How Customer Feedback Can Increase Business Success
Feedback loops are an important marketing tool for strengthening customer loyalty. What may sound innovative and technical at first is based on a principle that is almost as old as the Earth itself. Without feedback loops, there would be no people, nor the ability to read this article on the Internet right now. Feedback loops can be found in all areas of our lives and control our technical, biological, and social systems.
Such feedback regulates and balances almost all the processes in the human body – from the production of hormones and their delivery to the blood to the water balance in our cells. After a three-course meal, for example, the stomach sends feedback to our brain to let us know we’re full up. When these processes run naturally and as intended, our body works perfectly and is in balance. However, when a feedback loop breaks, we slip out of balance and get sick. Feedback loops are thus a sophisticated safety and control system that, on the one hand, ensures our survival and, on the other hand, creates pathways to further development.
What works in nature can also lead to a developmental leap for businesses. Each customer is individual and therefore has different expectations for and wishes from a company. Companies are increasingly faced with the task of finding out what most excites or annoys their customers. A simple and effective method is to ask the customer directly for their feedback and implement a feedback loop.
A Holistic Feedback System – The Inner and Outer Loop
Just as in nature several feedback loops run simultaneously, cross each other and influence each other, different feedback loops are used in a company:
Inner Loop – Collect customer feedback
The Inner Loop describes the management process in which feedback is obtained directly from the customer. There is an individual exchange between employees and customers. Customer input is collected and forwarded to the responsible department. All team members thus receive the same level of information and can then search for solutions together. At the same time, employees contact dissatisfied customers to suggest solutions with the goal to win back the customer. Subsequently, based on the feedback discussion and the solution found, measures are developed to avoid the problem in the future.
Outer Loop – The feedback goes a long way
In the Outer Loop, not only the team but the entire company deals with customer feedback. Customer input is used to identify customer satisfaction strategies and improvement opportunities. The results can then be used to develop strategies that lead to greater customer focus. Most often, these strategies involve investments because they are linked to new policies, price adjustments, processes, or technologies. The Outer Loop thus tracks customer-friendly changes that go beyond the sphere of influence of individual employees and teams.
Using Promoters Effectively through a Holistic Feedback System
However, a “shitstorm” in social networks should not be necessary to enable companies to develop further through feedback. Satisfied customers (promoters) can also provide valuable information to improve the performance of the company. By having customers share their enthusiasm for the service or products, companies learn what they should focus on in the future. This process is also called Referral Marketing. By winning promoters as ambassadors or influencers, companies can enhance their image and increase their level of awareness. Promoters are often true innovators with high potential for the company. With their insider knowledge, promoters can provide creative input for new product development processes. Attentive feedback, after the positive customer feedback has been received, makes the already satisfied customer shine even more. In this way, a positive feedback loop is created.
Companies that want to work with the closing the loop methodology have to be extra mindful since the new General Data Protection Regulation (GDPR) came into force. In order to contact the customer and ask them questions, their explicit consent is necessary in advance.
Checklist for a Successful Closed Loop
A successful feedback loop needs to be well thought out. It represents a management process that must be constantly developed and adapted to customer needs. Only in this way does it deliver valuable results. The following questions can help to plan the process: