How to Close the Loop With Customers to Drive Business Performance

Customer Service
Customer Service
Closed-loop feedback unlocks many downstream benefits-for customers, employees, and shareholders alike.

Companies that take a closed-loop approach to customer feedback gain substantially more ROI from their customer experience management (CEM) programs than their competitors do. These gains come in the form of improved customer loyalty, greater employee engagement, and stronger financial returns. But that's just the beginning. Today's top companies are realizing that every response from a customer holds the potential for further conversation. By treating closed-loop feedback as one step in reaching an end goal-to deliver great customer service-companies are reaping the benefits of more satisfied customers and more engaged employees.

The closed-loop feedback process starts with identifying key touchpoints throughout the customer lifecycle and seeking out feedback at those touchpoints. In addition to collecting feedback, closing the loop with customers also requires listening to and acting on the voice of the customer.

For example, if feedback is positive, a manager may follow up with a pleased shopper to thank her for sharing her great experience-potentially helping the business identify a new best practice or service delivery technique. If the feedback is negative, then the manager will offer a sincere apology and, depending on the severity of the complaint, perhaps free shipping on a future order, or a more significant gesture.

Closing the loop is enabled by two key components.

  1. Technology that is scalable and flexible, able to grow with your company's CEM strategy, and accommodates a diverse range of feedback at all customer touchpoints.
  2. CEM experts on hand and ready to step in with analytical and data support.

Closed-loop feedback also requires a committed effort from a company. For the system to function, frontline employees must take a few minutes to call back customers who generously provide feedback on their recent experiences. This dedication to customer satisfaction involves a small but incremental investment of time and money that may on the surface seem foolhardy. But closed-loop feedback has the potential to help companies unlock many downstream benefits-for customers, employees, and shareholders alike.

For customers, a key benefit of closed-loop feedback is that issues are addressed immediately. A truly sophisticated closed-loop feedback solution will build in escalating alerts to frontline employees and managers, designating case owners responsible for following up with customers.

In this manner, closed-loop feedback fosters greater customer loyalty by catching at-risk customers while the issue is still top of mind, before they become disillusioned with the company or even defect to a competitor. And for those customers who had a truly great experience, it reinforces the company's excellent service in their minds.

For employees, closed-loop feedback affords a unique chance to see the service cycle through the eyes of the customer, sparking greater employee engagement and inspiring service excellence.

Typically, a frontline employee plays a part in only a small fraction of the customer lifecycle. For example, two employees at a gym-a receptionist and a personal trainer-serve many of the same customers, but in very different ways. One checks in customers and handles administrative and account issues; the other delivers the core service of fitness training. Without closed-loop feedback, the two employees may not truly see how their roles complement each other.

Closed-loop feedback empowers every frontline employee to reach out to a satisfied or dissatisfied customer. By hearing about a customer's experience from start to finish, frontline employees can better see where their roles fit into the larger process, and start to gain a deeper understanding of how they can make small adjustments to better serve customers in a way that unifies their actions with those of all of their coworkers.

Put differently, when your employees reach out to customers and connect, all of a sudden they see things through the customers' eyes. That creates a level of engagement with customers that your frontline staff wouldn't otherwise get.

The goal of closed-loop feedback, then, is to avoid having an abstract person buried within a corporate hierarchy-or even a third-party phone-survey vendor-reaching out to customers. Instead, employees and customers are empowered to work together to improve the customer experience one best practice at a time.

All of this has obvious benefits for shareholders, as well. When customers and employees alike are more satisfied and engaged in the quality of a business, financial returns are inevitable.

Customer loyalty is best visualized as an emotional bank account that you hold with your customers. When the emotional balance is a hefty positive, then you reap the rewards in terms of brand loyalty, price premiums, and positive word of mouth. But if the account becomes overdrawn through negative experiences, you can count on customer defections, price sensitivity, and negative word of mouth.

Whether a business is seeking to close the loop with customers following a specific experience or throughout a broader relationship, those responsible for reaching out to customers should think about all transactions as contributing to this emotional bank account. Each employee-to-customer interaction has the potential to make three kinds of impact on the balance of the account:

  • Positive: the customer's loyalty to the company improves.
  • Neutral: the customer's loyalty to the company does not change.
  • Negative: the customer's loyalty to the company deteriorates.

Without gathering feedback that truly closes the loop, businesses have no way of knowing how a particular transaction affected each customer's emotional bank account-i.e., their loyalty to your brand and products.

With closed-loop feedback, though, companies have the ability to recover customers every day. They also have the capacity to capture and store customer satisfaction data, in turn creating the potential to track improvements over time, test new best practices, and link employee bonuses to a metric that truly matters.

Even better, the best CEM vendors provide dedicated CEM experts to help you get the most out of your closed-loop feedback program, from implementation and survey design to ongoing research and analytical support. This team should help you map out the customer corridor, identify where the key moments of truth are found, and implement feedback mechanisms to track customer experience at those touchpoints.

The ultimate goal is to develop a continuous learning and improvement cycle-employees reach out to customers who provide feedback, identify service failures and faulty processes through root-cause analysis, and take action on those weaknesses. Over time, the entire business provides a better and better customer experience.

Stop wondering how you could better serve your customers and just ask them-with closed-loop feedback.

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About the Author: Steve Earwaker is vice president of financial services and business development for Medallia Inc.