Customer Feedback Loop: Definition, Importance, & Best Practices

Building a customer-centric culture begins with the understanding that customer feedback is not disruptive, but instructive. Feedback loops act as a lighthouse, showing us the way and illuminating what truly matters to our customers. - Philip Kotler, Father of Modern Marketing.

As a business, you are always looking to improve your product and create a good and meaningful relationship with your customers. The more happy customers you have, the better.

How can you do that, and keep them coming back for more? It all comes down to the customer feedback loop. You will use this process to understand and improve your customers’ experience.

How do you use the customer feedback loop to your advantage? Here is what you need to know.

What is a customer feedback loop, and how does it work?

Essentially, it is responding to customers when they review or otherwise leave feedback on your business. Businesses respond to negative reviews as they do not want the customer to have a negative view of the business, so they look to improve things for them, thus completing the loop.

For example, the business owner can offer a refund if they feel overcharged for something. But as a business, it’s better to respond to all customer reviews. The more you interact with customers, the more you will make an impression.

That is why it’s a good idea to set up a Google My Business page where customers can leave reviews. This lends your business credibility online and helps you get higher search rankings.

A Customer Feedback Loop works like this: Step One: Gather feedback from your customers. This can be through surveys, feedback forms, or other useful methods for your business. Step Two: Now you have that data, you can analyze it and see what customers say about you and your product.

Use that to draw conclusions and create a better experience for customers. Step Three: Now you have that knowledge, you can apply changes to your business and product.

Customers will then see those changes and hopefully leave feedback on them. Once the loop is complete, you must start it again - no business is perfect, and the more you use it, the better your product will be.

What are the different types of customer feedback loops?

There are mainly two types of customer feedback loops:

1. Open Loops: In open-loop systems, there is no direct communication or follow-up with the customer who provides the feedback.

The feedback is forwarded to the concerned teams or individuals in the organization to take the necessary actions. 2. Closed Loops: Closed-loop systems go one step further.

After the concerned teams or individuals are informed, the customer is also notified about the actions taken based on their feedback. This can provide a sense of acknowledgment to the customer as they know that their feedback was heard and acted upon.

Both loop systems are essential and can be used based on the organization’s specific needs.

Turning feedback into actual process changes is where most companies struggle. Having a systematic way to capture insights and route them to the right teams makes the difference between feedback that sits in a spreadsheet and feedback that drives real improvement.

How do you collect customer feedback effectively?

Still not convinced?

We all need people who will give us feedback. That is how we improve.

— Bill Gates, Co-founder of Microsoft

To create the customer feedback loop, you first need some customer feedback. As mentioned earlier, if you have made sure to claim your business on online directories, such as Google My Business, then you are all set and ready to go.

If you have not, start by making an account with services such as these. You will be able to claim your business and handle any reviews on it. There are lots of other benefits too, so it’s well worth doing.

Once you have those accounts in place, you will see reviews start to come in. Make sure you are paying attention and reply to incoming messages.

Even if the review is positive, simply thanking them for their review will go a long way. While this is an excellent way to collect data, it is not the only way. Customer feedback can be effectively collected through various ways:

• Surveys: Short and targeted surveys can be used to gather customer feedback.
• Feedback Forms: Feedback forms placed on your website or within your product will enable customers to share their thoughts and experiences easily.
• Social Media: Many customers tend to share feedback with the world and not directly with businesses, so make sure to actively monitor your social media channels for customer comments and reviews.
• Customer Interviews: You can also conduct one-on-one interviews with customers to get their opinion.
• Net promoter Score (NPS): You can use NPS to gauge the likelihood of your customers recommending your product to others. If you want to use the NPS system in your customer feedback loop, it is easy to implement. You will ask your customers to rate the product on a scale of 0 - 10 to show if they would recommend it to others. 0 - 6 are considered “detractors,” as they will not recommend you. 7-8 is neutral, and 9-10 are considered “promoters”. This gives you a numerical score that you can calculate, to see how customers feel about your product. All you have to do is subtract your total number of detractors from your total promoters. The higher that number is, the better.

