Top 10 Reasons Why Customer Feedback Is Important To Your Business

Over 42% of startups fail because they misread market demand.

Unless you are Steve Jobs, the only way to know what your users want is by listening to them.

In this guide, we'll go over why collecting customer feedback is crucial for your business and the best practices for doing so. 👇

What is customer feedback?

Customer feedback is the information your users provide about their experience with your product.

It's super valuable because it gives you insights into how to improve your product, retain customers, and attract new ones.

You will encounter different types of feedback:

• Feature requests: Customers often suggest new features or improvements for the product. These insights help you with product development and staying ahead of competitors.
• Bug reports: Errors or issues your users encounter while using the product. Because bugs can seriously disrupt the user experience, so you should prioritize them over features (most of the time 🤔)
• Satisfaction surveys: Surveys mostly help you measure customer satisfaction levels. You can run surveys inside your app, through emails, etc.
• Usability feedback: Feedback on how easy or difficult it is to use the product. It mostly helps you identify and fix UI/UX problems.

...customer reviews, sales objections, churn feedback, and the list could go on.

The idea is that whatever feedback you collect, you gain crucial information about your customers that helps drive strategic decisions for your product. It also helps you connect with your users, improve the product, and boost customer loyalty.

The importance of customer feedback for your business

Building tech products is now cheaper than ever, and the cost continues to fall. This also means that the competition is higher than ever.

Collecting customer feedback is crucial for staying ahead in today's competitive market. Here's why 👇

1. Helps improve your product

Good products are not built on guesswork. They're built by carefully listening to and analyzing users' actual needs.

Customer feedback highlights what's missing, what needs improvement, and what to work on next.

If multiple customers point out the same lacking feature or a recurring problem, you know what to prioritize. This makes your product development efforts more effective, and the changes you make have a real impact.

Voting boards are super useful for this. They let your customers submit and vote on feature ideas, allowing you to decide what to focus on first.

2. Boosts customer satisfaction

But user feedback is more than just suggestions - it helps you understand their satisfaction.

High customer satisfaction means that customers are more likely to return and engage with your business again. They also tend to share their positive experiences with others, etc.

While general feedback can give you a clue about satisfaction levels, you should also measure them separately with dedicated surveys, like NPS.

This enables you to track improvements over time and identify new areas that may require attention. Using a cloud contact center can help you manage feedback through phone conversations more efficiently, for example.

By actively listening and responding to your users' feedback, you will gain their loyalty and trust.

This brings us to the next point. 👇

3. Builds customer loyalty

Implementing customers' requests doesn't just fix immediate issues - it builds lasting loyalty.

When users see their reported bugs resolved in later updates, their trust in your brand grows. A timely response increases the likelihood of them becoming loyal, long-term users.

This is where a robust feedback loop can make all the difference. After receiving feedback, be sure to give a clear response that communicates your plans.

With a feedback tool like Featurebase, you can automatically notify all upvoted users when you've started working on their feature.

Keep in mind that you SHOULDN'T implement every feature request you get. The art of saying "no" plays a big part in managing customers' expectations and keeping them happy.

4. Helps attract new customers

Actively listening and implementing customers' feedback gradually starts turning them into brand advocates.

Positive reviews and word-of-mouth recommendations are powerful growth tools. Genuine referrals are far more influential than standard marketing pitches, especially in today’s transparent digital age.

Building a good product that customers can't help but recommend is the key to product-led growth.

By demonstrating that you actively listen to feedback, you show potential customers your commitment to quality and satisfaction. It also helps nudge those who haven't yet made the purchase.

5. Simplifies decision making

Customer feedback is a goldmine of real data that Product Managers should practically treat as gospel. 😅

By analyzing this feedback, you can base decisions on actual user needs rather than your personal assumptions.

Going a step further, you can use a tool like Featuerbase to connect feedback with your customers' revenue to see and sort ideas by their total monetary value!

A data-driven approach like this helps PMs and POs massively in prioritizing product backlog with feature ideas that provide real upside.

6. Encourages customer engagement

Asking for feedback also makes your customers feel involved and valued by you.

Implementing feedback from your users creates a sense of ownership among them, which further boosts their engagement with your brand

This leads to more feedback, suggestions, and even customer advocacy, creating a positive cycle of interaction and improvement.

