benefit the bottom line by:
- Keeping existing users happy and improving retention rates
- Reducing support costs and time wasted responding to the same request repeatedly
- Improving morale on customer support teams, because they’ve seen their work affect change
- Attracting new clients who want this feature
But clients don’t think like product managers. They may have legitimate problems they want solved, but can’t articulate them in a way that makes the most sense, so they ask for new features. Taking every feature request seriously will just result in a pileup of unnecessary changes that won’t work for you or your customers. So how do you decode what’s valuable feedback and what’s not?
Ask the 5 Whys to get to the real root cause of a problem. What can look like a simple problem with one cause, may actually have several process issues and underlying causes behind it.
When we started asking “why” five times at Kayako, after making one time-consuming product change that really wasn’t needed, a few trends emerged: customers were requesting fixes because they didn’t know where to look, while some were facing bugs that we could fix without making a product request. In the end, this helped us figure out that only about 10 percent of the requests we were getting were worthwhile.
Focusing on this a manageable amount, while troubleshooting and helping customers find what they needed, allowed us to work faster and more efficiently.
Have a conversation
To get your startup team on board, consider putting together a formal proposal for how your company will gather and review feedback, or request permission from your supervisor to do some recon on your own.
Customer development is good for your startup’s products, growth, bottom line, and the clients themselves.