From Customer Feedback to Customer-Led Growth

Customer-Led Growth vs. Product-Led Growth

Let’s define the two terms first to get going.

Customer-Led Growth

Customer led growth means that a business relies heavily on insights from customers as the driving force to guide decision-making and enabling growth. It affects all areas of business from customer acquisition to churn rates.

Product-Led Growth (PLG)

Companies that have chose the product-led growth strategy rely on product experience as the driving force.

Calendly, Zoom and Dropbox are great examples of companies that successfully do PLG.

Which Tactic to Choose?

It could be argued that PLG is a second cousin to customer-led growth. Simply because they both define the customer (or user) experience to be the guiding force of all business.

Especially SaaS companies try to go for the PLG model, as it’s seen as the quickest way to become a unicorn: You minimize all friction from users and create a product that sells itself.

If you don’t have a product that could be used to drive growth, or you feel a little hesitant about going down that road, customer-led growth is probably the best fit for you.

After all, each and every company can exist only if they have customers that like them. More importantly, you can only grow, if you know what people like and how to give the same experience to everyone!

From Customer Feedback to Customer-Led Growth

Collecting customer feedback and measuring customer satisfaction has become more common in recent years as customer demands rise and competition intensifies in various industries. Almost without exception, successful companies take some form of customer satisfaction measurements and strive to develop their services to better meet the needs of their customers.

Though this doesn’t mean that the collection of customer feedback and the measurement of customer satisfaction are necessarily yet automated at any level. Furthermore, the processes are often not documented well or at all.

Despite this, surveys are conducted often manually. It could be said that, in general, the business community is at a stage where the importance of feedback and customer satisfaction has been understood, but there is still room for improvement in automating the collection itself.

At Trustmary, we have developed an easy and effective way to measure customer satisfaction and gather feedback – automatically. You can even automate the whole feedback flow directly with your CRM, such as Pipedrive and HubSpot.

To be honest, this was not our original idea. One could even say that while our customers can use Trustmary to solve their challenges of measuring customer feedback and measuring customer satisfaction. We don’t believe that the feedback or measured satisfaction our customers receive should be the primary added value that Trustmary or some other similar tool seeks to provide.

In principle, all companies are trying to make a profit, and the primary goal of customer feedback processes is ultimately to support that. Often, however, companies seem to forget why customer feedback is collected and the actual end results is lackluster.

Customer Centricity at the Heart of It All

Companies that measure customer satisfaction and collect feedback often have one unifying factor: They are at least to some extent customer-centric. Customer feedback is considered important and customer satisfaction is seen as an important measure of a company’s long-term success.

However, companies that swear by customer centricity can approaching the issue in two different ways, and their perspectives on how customer data and customer relationships should be utilized in growth may even be quite the opposite. This is why customer centricity is such a challenging term. Indeed, how a particular piece of information is utilized is much more important for a good outcome than the collection of the information itself.

In summary, it could be said that the differences between the different approaches become clearer in the approach to business development in general.

Deep Understanding of Existing Customer at the Core

While some companies focus on developing the customer experience by improving the service, others focus on developing the customer experience by focusing on the right customers.

Those who focus primarily on either approach largely agree that customer satisfaction is a measure of relevant information from which conclusions can be drawn about a company’s future prospects. Thus, it can be said that it’s worth measuring customer satisfaction and collecting feedback on the reasons for customer satisfaction.

However, companies that rely on different approaches don’t agree on whether all customers should strive to be served well. At first glance, it may seem obvious that customer-centric companies want to serve all customers well, but the fact is that business needs to make choices about their ideal customer profile.

Define Your ICP

Ask yourself: To whom is our service designed for? Who do we strive to serve well?

If you try to serve everyone, you’ll likely serve everyone mediocre. But if you choose to serve a very specific target group really well, you must at the same time realize that you can’t serve well those outside of the ICP.

The essential difference between the approaches will be the diagnosis of the root causes of the poor customer experience. Is the root cause more likely to be in the focus of customer acquisition, or in the processes themselves?

