How Early-Stage Startups Can Build a Strong Customer Feedback Loop

Before diving in, you should internalize how important customer feedback is.

In fact, it's the most important thing you can do for your business. Everything else will fail if this step is skipped or not done correctly.

Why is customer feedback important

The essential task in a startup is to create wealth; the dimension of wealth you have most control over is how much you improve users' lives; and the hardest part of that is knowing what to make for them. - Paul Graham, Startups in 13 Sentences.

In this post by PG that was originally published in 2009, half the principles in the list had something to do with talking to and understanding users better.

It’s not surprising, after all the purpose of every business in the world is to serve user’s needs.

How to collect customer feedback when your product isn’t ready

I’m so terrified of building in isolation, without knowing if users actually want or care about everything we are doing. It’s a trap that I want to avoid at all costs.

DelightChat was not being built in total isolation. We conducted multiple customer calls every week for nearly 3 months, showing the work-in-progress designs, describing the approach and functionality we are building.

We would gather customer feedback via

• feedback on the product designs
• questions on “can it do X”
• Noting their objections and complaints about competitor tools and why they ditched them
• understanding deeply their pains for which they are seeking a solution like ours in the first place

Customer here refers to someone looking for a solution like ours, who is potentially going to use it once it’s ready.

What is the customer feedback loop

Despite talking to potential users every week, I was still terrified.

To me, the only real-world metric that validates demand is usage. Until someone signs-up and starts using DelightChat, everything they said to me could potentially be tossed out a window.

In February, we had our first users and we finally closed the customer feedback loop.

What does the user feedback loop look like

• A real customer, using the product, gave us feedback.
• We acted on the feedback by fixing a bug, or shipping a small or big feature.
• The customer said their problem got solved, the app is more useful to them.
• The customer gives a new feedback — repeat the loop.

Potential side-effects of having real users in this loop

• Your roadmap might go for a toss
• You might add a dozen feature requests a week (from small to big)
• You learn the various ways in which your product can break, because real-world usage is messy (unlike internal usage and testing)
• You start to learn the ways in customers behave in the real world, which your product can help them do better

All of this is good news. Music to my ears, honestly.

How to collect customer feedback for early-stage startups

If you go online looking for answers, you’ll learn about surveys, in-app feedback cards, NPS scores, feedback boards and whatnot.

All of these are great, but not when you are going from 0 to 1 user, your first 10 users, and I’d argue even till you have your first 100 users.

I strongly believe that direct feedback is the right approach. 

How to collect direct customer feedback:

• Schedule phone/video calls with your users, ask them to describe problems verbosely, or share their screen to show their existing workflows.
• Create a WhatsApp/Slack group with your users, where they can share an issue or tiny feedback the moment they face it.
• Give out your personal number/email, and let them know they can message you with a problem at any time and that you welcome it.

We did all of these in February and will continue doing so until we have 100 users (perhaps more).

How to decide which feedback to act on

Deciding which feedback to act upon has a small impact in the short-term, but in the long-term it might make or break the future of your product and by extension, business.

That’s why you must try to find signal through the noise.

Let’s call this signal - good feedback.

Identify good customer feedback

Feedback is feedback, positive or negative, you should simply note it down without emotion.

But all feedback isn’t useful. So it’s equally important that you separate good feedback from the bad.

Bad here simply means feedback that isn’t beneficial to you, it doesn’t have to be negative in nature.

How to identify good feedback:

• It has a clear pain point that the user is facing TODAY.
• The feedback is extremely detailed or verbose, where you understand the real reason the problem even exists. Maybe it’s their process that is broken, maybe it’s something lacking in other tools they use in conjunction with yours. Reason - you can’t fix bad process with features.
• Acting on this feedback will benefit not only that user, but all or majority of your other users as well.

By inversion, bad feedback is:

• About a pain point the user might face “someday” in the future.
• Not very descriptive or detailed, you don’t understand the root of the problem.
• The feedback, if implemented, will not benefit any other user of your product except them.

Closing the customer feedback loop

The final part of the loop is to inform your customers when you improve the product, especially if it directly affects them or is a result of their feedback.

Once again, don’t use impersonal channels or mass-communication. Send them a 1:1 message explaining the new update and how it works.

Better yet, record a very short video (under 2 minutes) along with a bullet point list of the updated features and fixes.

This step is important not only to inform them about the update, but also to show them that you care.

It’s derived from the philosophy that having 10 happy users is better than having 100s of poorly engaged “meh” users.

Bonus: The sales customer feedback loop

Collecting feedback from users of your product is #1 priority, but the immediate #2 priority is to collect feedback from demos and sales calls.

When giving a demo of your product, make sure you note down every feedback. It could be:

• “Can your product do X?” — Ask them why they need X.
• “I use competitor product A this way. Can you do the same?”
• “I tried competitor product B but left it.” — Always find out why they left a competitor.
• Ask: “Why do you want to use a tool like ours?” — it will tell you the real reason they are seeking a new solution. It could be cost, missing features, ease of use. Whatever it is, you want to know.

How this feedback loop closes is when you act on features in your roadmap and then see a change in response from similar customers who didn’t sign-up in the past, this time going ahead and signing up with you.

It could even be in your positioning and pitch where you say “We are a great solution to problem A that customers like B & C face. We solve it by doing Y.”

This is simply highlighting the problems that people actually care about. Otherwise they won’t know that you’re the right solution for them!

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I want to learn from you.

Which stage of the journey are you in? Pre-users, or onboarding your first 10/100 users.

Tell me how you do customer communication and close the feedback loop on Twitter.

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