The negative feedback arena is vast because it embraces customers and employees — the lifeblood of every business — but is it an essential consideration with all else going on? “Essential” is an understatement; crucial is more to the point.
Reacting to peoples’ comments about missteps in your operations can be a blessing in disguise. Why? Because it connects directly to the two most significant ROI obstructions — customer and employee churn. Negative feedback is generally the tip of a massive discontent iceberg creating employee resignations and spurring loyal customers to jump across to the competitors’ brands. As they say, there’s no smoke without a fire. Ignore the former, and the latter can rage out of control.
Now, to be clear, negative feedback from both employees and customers doesn’t necessarily come together. Indeed, it may be one or the other. It’s entirely possible to have a happy staff environment while customers abandon ship left, right, and center — or vice versa. Whether it’s double trouble or one-dimensional, the more you know about it, the better. The more resolutely you respond to negative feedback, the greater are your chances of sustaining a bottom line that meets stakeholders’ expectations.
The implications of ignoring negative customer feedback
U.S. companies are losing a staggering $35.3 billion annually due to customers shifting to a competitive brand for avoidable reasons. Even scarier, American Express discovered that 33% of one’s customer base is exceptionally fickle. It takes only one disappointing customer experience (CX) to get them to switch brands. Also, consider the following somewhat mind-boggling stats:
- Recruiting a new customer traditionally costs five times more than retaining a loyal one.
- A 5% boost in customer retention can improve profitability anywhere from 25-95%.
- The chances of successfully getting repeat sales from an established customer are 60-70% versus substantially weaker odds with a new customer (i.e., 5-20%).
- Compared to new customers, loyal customers are more likely to:
- Repurchase and forgive errors by five times.
- Refer friends and family close to four times more.
- Accept new deals up to seven times more.
The implications of ignoring negative employee feedback
Replacing a salaried employee isn’t cheap, and employee turnover rate isn’t particularly low. If you aren’t careful, employee churn can be costly.
A Work Institute Study revealed that in 2019 voluntary job resignations touched forty-two million. This was nearly 30% of the workforce at the time. There’s nothing to suggest the trend hasn’t continued in the following years.
A Deloitte study found that replacing an employee can cost anywhere between tens of thousands of dollars and two times the annual salary of that employee. This is because the cost associated with a new hire isn’t just their salary. It involves everything from advertising for the position, interviewing, and onboarding to training, personnel consultants’ fees, and substantial management time. Many of these core costs are not easily measurable, but they’re powerfully impacting the bottom line nonetheless.
One of the massive expense items often overlooked in the mix is lost productivity and project disruption. An entire team may come to a standstill or slow down when a pivotal member exits. Employee turnover starts an unwelcome snowball rolling, frequently discouraging and demotivating others in the business. Excessive exits can quickly taint a corporate culture, stamping the organization as one that fails to engage its employees long-term.
Dealing with negative feedback
I could spend time giving you tips on directly placating customers and employees unhappy with your service. That’s not what this article is about because it doesn’t go to the crux of the matter.
In reality, feedback comes to you most of the time through NPS (Net Promoter Score) and other anonymous surveys. Respondents’ identity protection is a condition for expressing their feelings in the first instance. There’s no doubt that when a survey guarantees anonymity, it creates a higher probability that the feedback will be accurate and honest. Respondents are far more inclined to express deeper feelings that may even verge on embarrassment. The downside to this anonymous feedback is that it seldom leaves room for two-way communication.
On the other side of the coin, asking respondents outright what they think tends to generate answers they think you want to hear. It’s a natural human aversion to being confrontational.
Instead, let’s look at the top reasons for churn (affecting employees and customers). Negative feedback, if heeded and applied wisely, provides the foundation for ROI-centric remedial action.
Customer Churn: Causes and Solutions
Here are some of the most significant customer churn causes signified by negative feedback and the suggested remedies.
You’re signing up the wrong customers (who don’t genuinely understand what they’re buying or what it involves). Fast conversions may look great in the short term. However, if sustainability is inadequate or non-existent, they lose their shine down the line. Feedback will register as disappointment when brand outcomes drop below expectations.
Notably, the touchpoints to blame are probably early in the sales process when customers misinterpret your communications and promotions. The chickens come home to roost later on in the customer journey (after purchasing) with profit-deflating consequences. If you analyze your feedback carefully, you’ll see that much of it circles back to mismatching your brand to the wrong segments. Also, when you devote excessive time to engaging new customers who repeatedly can’t stay the course, you’re probably missing out on those that can.
