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Closed loop feedback and your customer: What, why and how?

1st Apr 2011
MyCustomer.com

Steve Earwaker looks at the processes and benefits of an emerging area of customer experience management that is attracting a lot of attention - closed loop feedback.

To really get the job done, customer experience management (CEM) must allow companies to 'close the loop' with customers. Closed loop feedback gives companies the ability to continue a dialogue, whereas typical customer feedback programs end the conversation or don’t start it at all.

Companies that engage in closed loop feedback gain substantially more ROI from their CEM programs than competitors, in the form of improved customer loyalty, greater employee engagement and stronger financial returns. 

And it is this that is ensuring that it is receiving a lot of attention, making it one of the most exciting areas in CEM. So with that in mind, let’s look at the processes and the benefits more closely…

Feedback action 
The closed loop feedback process involves identifying key touchpoints throughout the customer lifecycle and seeking out feedback at those touchpoints. But that’s just the beginning. Today’s top companies are realising 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.
In addition to collecting feedback, then, closing the loop with customers also requires listening to and acting on that feedback.
For example, if feedback is positive, a manager may follow up with a pleased shoe 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 the use of a feedback survey platform that, for the best CEM solutions, is supported by two key components.
  1. Technology must be scalable and flexible, able to grow with your company’s CEM platform and accommodate a diverse range of feedback at all customer touchpoints.
  2. CEM experts must be 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.
Catching at-risk customers
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 — practically in realtime. A truly sophisticated closedloop 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 aa 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, while the other delivers the core service of fitness training. Without closedloop 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 everything through the customers’ eyes. That creates a level of engagement with customers that your frontline staff wouldn’t otherwise get.
Emotional bank account
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 visualised 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 — their loyalty to your brand and products.
With closed loop feedback, though, companies have the ability to recover customers every day. On top of that, 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.
  
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 lloop feedback.

Steve Earwaker is VP of financial services and business development for Medallia, Inc., a CEM vendor headquartered in Palo Alto, CA. He boasts 20 years of experience in market research, business development, and statistical methodology in the private and public sectors. 

This column is part of a monthly series featuring thought-provoking articles, best practices and valuable insight by the Medallia team. Customer Experience Management (CEM) solutions by Medallia enable companies to gather, monitor and act on feedback from customers, partners and employees. Learn more by visiting the Medallia website at www.medallia.com.

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