What is a feedback loop and how does it work?

If you're learning about analyzing customer feedback and voice of customer, then it won't be long before you come across the term 'feedback loop'.

This post breaks down what a feedback loop is, why it's an essential part of customer experience, and how to ensure success when implementing one in your own work.

Looking for a TL;DR or common FAQs? Skip ahead to the end of the post!

What is a feedback loop?

A feedback loop is a process in which a system's output is fed back into itself to influence its subsequent output. There are feedback loops in biology, and electronics - it's not a CX specific term (although that's the kind of feedback loop we're focusing on here).

So in the context of customer experience, a feedback loop is the process of gathering, analyzing, and using customer feedback to make improvements in products and services.

Feedback loops allows businesses to understand their customers' needs better and make informed decisions to enhance overall customer experience.

Why are feedback loops important?

Feedback loops play a crucial role in the success of any business.

They help to:

Identify and resolve issues that could be impacting customer satisfaction
Improve customer retention rates by addressing concerns faster
Drive innovation by identifying unmet needs, trends, and opportunities
Foster greater customer loyalty by demonstrating responsiveness and commitment to improvement

Positive vs. negative feedback loops: what's the difference?

Examples of positive feedback loops

A positive feedback loop is when a company takes customer feedback and makes improvements. Once the improvements are in place, the process starts again, with analysis of user feedback to ensure the fix has hit the mark. If so, great - on to the next issue. If not - implement a new solution to address it.

Engaging with customers and continually working to actively address problems increases customer satisfaction. There's proof you care - and this increases the engagement you get from customers in return.

An amazing example of a positive feedback loop in action is how Atlassian scaled their feedback analysis to empower both their customers and their product teams.

Examples of positive feedback loops include:

Implementing a new feature that customers specifically requested
Enhancing a product based on user feedback to improve overall usability
Addressing common customer complaints to improve the overall experience

Examples of negative feedback loops

A negative feedback loop revolves around a company failing to consider customer input, leading to a decrease in user satisfaction or engagement.

Examples of negative feedback loops include:

Ignoring customer complaints about a particular product feature, resulting in declining sales
Overlooking comments about poor customer service, leading to a negative reputation
Disregarding user feedback about the usability or effectiveness of a service, and ultimately causing decreased customer retention

How to create a robust customer feedback system

Building an effective customer feedback system involves several steps, including:

1. Identifying the channels and methods through which you'll collect feedback (think surveys, app reviews, chat logs, social media).

2. Establishing a feedback analysis and review process to ensure customer input is assessed promptly and comprehensively.

3. Creating feedback loops by implementing changes and improvements based on customer suggestions.

4. Consistent communication with customers about actions taken in response to their feedback to foster trust and loyalty.

When you have all of the above in place - both inner and outer loops - it evolves into what CX expert Melanie Disse refers to as an 'insights to action' framework, emphasis on the action. Because if you're not using feedback to improve your products and services, what's the point in collecting and analyzing it?

Aggregating and analyzing customer feedback

By gathering feedback from various channels together in one place, businesses can view their operation from all angles. This makes it easier for you to gain a more comprehensive understanding of your customer's experience.

Analyzing this data involves looking for trends, patterns, and key areas for improvement.

You can choose to analyze your data manually, or by using feedback analytics software like Thematic. If you're looking at manual analysis, we have free tools and templates to help you collect everything in one place and start coding your data.

Tools for analyzing customer feedback

Selecting the right software for analyzing customer feedback largely depends on your specific needs, budget, and the level of complexity required to handle your customer data.

Qualitative data, like text feedback, is time consuming to analyze manually. If you have a lot of feedback to consider, then an automated solution is your best option. By leveraging text analytics software, you can maintain a strong feedback loop and consistently enhance your customers' experiences.

Building your feedback loop

Following up with customers

After you've made improvements based on customer feedback, it's crucial to follow up with those who provided the input.

Let them know that their feedback was taken into consideration and appreciated. Depending on the context, you might als0 want to organise user interviews, or ask for more information to better understand an issue you've identified through your analysis.

Regular communication can go a long way in building a strong and lasting relationship with customers. This means that you need a system in place that allows you to match your analyzed feedback back to the source, either through something simple like spreadsheets, or through your CRM.

Following up with employees

Your employees are key to implementing feedback loop improvements. They're on the front lines, helping to maintain consistency in providing an excellent customer experience.

Keep them informed about changes and performance expectations based on customer and employee feedback. And encourage open communication to ensure they feel comfortable sharing input from their own interactions with customers!

Internal processes for continued improvement

Finally, establish a process for regularly reviewing and incorporating customer feedback into your company's strategy and operations.

This may involve setting up meetings or ongoing communication channels to provide updates on customer feedback and ensure everyone's continued involvement in improving the customer experience.

By fostering a culture that values customer feedback and a commitment to continuous improvement, your business is more likely to enjoy long-term success and positive customer relationships.

TL; DR

Feedback loops collect, analyze, and use customer feedback to improve products and services.

Feedback loops are critical for identifying customer satisfaction issues, improving retention, driving innovation, and fostering loyalty.
Positive feedback loops make improvements based on customer feedback, increasing customer satisfaction.
Negative feedback loops ignore customer input, decreasing user satisfaction or engagement.
An effective customer feedback system includes collecting feedback, analyzing it, implementing changes, and communicating these actions to the customer.
Customer feedback can be analyzed manually or with analytics software.
Analyzed data will help surface the insights needed to take action, either by fixing issues, or implementing new features based on customer questions and requests.
After you've made improvements, it's vital to follow up with customers and inform employees about changes based on feedback.
Continuous improvement culture based on customer feedback contributes significantly to long-term business success and positive customer relationships.

Frequently asked questions

What is a feedback loop in customer experience?

A feedback loop in customer experience is a process that entails gathering, analyzing, and using customer feedback to make improvements to products and services.

What roles do feedback loops play in business success?

Feedback loops help identify and solve issues impacting customer satisfaction. They improve customer retention rates, drive innovation through identifying trends and opportunities, and foster customer loyalty by demonstrating commitment to improvement.

What's the difference between positive and negative feedback loops?

Positive feedback loops occur when a company takes customer feedback, implements improvements, and reassesses effectiveness. Negative feedback loops happen when companies ignoring customer input, leading to a drop in user satisfaction or engagement.

How can you create an effective customer feedback system?

An effective customer feedback system involves identifying feedback collection channels, establishing a feedback analysis and review process, implementing changes based on customer suggestions, and consistently communicating with customers about actions taken based on their feedback.

What tools can be used for analyzing customer feedback?

You can analyze customer feedback manually, or utilize feedback analytics software like Thematic to automate the process.

How important is it to follow up with customers after making improvements based on feedback?

Following up with customers shows that their feedback was considered and appreciated. This is integral to 'closing the loop' with customers. It's not enough to collect feedback - customers provide their comments because they expect you to act! Report back on improvements to boost customer satisfaction and loyalty.

How do internal processes contribute to continuous improvement?

Regularly reviewing and incorporating customer feedback into your company's strategy and operations fosters a customer-centic culture. Companies that value customer feedback are committed to continuous improvement, which contributes significantly to the long-term success of the business!