Understanding and addressing customer needs is essential for every business. Closing the customer feedback loop is a powerful way to improve customer satisfaction, build loyalty, and increase revenue.
In this article, we discuss the importance of closing the feedback loop, explain the difference between a positive and negative feedback loop, and cover some customer feedback loop best practices.
Feedback Loop Definition
A feedback loop is a process in which the output of a system is used as input to influence and modify the system itself. In other words, it is a cycle where the output of a system is fed back into the system, which affects subsequent outputs. Feedback loops occur in various contexts, such as business, biology, economics, and human behavior.
In business, the customer feedback loop refers to the process of collecting feedback from customers or employees and using it to improve the company's product or service. Boosting customer and employee satisfaction is key, so incorporating feedback in the product roadmap leads to higher loyalty and better product decisions.
Closed Feedback Loop
While it is a logical process, many companies struggle with closing the feedback loop. To successfully do it, you need to collect actionable feedback, extract insights, plan the changes, implement and announce them.
When you receive feedback, the first step is gathering as much information about it as possible so that you can understand your customer’s context. In a survey, you can do that by asking secondary questions. In other cases, you should consider reaching out to the customer directly. The next step of the process is data analysis, which allows you to determine whether it’s a recurring or one-time issue and what may have caused it.
Afterward, you can move into the response phase. If the customer’s issue is a routine one, you can use an automated response and save time for bigger and more urgent issues. You also need to share the feedback internally and explain why it is important to act on it. After planning or implementing the changes, you can thank the customer for their feedback and reassure them that it has been taken into consideration.
Why Is It Important To Close the Feedback Loop?
Closing the feedback loop requires some effort and organization, but it can be a game-changer for any business. Here’s why.
Reduced customer churn
Following up on negative feedback is the only way to keep an unsatisfied customer from turning to your competitors. If you ask for feedback but don’t act on it, you are wasting your customer's time and amplifying their frustration.
Most of the time, we choose the path of least resistance. Your customers want to stay with you, so give them a reason to do it. When you thank them for their feedback and prove that you take it seriously, you’re improving your customer retention and loyalty, which ultimately leads to increased sales and revenue.
Improved employee efficiency & satisfaction
In a similar vein, your employees want to feel good about their workplace and the work they are doing. Incorporating their feedback will make it easier for them to satisfy customers' needs and be successful at their jobs. Besides, customer feedback provides invaluable guidance to the employees and gives them an opportunity to step up their performance.
How To Achieve a Closed Feedback Loop?
- Communicate with the team to ensure every department is motivated to promptly close the feedback loop and satisfy customers' needs
- Set up a system for prioritizing feedback
- Pick customer feedback software that matches your needs
- Automate the response to low-value visitor feedback
- Allocate additional resources to dealing with high-value visitor feedback
- Incorporate valuable actionable feedback into your product roadmap
- Track VoC metrics to ensure the success of the update
- Determine the root cause of the issue and how you can prevent it in the future
Positive Vs. Negative Feedback Loop
Depending on the source of the feedback, we can differentiate two types of feedback loops – positive and negative.
Positive feedback loop
In a business setting, a positive feedback loop deals with internal feedback. Criticism from the employees is used to evaluate and improve the processes inside the company.
Depending on your workplace, you can take several approaches to internal feedback collection. Some businesses use formal tools such as onboarding and exit interviews or employee surveys, others opt for an informal approach and encourage their employees to share feedback anonymously in any format they see fit.
Gathering internal feedback can be tricky, so employees need to be sure their feedback is heard, valued, and will be used to make real changes. Employees can be particularly hesitant about expressing their criticism, but identifying employee pain points is crucial for increasing employee retention and optimizing processes inside the company.
Negative feedback loop
Unlike a positive feedback loop, a negative feedback loop focuses on external feedback from the customers. Such feedback is collected through a variety of sources such as surveys, customer support data, social media, online review platforms, etc.
Collecting and incorporating user feedback is crucial. Unless you’re aware of your customer's issues, needs, and expectations, your product strategy is no more than a guessing game. By acting on your customers’ feedback you’re letting them know you’re dedicated to satisfying their needs, thus decreasing customer churn and increasing revenue.
To close your negative feedback loop, you need to give your customers an effortless way to leave feedback, set up a system to prioritize and analyze it, and have the entire team onboard with incorporating it into your product roadmap. Afterward, you can reach out to the customers and let them know what changes have been made, thus completing the last step of the feedback loop.
Customer Feedback Loop Best Practices
Follow these rules to optimize your feedback collection and analysis processes.
Communicate with the customer
“Thank you for your feedback” at the end of the survey is not enough. Acknowledge how much you value your customer’s input and offer them additional ways to satisfy their needs and express their opinions. When you act on your customers' feedback, keep them updated and demonstrate your appreciation with appropriate action.
Leverage your promoters
When you get positive feedback, make sure to amplify its effect. Identify your promoters and incentivize them to recommend your product to other people by launching a referral program, hosting social media giveaways, and rewarding them for more detailed feedback. If you can make recommending easy and fulfilling, your customers will do it more often.
Choose the right channels
Cross-channel communication enables you to make the most out of your feedback and increase customer satisfaction. Depending on the urgency and complexity of the feedback, you may want to reply to a particularly passionate online review with a personal call or email.
Optimize your surveys
If you spam your customers with 30-question surveys every month, you’ll be left with no feedback. While it is tempting to ask many questions and get as much information as possible, it can kill your response rates. Determine the objectives of your survey and make every question count.
Automate whenever possible
Strategic automation can be a game changer for closing the feedback loop. With AI customer feedback software, you can accurately analyze large amounts of data in seconds. As an AI-powered feedback analysis tool, Essense can collect data from all your feedback sources, analyze it, and turn it into actionable product insights. With Essense, closing the feedback loop has never been easier.