After receiving feedback, be sure to act on it and make improvements in the product to enhance customer experience.

Ready-to-use templates for customer feedback workflows

Example Form

Customer Product Feedback Survey Form

10 fields

View template

Example Procedure

Customer Complaint Resolution Workflow

1Acknowledge the Complaint

2Categorize and Prioritize

3Investigate the Root Cause

4Propose Resolution to Customer

5Implement the Resolution

+2 more steps

View template

Example Procedure

B2B SaaS Customer Testimonial Collection Workflow

1Initial Outreach and Permission Request

2Social Media Testimonial

3Industry Expert Testimonial

4Written Case Study Testimonial

5Video Testimonial

+3 more steps

View template

Is anonymous feedback a good idea?

Transparent and anonymous feedback is vital for quality improvement. It encourages raw honesty - a precious commodity in business development.

Anonymous feedback can be a good idea, especially in situations where customers might hesitate to share honest or critical opinions. By allowing anonymity, businesses can ensure the feedback received is unfiltered and genuine.

This can be invaluable in identifying improvement areas and making positive changes. But it’s important to note that anonymity might also make it difficult to follow up or clarify specific points with the respondents. Therefore, it’s a good practice to balance feedback methods - both anonymous and identified - which can help businesses gain complete insights.

How do you analyze customer feedback professionally?

Need a reason?

Your most unhappy customers are your greatest source of learning. Let them guide your next steps and inspire your improvement.

— Jeff Bezos, Founder of Amazon

Using customer feedback to improve customer experience, resolve issues, and drive business growth is essential. This requires the following steps:

1. Categorize Feedback: Grouping similar types of feedback will make it easier for you to identify common issues and trends.

2. Quantify Feedback: Using a scale or scoring system to quantify the feedback will provide a benchmark to measure your progress over time. 3.

Analytics Tools: You can use one of the many software tools like Power BI Visualization Tool or Tableau, which can help analyze customer feedback through charts, graphs, and other visual data representations. 4.

Sentiment Analysis: This involves determining the emotional tone behind the feedback and can be used to understand the customers’ attitudes, opinions, and emotions. 5. Focus on Actionable Feedback: While all feedback is valuable, it’s critical to focus on the feedback that can be used to improve your product or service.

When to act on customer feedback

Acting ASAP on customer feedback is essential, especially when the feedback is consistent, and several customers are bringing up the same problem, or they point out a bug or a technical issue that is impacting the use of your product or service. If the feedback received is negative, you must look at it as an opportunity to improve, and prompt responses can potentially convert an unhappy customer to a loyal one.

All feedback is valuable and acknowledging it is critical to building customer trust and loyalty. This is essentially step two of the customer feedback loop. You will analyze the data they have given you, and see what you can do to improve.

You will then want to communicate with your customers to let them know you are acting based on their comments. The way you will communicate with customers will depend on their data, so let us see what that would look like: Speaking with promoters: These customers scored 9-10 on your NPS scoring system.

If they score that high, they are likely loyal customers already, who feel very strongly about your product. As they are happy with your offering, it is tempting to thank them and focus on the less satisfied customers. While you do not need to improve on anything here, you cannot take them for granted.

The first step is to thank them for their response, but you can take it further. The most loyal customers can be given extras, such as merchandise.

You can then ask them to refer them to others, as part of a referral program. You can also keep them in the loop by sending personalized emails about your subsequent work. This encourages them to keep coming back and buying with you.

Ensure you appreciate your promoters and use their enthusiasm to widen your customer base. They are more valuable than you know.

Speaking with neutral or passive customers: These customers rated you a 7 or 8 when you asked for feedback. They are some of the most important customers in your feedback loop, as they are vulnerable to your competition. In this case, you want to show them you are the best, and why they should choose you again.

