Thousands of new businesses start up every year, but many of them fail within just a matter of years. According to statistics published by the Small Business Administration (SBA), about half of all businesses survive at least five years and only a third survive ten years or more. However, Bloomberg paints an even bleaker picture:...
Thousands of new businesses start up every year, but many of them fail within just a matter of years. According to statistics published by the Small Business Administration (SBA), about half of all businesses survive at least five years and only a third survive ten years or more. However, Bloomberg paints an even bleaker picture: eight out of ten entrepreneurs who start businesses fail within the first eighteen months. In other words, only 20% manage to make it into their second year.
So, what is the difference between the 80% that fail and the 20% that succeed? There are many reasons why small businesses fail but one common reason is that most small business owners are so preoccupied with work that they never take the time to step into the shoes of their customers to see and experience their business from another vantage point. However, it is crucial for a business owner to understand what customers like and dislike about the business, how the competition differs, or what the customers desire most. Knowledge of customer perceptions gives a business the power to make changes that can prevent its downfall. In this way, customer knowledge is the lifeblood of a business, playing a vital role in its success or failure.
Is Your Business Working?
Customer feedback is essential for a business to grow. Here are a few reasons why:
- Customer feedback provides an opportunity to listen and respond to the needs and wants of customers. Customer feedback also makes it easier to identify needs that customers might not have considered and anticipate their possible future needs.
- If a customer feels that his needs are not being addressed or that the business is more concerned with what it feels the customer needs than what the customer actually wants, the customer is less likely to buy from the company. This will, of course, have an immediate impact on the bottom line.
- When customers are unsatisfied with either the product or service company offers, they will not recommend the company to others. The customer might also go so far as to actively dissuade others from patronizing the business based on his own negative experience. The power of word of mouth cannot be underestimated.
- It costs four to ten times less to retain current customers than it does to attract new ones. Good customer service keeps customers happy. If needs go unmet, customers might buy from the business once and never return. If a company has to spend a constant portion of their operating budget attracting new customers, it can lead to cash flow problems, which can be the death knell for a business.
Feedback surveys are an especially helpful way to monitor customer satisfaction, providing two key benefits:
- They provide insights into what customers like or dislike, calling attention to specific problem areas which need to be addressed.
- They help a business develop long-term strategies to become more effective and customer-centric. Rather than guessing where time and money should be allocated, customer feedback provides a new business with clear, practical insights to achieve greater growth.
Feedback surveys generally include questions which respondents answer on a sliding scale. However, they can also include open-ended questions which provide even more insight. These questions might include:
- Why did you choose to do business with us in the first place?
- What is one thing we do better than other businesses?
- What is one thing we could do better than other businesses?
- Would you recommend us to friends or colleagues? Why/why not?
Building a Lasting Business
Customer feedback is responsible for the continued success of a new business. If a company engages in no follow up with a customer, it has no idea what the customer thinks. Consequently, the business will most likely lose that customer to a competitor, and no new business can afford to take this risk. After all, the majority of businesses, particularly new businesses, rely on repeat customers. Simply asking for opinions can make the difference between success and failure, turning an unhappy customer into repeat customers.
And a final thought to consider. These days, customers are very likely already sharing opinions about businesses, especially online. Providing them with internal feedback opportunities is probably a safer and more productive way to keep track of what they are saying. If customers are going to talk about a company anyway, that company might as well hear, learn from, and profit by what they are saying.