Closing the customer feedback loop

Businesses looking to grow, fend off the competition or simply survive uncertain times are analysing their way of operating and identifying new ways they can acquire or keep customers. Without the budget to pay research companies, and with limited opportunities for mistakes businesses need a low cost and effective method for identifying customer needs, and meeting them.

One of the many ways this can be achieved is also the quickest and cheapest: implementing a customer feedback loop. A customer feedback loop is a simple process. In its simplest form it involves three simple steps:

1. Ask
2. Action
3. Assess

Rather than a 3 step process, as shown above, it’s a cycle of asking, implementing your findings and assessing their impact on the feedback you’re now receiving. This can be visualised as a circle constantly feeding back into itself.

In a Harvard Business Review article Charles Schwab credits this exact approach to turning around the success of his business and helping to increase revenues by 11% in 2008. His approach was to receive a report on his branch’s scores and to scan through the feedback they were receiving from clients. If common themes appeared he would raise those issues in manager meetings, or focus in on the root cause directly to drive change. In some circumstances, he would even call customers to understand more about the feedback they’d given.

“We had lost our connection with our clients—and that had to change,” Schwab confessed to shareholders in the annual report.

And while businesses can be good at asking for feedback consumers don’t have confidence that businesses actually listen. In a study of DISQO Audience members, only 10.4% completely agreed with the question of whether companies listen to the feedback of customers. This indicates a lapse in the ‘Action’ part of the feedback loop.

There are two fundamental issues with the customer feedback loop and a business’s ability to close it.

• The business doesn’t have the drive to use feedback
• The business doesn’t have the tools to make effective change

Some businesses avoid asking for feedback. Whether through fear, seeing it as low importance or feeling that they know their business better than the customer the systematic asking is absent. Some businesses ask in an off-hand and ad hoc way and will action only if it’s imperative they do so. Often the action part of the loop is instigated by the customer escalating the issue to someone high enough to drive the change or desired outcome. This has the impact of making a closed-loop feedback system seem tokenistic.

If you’re only asking for feedback to tick a box, why bother?

This leads us onto the second bullet point. If a business lacks the mechanism to affect change then why ask for the feedback in the first place?

It may have been a while since many of us visited a restaurant thanks to the COVID-19 pandemic but it’s common practice for service staff to ask whether you’re enjoying your meal. Often this will be done just as you’ve taken a mouthful of food. In some cases, the customer knows this is a good opportunity to raise any problems they’re having, but given the public setting, low-value nature of the transaction and limited ability to address any failings in the food that’s already being consumed many more people simply smile and say it’s fine. Some cultures are inherently bad at expressing dissatisfaction while others might be slightly better at voicing their issues.

Yet customer feedback is one of the best sources for service and product improvements as well as identifying new offerings your existing customers are likely to buy. It’s 5 times more expensive to acquire a new customer than retain an existing one. And there’s a 60-70% chance of successfully selling to an existing customer compared to the 5-20% success rate in selling to a new customer. Customer feedback gives you real insights into what makes customers love you (things to not change/touch) and the friction points in dealing with you.

The latter area is arguably the most important element a business needs to change. If people find a part of your offering irritating, challenging or inconvenient then your business is failing them in some way and giving them a reason to try someone else. Depending on how frequently the customer experiences this friction or where it sits in their buying journey a small issue might become a deal-breaker for them and push them to move away.

Asking for feedback, actioning the points noticed in the feedback and assessing whether your changes reduce the level of mentions the friction points appear in ongoing feedback results in a business that is growing through retention. By removing the things your customers don’t like you give them one less reason to leave so your business can grow on a foundation of success.

How to create a closed feedback loop in your business

Creating a customer feedback system is simple and can be game-changing for a business of any size. Here we explain the simple measures you can take to gather feedback, action the findings and grow your business as a result.

Ask

Ask customers for feedback all the time, and at different stages of their journey with your business. Ask in a variety of different ways, and on different platforms so that even those without the confidence to offer face-to-face feedback are able to voice their opinions. Don’t rely on any one method for gathering responses, cast your net wide! Here are a few ways you can increase the places you ask for feedback:

• Use QR codes on the table or at the till linking to a survey
• Include a feedback link in your company email signatures
• Add a survey link to the end of any web chat conversations
• Include a link in email invoices to leave feedback on your e-commerce process
• Add a QR code to packaging to make leaving feedback after delivery easy

Action

Empowering employees to do something about the feedback they receive is key to implementing change that customers notice. If you can’t delegate that sort of power then make it easy for individuals to bring in a decision-maker who can. If someone takes the time to give you feedback the least they deserve is the acknowledgement of their feedback and an assurance that their time will is valued and comments will be reviewed.

It may be good practice to look at every 10 or 20 pieces of feedback in a group and look for commonalities so you can prioritise the fixes that need to be put into action. As with any focused business change, it’s important to get team buy-in and explaining that customer feedback is driving the change outlines its importance. This may mean changing a marketing message to set realistic expectations, working with individual team members to develop their customer service skills or promoting exemplary individuals to areas where they can set the tone for the wider team.

Assess

Any change needs to be measured to ensure it’s having a direct impact on the customer. Monitoring how often a particular friction point or comment appeared before your changes and after is the simplest method of assessing whether your changes have made a positive impact.

It’s easier to jump to the direct cause of an issue through analytics and reporting. ‘Speed of response’ might only be a common issue on your website chat so rolling out fixes across all departments would be costly and ineffective versus honing in on the problem area and implementing a response time KPI. While an overall score is good for seeing overall sentiment it’s great to break down the minutia of the feedback to implement effective change.

Once you’ve successfully completed one cycle of the customer feedback loop it’s time to start again! The thing with improvement is there’s always room for it. A constant cycle of always asking for feedback gives you more areas to improve and actions for the business to take and more assessment of performance to be undertaken.

But it all starts with feedback.

Without insight into what your customers like and don’t like about your business, you don’t stand any hope of stopping customers from drifting to your competitors. Price is commonly an excuse made for why a customer left for the competition but that’s rarely the real reason. If a customer has their needs met, expectations exceeded and feel valued then price will not pull them away. Many customers realise that not being treated like a number is a rarity so will stay where they feel valued - until they don’t.

To start your own customer feedback loop jump on Review Tui and gather customer feedback easily, action your findings and assess your business’s improvement over time. Click the link below to sign up for access.