You want to give these customers more reasons to come back and buy from you. Many businesses email special offers, such as discounts and upgrades.

These allow them to buy from you again with no risk, so you have another chance to show them how good you are. There is also the option to send out guides about your product. If you have created ebooks about your business and products, sending one for free can go a long way.

Speaking with detractors: Now you are dealing with those rated you at a 6 or less. You need to consider these as unhappy customers.

There are several reasons why they may not recommend you to others, and you need to see if you can put things right. This may not be pleasant, but their feedback is helpful as it shows you where you need to improve. Usually, it is pretty clear how you should communicate with these customers.

They will have voiced precisely what went wrong with the sale, so you can get in there and fix it. You can do this easily by replacing a product, offering a refund or discount, or giving them the extra necessary information.

The key is to make sure you do this, every time. It does take time to handle complaints, but when you do so well, those customers will give you another chance. Speaking with non-respondents: You must focus on a fourth group here, as they are the largest.

“When you send out a survey, around 20 - 40% of people will respond; you have a pool of 60 to 80% of your customers that you are not even connecting with.” says tech writer Ryan Winters. Because of this, you must make an effort to break the ice with them.

It is usually best to treat them like a passive buyer, as they are not currently swayed by your business one way or the other. In our experience with workflow automation at mid-size companies, simple outreach often converts these silent users into active participants - one telecommunications infrastructure company scaled from 3 to over 1,600 clients in 15 months partly by maintaining consistent touchpoints with passive prospects. Sending extra deals or info through email can encourage them to come back, and get involved by offering feedback. You will never get a 100% feedback rate, but the more you encourage customers to get involved, the more valuable feedback you will get.

How customer feedback loops boost business growth

Maintaining a responsive and effective customer feedback loop is critical for customer-driven growth. In discussions we have had with product managers at mid-size technology companies, customer feedback consistently drives the most impactful product improvements. Let us take a look at how they can significantly boost business growth:

1. Product Improvement and Better Decision Making: Using customer feedback, you can quickly identify the areas in your products or services that need improvement, and gather valuable insights that can be used to make strategic business decisions.

Making these modifications can increase customer satisfaction. 2. Customer Retention: Customer satisfaction is increased by acting on feedback and demonstrating the value you place on their opinions, which builds trust and fosters loyalty.

3. Innovation: Feedback often leads to new and innovative ideas that can keep your company competitive and ahead of market trends. Based on our experience working with technology companies, this is probably where the biggest breakthroughs come from - product teams that build systematic feedback loops into their workflows report faster iteration cycles and better market fit.

4. Promotes Referrals: Happy customers are more likely to refer your business to others, helping you acquire new customers and boost revenue.

How Tallyfy helps manage your customer feedback loops

In this part, we talk about how Tallyfy, a SaaS platform, can help manage feedback loops effectively using its AI and workflow management capabilities. Tallyfy is the best tool for structuring, executing, and monitoring customer feedback loops, with real-time insights and automation.

Here are two ways you can use Tallyfy to your advantage: Create Template: Tallyfy enables you to create templates to automate repeatable processes. You can create a template to rinse and repeat it whenever you need to gather customer feedback - either from scratch or with the help of AI. Create One-Off Task: You can even create a one-time task to gather feedback and assign it to a specific customer.

While this will not close the loop, this is an easy way to collect data.

Start the loop again

You have completed the loop with customer feedback and the improvements you have made based on them. That is excellent news, as you have now made your business better and created engagement online.

However, you cannot stop there. For a reason, it is called a customer feedback loop, so you need to keep it going. There is always room for improvement, and that is important if you want to be on top of your game.

Periodically, you want to contact your customers again and get feedback about your products. Many choose to ask for it every time a customer buys something.

That keeps that data coming in, which you can analyze and act on in real time. With Tallyfy you can automate this process, and focus only on keeping your customers happy and not the busywork!