Your customer support is not up to scratch. Customers leave the brand bandwagon when company support frustrates or fails to provide helpful advice quickly. Today, customers are short on patience and long on expectations; support agents are the biggest culprits in widening the gap between them even more. Regular feedback surveys are crucial to quickly uncovering customer discontent when seeking help, keeping in mind that touchpoints requiring technical and other support exist throughout the customer journey. The key considerations are:
- Support channel employees must competently deal with the intricacies of engaging customers and prospects. It’s why so many companies contact their customers afterwards to find out how the recent support call went.
- AI software can fill in numerous support gaps far better than humans for specific situations.
- Leveraging the versatility of YouTube video guides and other self-help docs may be the key to rounding out your support tools.
- A vital consideration is ensuring that your customers can enjoy a smooth customer journey without the stress or turnoffs that ultimately lead to churning.
Your customers repeatedly highlighting competitor benefits that overshadow your own is another negative feedback alarm bell.
Be extra-sensitive to information that demonstrates competitors’ brands are motoring ahead, and continually monitor competitor actions and adjust in meaningful ways.
The only reason loyal customers are in your camp is that they believe you offer a significant difference. The day you look the same, or beneath others, your compelling proposition for customers staying over the long run weakens or disappears.
Negative feedback about pricing could relate to numerous things. Price points in isolation aren’t helpful, but when paired with value perceptions, they light up. As examples:
- “Your features X, Y, and Z are good to have but not to pay for. I hardly ever use them.”
- “I bought Brand L for 15% less, and it works just as well.”
- “Your prices are too high because bugs are recurring in the system.”
The above feedback, if many share the same views, provides valuable input. Responsible marketers will reconfigure their products to keep the same complaints from reoccurring.
Employee Churn: Causes and Solutions
Now turning our focus internally, here are some of the most significant employee churn causes signified by negative feedback and the suggested remedies.
The following may appear like dissatisfaction employees can air in a two-way open forum. In such cases, they do allow you to remedy festering anger and upset before the employee terminates. Do you provide a suitable platform for interactive discussion? A lot depends on your company culture and the way you deal with disagreement:
- Transparent and reactive organizations tend to get brewing employee issues into the open sooner rather than later, in which case they avoid churn’s ROI deflation effects.
- Alternatively, suppose you mostly see negative feedback in exit interviews or anonymous surveys. In that case, it’s not something you can fix on a one-to-one basis. It also tells you that possible cultural flaws are significantly disrupting your organizational harmony.
These are some of the biggest drivers of employee churn alongside suggested strategic remedies to counteract them:
Employees express feelings of being undervalued. Under anonymity, they are more eager to share negative emotions. Note, feedback reflecting a lack of recognition may have little to do with financial rewards. Adjust your HR policies to create a sense of employee belonging by acknowledging excellent achievement at every opportunity.
Compensation issues are prolific in negative survey feedback. Failure to calculate commissions accurately, award bonuses on a systematic formula, and holding back on raises are primary churn instigators. When you observe a lot of negative feedback on these issues, the time’s arrived to audit your compensation packages.
You’re working the employee too hard, not leaving enough time for family. Irrespective of how competitive your monetary compensation is, too much work pressure can create churn. Good examples of this are law firms where well-paid associates complain bitterly about being on call 24/7.
Organizational shifts create substantial discontent at times, especially when employees feel overlooked for promotions or the appointment of a new boss fails to account for foreseeable personality clashes. The biggest feedback gripe emerges from not consulting the employee about making hierarchy changes.
When employees are ambitious, a lack of transparency on mapping out the employee journey can create so much frustration that it leads to resignation. Successful companies consistently align employee goals with their own.
Sometimes company job descriptions, for various reasons, are unrealistic. Eventually, the employee hits a brick wall and leaves, releasing the stress of unsuccessfully trying but never meeting management expectations.
Not enough intellectual challenge and job boredom are severe churn feeders. Work stimulation, participation in project decisions, and new and exciting challenges keep employees engaged, even when the pay doesn’t match the job demands.
Inadequate company support is a root cause of churn, often overlooked until it’s too late. It can come in many forms:
- The employee believes the company’s technologies are inadequate.
- Management isn’t helping when they should.
- The brand isn’t competitive.
The solutions to these are pretty simple: recognize your employees for a job well done, compensate them appropriately, and create a spaces for honest communication. Overall, these eight essential focus items go to the root of your strategic planning to either encourage employee churn or stop it in its tracks.
Conclusion
The most significant benefit of negative feedback is that it informs your strategic changes to stop or slow down customer and employee churn. A company that can take you down this road is Sogolytics. Its professional team has years of experience interpreting survey feedback and translating it into practical business actions that remove churn erosion from the equation. They also understand the steps to solicit feedback — good and bad — with the objectivity you need. Contact Sogolytics to start collecting and acting on feedback in a way that’s immensely constructive and yields fast results.
