Obtaining feedback previously has been a tedious affair, with operators calling customers and doing surveys over the phone while customers tapped out their responses. However nowadays, it’s quite straightforward, you can just elicit feedback from your customers by email, text messages, or just give them the option to contribute spontaneous feedback.
And while that is a great step forward, how you approach the feedback matters even more. Especially since that has a direct impact on your customer experience management
Closed-Loop Feedback vs Open Loop feedback
In its simplest form, there are two ways you can approach feedback – either its open loop or closed loop. What do we mean by that? Well in the case of the former, the customer leaves some kind of feedback either negative or positive and that’s it; they don’t get any response, they have no idea if anybody read it or if anybody cares.
It’s kind of a sad approach if you start a survey talking about how you want to improve the company and your team and that the customer’s opinions matter and the customer then put time into giving feedback and nobody works with it and the customer never gets to find out if anybody even read the feedback.
However, in the case of customer closed-loop feedback, the company responds to the client, thereby effectively closing the loop. More or less the process is the same, the company creates and sends the survey, the customer replies and the company responds to that reply in one form or another. The goal is to open up and continue a discussion with your customer tries to identify their problems and solve them.
To sum it up the main difference is how you work with the feedback, how you process it, and how you work with the data you extrapolate from it. In a closed-loop feedback environment, the data gets collected analyzed and used to improve processes, services, and products. Meanwhile, in open-loop feedback, the data is just treated as a score.
How closed-loop feedback works
The easiest way is to explain this is using some examples. In the case of positive feedback, it’s quite simple – the customer applauds you for something and you respond with an automated reply, closing the loop. In this case, everybody wins, the client tells you what you did right and you can keep on doing that and they know you’ve seen their feedback.
In case the feedback is negative, the process is a bit more complex. Once the customer triggers the negative feedback, the company needs to attempt to resolve their issue. This can be done using various methods but usually, depending on the query it can take the form of an email or phone call.
The aim is to continue the discussion with the customer until their issue is resolved. Sometimes, however, the call or email occurs because the customer didn’t leave enough information and the company agent needs to follow up to fill in the missing parts and verify the problems with the client. All of this is an important part of customer experience management.
It is important to keep in mind that leaving feedback is basically a new touchpoint and many times the last instance of clients trying to solve a certain problem or as a place to vent their frustration if they can’t solve it. So, for these cases, closed-loop feedback is the perfect solution.
So what are the benefits?
With the right approach you can set up a system where almost everybody wins and it does wonders for your customer retention management.
If you engage the customer appropriately, then they feel that they are valued and their opinion and feedback are held in high regard, which in turn lowers the possibility of customer churn. Additionally, this translates into increased loyalty.
Traditional retail companies that sell traditional consumer products are a good example of this. A loyal customer of such companies is willing to spend a third more during purchase and make 25% more purchases than disloyal customers. And then there is the repeat business that it brings – 86% of loyal customers will repeat their purchase again in the next 3 months. All of this has a direct positive impact on the bottom line – revenues.
And let’s not forget about the employees; feedback helps them grow. In case of negative feedback, they can learn and work on the skills that are lacking, while positive feedback fuels their motivation and lets them know that the job their doing matters.
To sum it up, while many companies have the capability to collect enormous amounts of data, that is then analyzed and used to output a performance metric, it’s the real-life experience of customers that matters. If you don’t translate the data collected from the feedback into specific actions that are aimed at improving or changing things that don’t work, then you’re losing the chance to convince your customer that you’re listening and that you care.