Rupali Kaul, Stephen J. Anderson, Pradeep K. Chintagunta, Naufel Vilcassim
Academics and practitioners acknowledge the value of customer feedback in improving firm performance. Companies routinely solicit feedback from different customer subsets. However, the extent to which this feedback impacts nonsolicited customers depends on whether firms implement meaningful business-level changes that resonate with customers. This paper assesses customer feedback’s impact on firm learning and business improvements as well as its spillover effects on nonsolicited customers using a randomized, controlled field experiment conducted in Rwanda over two years. We hypothesize that private feedback seeking could operate through two broad mechanisms: (a) directly influencing solicited customers and/or (b) prompting firms to improve their offerings, leading to spill-over effects on other customers. Our results demonstrate a 38.2% increase in recall and a 77.4% increase in purchases for customers not engaged in the feedback process. The analysis further suggests that business-level changes driven by customer feedback fuel these spillovers. Additionally, customer feedback seeking significantly improves treatment firm performance, resulting in a 62.0% revenue increase and 54.5% profit increase compared with control firms. Our study also introduces a basic customer feedback-seeking technology for small businesses to improve performance. These findings can guide firms in leveraging customer feedback to undertake business changes and generate greater revenues/profits. © 2024 The Author(s).
INSEAD, 138676, Singapore; Mays Business School, Texas A&M University, College Station, 77843, TX, United States; Booth School of Business, University of Chicago, Chicago, 60637, IL, United States; London School of Economics, London, WC2A 2AE, United Kingdom
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