What Is Closed-Loop Feedback?

Closed-loop feedback ties up loose ends, ensuring that customers feel heard, valued, and appreciated

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What Is Closed-Loop Feedback?
Voice of the CustomerInsights

Published: May 4, 2022

CX Today Team

Closed-loop feedback refers to the follow-up companies give to customer feedback, which helps build long-lasting relationships.

Whether the customer fills in an online survey, posts on social media, or joins a focus group, they often provide excellent feedback that enables brands to enhance the value of products and services offered.

Yet, customers can feel undervalued when they share their thoughts and never hear from the company again. It seems that they have wasted their time, and little has changed. Closed-loop feedback helps to break this precarious pattern.

How Does Closed-Loop Feedback Work?

The most critical aspect of closed-loop feedback is using the insights gathered to offer a better product/service.

Having feedback filter into and saved on the CRM system is ideal, allowing companies to refer back to the data, categorize it, and spot trends in what customers say.

Acting on these trends, companies can enhance their offering. Then, the company can reach back into the CRM, segment customers that left relevant feedback and follow up. Often, a digital channel such as SMS or email is the ideal channel, but some businesses will instead create a “You Said, We Did” page on their website.

If it is not possible to act on the feedback, explain why. Doing so will likely lower customer frustration if they experience the issue again.

However, it is not just verbatim feedback that customers can close the loop on. Consider CSAT or NPS feedback, where customers leave a rating score. If this rating is negative, companies may reach out to the customer, uncover the reasons behind their bad review, solve the problem, and blow their socks off. Alternatively, if the score is positive, companies can consider how to leverage their satisfaction to drive further value – perhaps with a proactive product offer.

Finally, there is neutral feedback. With this, consider closing the loop by asking permission to build the relationship, discovering what could have been better, and acting to increase satisfaction.

5 Traits of a Closed-Loop Feedback System

Going beyond the definition above, here are five critical traits of a closed-loop system.

1. Customer Individuality

It is impossible to follow up with every customer the same way, as different customers require different patterns of approach. Therefore, knowing each customer, their personality, and ways of reaching out to them is crucial in a closed-loop feedback system. Organizations should avoid anonymity and endeavor to identify their customers and understand the follow-up method that best suits them.

2. Open-Ended Design

Traditional surveys include questions that companies know they can act on, leaving no room for customers to express their subjective views. Unlike the conventional survey, a closed-loop feedback system follows an open-ended design that allows customers to say what they think about a company’s product or brand. This opens a line of communication for customers to pour out their positive or negative views and thoughts about the product/service the organization offers.

3. Automated Alerts

Automation is often a critical part of large-scale closed-loop feedback projects, paving the way for companies to provide quicker responses to customers. Typically, a feedback solution embeds automation to gather feedback and submit it for managers to review. Such a system is often essential, especially when dealing with negative feedback from customers, and urgent action is necessary.

4. Case Management

It is difficult for employees to act on customer feedback alongside their day-to-day work. However, the use of case management tools in a closed-loop feedback system can ease the process and allow the manager to assign follow-up actions and monitor the progress of a case. Such tools make the closed-loop feedback system open and easy to navigate. As a result, the company tracks every piece of feedback, and no data is lost.

5. Customer Experience Goals

According to a Gartner 2019 report, CX drives over two-thirds of customer loyalty. A closed-loop feedback system is customer-oriented, and the goal centers on the customer’s satisfaction. Indeed, the system is customer-centric, seeking to transform the customer journey into one that enhances the long-lasting relationship between each customer and the brand.

Importance of Closed-Loop Feedback

A closed-loop feedback system often drives a whole host of benefits, including:

  • Increased Customer Loyalty – Most brands aim to differentiate themselves from competitors. Closed-feedback loops are a rarity and often show that the company is willing to go the extra mile. As such, they can build customer trust and loyalty to the brand.
  • Improved Revenues – Increased loyalty implies more revenue for an organization. After all, loyal customers tend to tell other people about the brand, spreading positive word of mouth while increasing sales and revenue.
  • Enhanced Efficiency of Employees – The closed-loop feedback system allows employees to step up their performance as they uncover significant pain points thanks to customer feedback.
  • Upgraded Brand Image – An unsatisfied customer might go online, telling the general public how bad the brand is. Such negative portrayals may put off potential customers, discouraging them from patronizing that company. However, a closed-loop feedback system will promptly ensure follow-up with such customers and overcome these negative perceptions.

Best Practices to Remember

In a closed-loop feedback system, it is often best to stick to the following best practices:

  • Focus on one feedback source at a time
  • Have a centralized collection of feedback
  • Set expectations and update customers on relevant actions to enhance CX
  • Create a culture of embracing customer communication

Since CX is a significant driver of customer loyalty and lifetime value, companies can drive value by applying a closed-loop feedback system. It ensures that every customer is heard and attended to without loose ends.

Eager to kickstart a closed-loop system by garnering better feedback? Check out the following article: 11 Excellent Ways to Collect Customer Feedback

 

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