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The Fast Company Executive Board is a private, fee-based network of influential leaders, experts, executives, and entrepreneurs who share their insights with our audience.

The difference between being customer-informed and customer-led

There’s a huge difference in the level of commitment to acting on customer insight—and there’s a huge difference in where it can take you as a business.

The difference between being customer-informed and customer-led
[Yakobchuk Olena/Adobe Stock]

Businesses need to know what their customers think—it’s no surprise that they’ve devised many different structures and channels for capturing customer feedback. They have customer advisory boards, which are filled with senior clients from strategically important accounts who are invited to feed into product road maps. They trigger customer surveys from website visits, record customer service calls, and ask people to fill out reports when there’s a problem.

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Many of these businesses would describe themselves as customer-led. And some of them are. But not all. That’s because there are subtle but important differences between being a customer-informed and a customer-led business. If you allow certain customers to provide input on the direction of the business in certain areas, then you’re customer-informed. If you create a system that aims to capture strategy-shaping insights from potentially any customer, then you’re customer-led. There’s a huge difference in the level of commitment to acting on customer insight—and there’s a huge difference in where it can take you as a business.

FREEING CUSTOMER FEEDBACK

Many businesses integrate customer feedback into a framework that’s already set by their strategy. They’ve decided which customers’ ideas matter because they’ve decided which sectors and areas of the market they’ll focus on. They have a marketing-led growth strategy that’s then informed and optimized by customer insight.

Other businesses have an engineering-led approach, following the internal logic of their product portfolio to decide what they launch next. They aim to keep iterating and improving their products, produce a road map, and then elicit customer feedback to fine-tune it.

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It’s important to point out that both approaches make a lot of sense intuitively. They add structure to a mass of insight that could otherwise feel intimidating and overwhelming. They determine in advance which type of feedback should lead to which type of action—and which team should be taking that action. However, they do this by boxing in the scope of customer feedback and curtailing its ability to generate really big ideas.

Customer-led growth differs because it makes customers value the guiding force behind product development—and it doesn’t predetermine what form that value should take, or which customers should experience it. It’s more demanding of a business and its leaders—but it can expose you to a far greater range of market and growth opportunities.

THE VALUE OF GIVING ALL CUSTOMERS A VOICE

It starts with a commitment to giving a voice to all customers. Customer advisory boards are great for providing focused insight to help solve particular problems and build particular customer relationships, but they’re not really designed to shed entirely new light on your strategy. They probably won’t alert you to market opportunities you haven’t already recognized, opportunities among smaller customers who could be bigger customers or opportunities in market areas where you’re currently underrepresented. To stay alert to all of the forms of customer value that you could create, it’s crucial to expose yourself to feedback and ideas from across your customer base.

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One of the reasons businesses often give for not doing so is that it’s too complicated. Focused advisory boards are manageable, the theory goes, while trying to survey your entire customer base sounds like a huge research commitment. However, while research can definitely promote broader customer understanding, it’s not essential for a customer-led approach. The fact is, customers talk to, give feedback to, and provide insight to your business all the time. You just have to be prepared to analyze and act on it.

ACTING ON THE CUSTOMER INSIGHT YOU ALREADY HAVE

The broader customer feedback that drives my company’s strategy comes from support tickets and comments that our customers attach to them. It comes from feedback forms, online chats, social media comments, and community groups. The nature of these channels means that we tend to get feedback from our most engaged customers—and that’s a good thing because the feedback is more informed and constructive as a result. It helps us identify areas to improve and innovate. It also creates long-term advocates at scale: customers who were engaged with our solutions to begin with and now have the sense of being part of our journey.

All of this takes time and resources. It requires people with decision-making capabilities to spend time immersing themselves in the substance of what customers say: reading through tickets, chats, and feedback forms, and operating with a conviction that there are insights of real value to be found. We’re a customer-led business because we recognize the value of investing this time. Analyzing what your customers have to say deserves to be prioritized alongside analyzing revenue or growth figures—because, ultimately, it’s what those numbers depend on.

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MARRYING CUSTOMER FEEDBACK AND EXPERTISE

Being customer-led doesn’t mean solving every problem that your customers highlight—or solving them in the way your customers think you should. If you take customer value seriously as an organization, you don’t leave it up to your customers to work out how to generate it. That’s why customer-led organizations still have road maps and strategies that are designed by engineering, marketing, and other teams. They use customer feedback to identify pain points and opportunities to solve them. They then use the expertise within the organization to solve those pain points in a way that’s more innovative, more scalable, and more capable of delivering value to more customers.

There’s an implicit assumption in many approaches to customer feedback—a false logic that because your customers don’t understand the business as you do, their experiences, views, and suggestions carry a lot less weight. Actually, the opposite is true. Customer opinions don’t come with prior assumptions about how you do things, what’s possible, and why. They’re driven directly by insight about where there’s an opportunity for value that’s yet to be met. That can be one of the most valuable sources of inspiration and forward momentum for any business. Rising to that opportunity and finding a way to generate that value? That’s where you come in.


Jason VandeBoom is Founder and CEO of ActiveCampaign, the Customer Experience Automation (CXA) category leader.

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