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What is Feedback Loop and How Can it Improve Customer Experience?

Feedback is an essential tool for all businesses regardless of the products or services they offer, as it provides insights into the company’s performance as viewed by its stakeholders. Customer feedback is crucial for any business looking to improve and grow.

Put simply, feedback allows a business to measure the effectiveness of systems or processes, and then use that information allowing targeted and efficient improvements.

A feedback loop, then, is the process that allows a company to regularly collect input (suggestions or comments) to recalibrate or influence its output (products and services). It allows businesses to constantly optimize processes, products, and services based on real-world data and results, rather than assumptions or guesses.

How Customer Feedback Loop Works

A customer feedback loop is the ongoing process of collecting, analyzing, and responding to feedback. It's not a 'one-and-done' approach, but rather a cycle that continuously evolves and adapts to the current needs and goals of a business. The ultimate goal is to use this loop to drive constant improvement in your business.

Here are some benefits of a well-managed customer feedback loop:

  • Allow for faster, more agile decision-making by providing real-time insights into business performance.

  • Help identify potential problems or inefficiencies early on, thus reducing the risk of larger, more costly issues down the line.

  • Foster a culture of openness and collaboration, since they involve consistent communication and input from various stakeholders, including customers, employees, and managers.

To illustrate how a customer feedback loop works in real scenarios, take a software development company for example. Feedback is collected from users about a recent update and analyzed to identify trends or common issues with the current system. Adjustments will be made based on these insights and then new updates will be released. Consequently, they receive more feedback, and the cycle continues.

Positive and Negative Feedback

A company or a business may receive both positive and negative feedback. How your company integrates these feedback into your system or services will reflect how adaptable you are and how much you value your stakeholder’s voice as a company.

Receiving negative feedback may often be seen as a criticism or a setback but it helps identify gaps and room for improvement. When a business receives negative feedback, it should be identified if such feedback is an isolated case or is a constantly recurring issue. From there, managers and business owners can plan their course of action.

Acknowledge the feedback received while avoiding generic replies such as, “Thank you for your response!” Communicate with the customer service team to address and resolve the issue. Once resolved, notify the particular customer who raised the concern, and the other customers as well of the updates and changes made.

While negative feedback helps identify concerns, positive feedback reinforces beneficial and effective traits of the business. As always, acknowledge the customer who provided the feedback, and you may follow up by asking for additional suggestions. You may also ask them for a testimonial or a positive rating score as these are effective tools in establishing the company’s credibility.

If the positive feedback the company receives is about your Customer Service, notify the customer service team to encourage good customer service behavior further, and give incentives to the individual who performed well. If the feedback received is about the product or the service provided itself, then direct the feedback to the responsible individual or team. Take note of the positive and effective features your agents are doing as these can be implemented by the whole team.

Customer Experience Management and Feedback Loop

Customer experience is the driving factor behind a successful business. Customers' satisfaction and loyalty directly impact a company's success and growth. Regardless of the quality and range of the company's products and services, if the customer experience is not good, they will take their business elsewhere. So, how can a company satisfy and retain its customers?

Providing exceptional customer service and creating a positive customer experience can set your business apart from competitors. Customer experience management or CXM involves understanding the needs and expectations of customers and tailoring products and services to meet those needs. The role of the feedback loop in CXM is to help facilitate the improvement of your products and services.

Suppose a customer is looking for a recommendation for a computer that provides basic office functions and can run meeting applications for his child’s online classes.

A high-end value computer gaming setup is not the best choice. He might find it impressive but he will most likely move on to another business that can provide what he is asking for. Thinking that always selling the priciest or the best product in the lineup can yield the most revenue, can be fatal in running a business as “the best” does not necessarily mean it is what your customers need. Taking this into consideration, your staff can recommend products that are more aligned with what they need.

Businesses must also empower their employees to deliver exceptional customer experiences. Employees are often the face of a company and play a crucial role in shaping the overall customer experience. If employees are aware of their customer’s feedback, they can recognize where to improve their skills. By supplementing feedback with proper training, resources, and tools for employees, businesses can ensure that they are equipped to deliver outstanding service and customer support.

Another important aspect of CXM is soliciting and acting on customer feedback. Businesses can gain valuable insights into areas for improvement and make necessary adjustments to enhance the customer experience by actively seeking feedback from customers. This feedback loop is essential for continually evolving and improving the customer experience over time.

Best Practices for Implementing a Customer Feedback Loop

When it comes to implementing a feedback loop, several best practices can set you up for success.

1. Regular Communication

There are several ways that businesses can gather feedback from their customers. Surveys, comment cards, social media polls, and online reviews are all effective tools for collecting feedback. The key is to make it easy for customers to provide their input and to ensure that their feedback is taken seriously.

2. Encourage Honest Feedback

You can't improve if you don't know what's broken. Providing honest feedback can be challenging at times, it requires tact, empathy, and a genuine desire to help improve thus it is important to approach feedback and constructive criticism with a positive attitude. Creating a safe and supportive environment for feedback is essential for it to be honest and effective. 

3. Embrace Transparency

Transparency is also a critical component of managing feedback loops. Being honest and upfront about what you're doing with the feedback you receive and how you’re using it to drive improvement can build trust. Regular updates on the action taken, regardless of whether a suggestion will be pursued or not, signify that all feedback is acknowledged and taken into consideration.

4. Productive Use of Feedback

Finally, it's not enough to simply collect and acknowledge feedback. Once feedback has been collected, businesses must analyze it to identify patterns and trends. This information can then be used to make informed decisions to improve the customer experience. For example, if customers consistently complain about long wait times, businesses can reallocate resources to reduce wait times and improve efficiency.

By now, it’s clear how valuable a well-implemented, carefully managed feedback loop can be. Its potential to drive improvement, foster collaboration, and spur innovation and manage customer experience is incredible. But it's not something you can set and forget. A successful feedback loop requires ongoing commitment, regular communication, honesty, transparency, and the willingness to act on the insights you gain.

Whether you're just starting to build your feedback loop or looking to refine an existing one, remember that it isn't just about receiving – but a cycle of receiving, responding, and improving. When done right, it becomes a powerful tool for growth and excellence.

Want to calculate your CX impact? Connect your customer experience to revenue here!

Let us know how you're managing your feedback loop and its impact on your organization. Sharing your experiences and learning from others is another powerful feedback loop we can all benefit from.

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