The key difference between the different approaches is the way in which the customer experience is believed to be developed most effectively. It can be by focusing on customer acquisition or by developing the overall customer experience.

Whether you experience the benefits of the data collected most concretely in the development of processes or customer acquisition, we believe the easiest wins can be achieved by leveraging your satisfied customers in your company’s customer acquisition. This does not rule out the possibility that the feedback data itself would otherwise be valuable, but you will certainly get faster results by leveraging your satisfied customers.

Once you’ve defined your ICP, you can focus on keeping them happy by regularly tracking customer satisfaction to prevent churn. One great way to track customer loyalty is to measure NPS.

Customer-Led Growth as a Process

Measuring customer satisfaction and collecting feedback and making the most of the gathered data is a process. It can be divided into three stages.

These three steps ensure that customer satisfaction is actually translated into sales growth.

Step 1: Identify Satisfied Customers

In the first phase, the measurement of customer satisfaction and the collection of feedback are always put in order. We often like to use NPS (Net Promoter Score), as the primary quantitative measure.

In its simplicity, NPS is the following question, which is answered on a scale of 0-10:

”How likely are you to recommend us to a friend or colleague?”

Three Reasons to Use NPS

1. It tells the potential found in satisfied customers in a concrete way
2. It’s comparable and there is quite a bit of data to compare to
3. It’s a fairly studied measure in academic literature

Perhaps the most important reason from these is the first, the discovery of potential.

The process we are defining here doesn’t work for companies that don’t have satisfied customers.

In 97% of cases, companies’ customer satisfaction and feedback processes stop there. Feedback is collected and satisfaction is measured at different contact points, which makes a lot of sense. In other respects, the data is just analyzed and the process doesn’t materialize into added value in the business in any way.

However, we see opportunities here. Now that we know who your customers are happy with, it’s time to leverage customers as part of your growth story.

Step 3: Convert More Sales and Improve Conversion Rates with Social Proof

The final step in our process is the part which is usually almost completely forgotten by our customers before they start using Trustmary.

Even if feedback is collected, it’s often forgotten to leverage that in marketing.

When for example testimonials are received from satisfied customers, it’s also worth it to leverage them in both sales and marketing.

At its simplest, this means adding testimonials on a website, in sales, and in various marketing channels.

In our experience, the most important of these is the website. When testimonials are effectively brought out there, they usually flow naturally into sales and other marketing channels, almost without effort.

Does Adding Testimonials Actually Do Your Business Any Good?

This question is rarely asked.

The benefits of using testimonials and other forms of social proof are already obvious to many marketers. That’s why their usefulness can often be taken for granted. that they are forgotten to be questioned in an appropriate way.

We believe it would be useful to understand why things work and why they do not work.

Like reciprocity, the theoretical framework around testimonials and more broadly about social proof, have been brought to attention of most people by Cialdini.

Cialdini summed up the phenomenon like this: when people make a decision, they assume that the decisions made by others are the right ones. If the decisions of others are likely to be right, it is, of course, natural to look at what others have done and act the same way they do.

Regarding the effectiveness of social proof, Cialdini also described that the effect of social proof is dependent on the uncertainty the customer feels. Thus, you can make sales without social proof. But if the customer is unsure of their decision social proof will increase conversion rate.

If you’re wondering whether Cialdini invented this theory on his own or whether this has been researched also by other people, it should be stated that the effect of social proof has been studied and documented since the 1950s.

Perhaps the best known single study on the subject is a study conducted by Solomon Asch in 1951. In the study, he sought to test his theory that people adapt to the majority. This happens even if the majority is wrong. We have written more comprehensively about it on our blog: What is social proof and how to use it.

The impact of the testimonials and social proof on one’s website and more broadly in sales and marketing is reasonably well documented in the research data. Based on our own tests, we can conclude that the research translates relatively well into practice as well.

Of course, adding testimonials won’t necessarily increase your website’s conversion rate by 15%. Sometimes, it’s impossible to measure effectiveness if too many changes are made at once. In other cases, the effectiveness is 30% and sometimes 5%. However, it all depends on how big the impact of the increase in conversion rate will have on your overall revenue.