Moreover, engaged customers are more likely to participate in other areas of your company, such as community forums, social media, and promotional events, further increasing their loyalty and connection to your brand.

7. Improves overall customer experience

Listening to customer feedback helps you create a better product and an overall experience, which in turn, boosts almost every other metric of your business.

If you were to ignore feedback completely, you wouldn't find all of the bugs and missing features.

When customers point them out, they're essentially offering you a free roadmap to a better product. It would be a crime not to accept it. 😅

8. Reduces churn

Reducing churn is arguably one of the most important issues for any startup, and customer feedback can help a lot with it.

When users feel heard and see their suggestions implemented, they are less likely to leave your product for a competitor.

It's important to find out and address any pain points early. This way, you'll not only keep your users satisfied but also turn them into super loyal customers.

Pro tip: Set up churn surveys to ask leaving customers why they left. This will help you win them back or, at the very least, fix those issues for your current users.

9. Improves customer retention

Customer retention and churn go hand in hand. But it's not just about retaining customers - it's also about keeping them happy.

By continuously improving your product based on customer feedback, you ensure that it meets their evolving needs.

Regularly asking for feedback and acting on it shows users that you value their opinions. This fosters a sense of loyalty and makes them more likely to stick around.

10. Strengthens brand reputation

A strong brand reputation is built on trust. The problem with trust is that it's very hard to win and super easy to lose.

That's why word-of-mouth and positive reviews are incredibly powerful in today's competitive markets.

When you actively seek and implement customer feedback, you show them that you care. Real dedication rarely goes unnoticed and is appreciated by customers, who are likely to share their positive experiences.

How to collect customer feedback?

Now that you understand why customer feedback is crucial for your business let's discuss the best ways to collect it.

You can use various tools and channels, but the main goal is to centralize as much of it as possible in one place. This way you can easily analyze it to make educated decisions.

These methods are popular for their convenience and scalability:

1. Public feedback forum: A public forum where customers can provide and vote on feedback, track product updates, and interact with other users. This helps you spot the most relevant feedback right away.
2. Feedback widgets: In-app widgets allow customers to provide feedback frictionlessly inside your app. This is perfect for tracking bugs, as users can submit reports about them right where they happen and take screenshots.
3. Surveys: There are loads of different surveys, like CSAT, NPS, and others. You can run them inside your app, through emails, etc.
4. Customer support chats: A lot of the feedback comes from live chats. Many feedback tools let you push this feedback into voting boards for better prioritization.

Featurebase lets you do this all. You can collect feedback via widgets, surveys, or support chats, and everything ends up conveniently on your voting boards.

Once you have the feedback in one place, you can manage it to make impactful decisions. For instance, you can sort it by customer revenue.

Best practices for collecting customer feedback

As we’ve discussed, collecting customer feedback is important for improving your products. Being familiar with some best practices will help you make the most of this process.

Here are some important tips to make the best of it.

1. Setting clear objectives

Before collecting any feedback, it's crucial to define clear objectives.

What do you want to learn from your customers? 

Are you assessing a new product feature, gauging satisfaction, or identifying pain points in your product?

By setting specific goals, you can customize your feature-tracking tools to better meet your customers’ needs.

2. Gathering everything in one place

Having a single source of truth for all feedback is crucial for making sense of it.

The problem is that you're likely getting it from many different channels, including emails, Intercom chats, Slack, etc.

That's where feedback tools can be real game changers. They give your users a dedicated place for requests. Feedback forums are also awesome for reducing duplicate ideas, as users already see existing ones.

3. Close the loop

Closing the feedback loop is crucial for building trust. When users give feedback, they're engaging with your product.

Letting them know that you've made changes based on their input shows that you value their thoughts. 

Featurebase sends automatic updates to users when you've started working on their feedback. You can also use in-app release popups to bring release notes in front of your users.

Conclusion

You can't ignore the value of collecting customer feedback. It helps you build better products, reduce churn, and even market your company.

But collecting high-quality feedback needs a strategic approach and a scalable system.

Featurebase helps you track feature requests, prioritize them intuitively, and communicate product updates back to customers to boost community engagement.

Unlike many other tools, trying Featurebase is easy and straightforward. With the Free Plan, you can collect unlimited feature requests, so why not give it a try?

Start collecting customer feedback with Featurebase for free →