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July 07, 2022

What Is a Feedback Loop and Why Does It Matter?

Statistically, most people choose to hear the bad news before the good, and when it comes to customer satisfaction surveys, polls, and inquiries, companies hear both the good and the bad, but mostly the bad.

Successful companies understand that positive change can come from positive and negative feedback. A tried and true method of collecting real-time customer feedback and data is using a positive or negative feedback loop.

Key takeaways:

What Is A Feedback Loop?

A feedback loop uses customer and employee feedback to institute changes to business policies, practices, products, and services. It is a scientific process of using the outputs of a system as inputs to adapt to the regulating factors of an ecosystem — it operates on the same conceptual basis as climate feedback loops, which aim for temperature regulation and a control system capable of mitigating the speed of climate change. In a sense relevant to product development and customer loyalty, the term comes from its use in psychology and medicine.

Feedback loops are the starting point for your internal market research and product improvement programs.

There are three essential components to any feedback loop:

  1. Outputs
  2. Inputs
  3. Execution

Feedback Loop Outputs

The output component of feedback loops comprises the products and services your business produces and provides your customers.

This includes the customer service your clients encounter, the process of ordering and receiving your products, the products themselves, and how you market your company and its core purpose.

In other words, the output component is the parts of your business that you export to your customers and the parts with which they have direct or indirect interaction.

From the commercials they may see on television to how your support team handles their concerns, the output component of feedback loops is the source of all the customer input your closed loop will receive.

Feedback LoopInputs

The input component of your feedback system comprises the feedback your market research receives from prospective, current, or past customers. Input from customers derives from various sources, such as:

  • Beginning, middle, and end-point buying surveys
  • Customer satisfaction surveys
  • Reviews
  • Polls
  • Proactive telemarketing efforts.

Surveys

Surveys are perhaps the most popular technique for collecting customer inputs for feedback loops. You can deploy various survey techniques to gather specific input at deliberate points in the customer’s interaction with your business.

For instance, pop-up surveys are perfect for customers adding a product to their cart but then deleting it before completing the transaction. Pop-ups are also great for when they move away from the website without purchasing a product. You can deliver other surveys after the sale to gauge the customer’s experience while visiting your website, which becomes the input for the feedback mechanism.

Surveys are not limited to online commerce; they also work well in traditional storefront environments. Handwritten surveys can be conducted inside your physical location or mailed traditionally or electronically after the customer makes a purchase. In either instance, the survey is the input source for your customer feedback loop.

Feedback Loop Execution

The third component of feedback loops involves the actual implementation and execution of the customer feedback input data compiled using your feedback loop.

Knowing how to do something is not enough; you must also possess the will to do it. In other words, intelligence goes to waste if you refuse to put it to work.

While we all would like to hear positive feedback over negative, the negative feedback presents the greatest opportunities to improve. With negative feedback, you can glean actionable steps that enhance and improve the customer experience with your business.

Positive feedback is useful and helpful in gauging what you are getting right, but negative feedback is often a lot more honest.

Once you and your marketing team have gathered data from your feedback loop, the next step is to identify the areas of your business that are struggling to make the impact on your customers that you intend to make.

Consequently, this process will also identify your strong areas. Armed with this knowledge, you and your team can implement changes, whether outsourcing areas of weakness or doubling down on areas of strength, resulting in a greater customer experience and increased profitability and success.

Positive Feedback Loop vs. Negative Feedback Loop

Believe it or not, it is not just your customers who may have praise or complaint about your products and services. Your employees are the backbone and frontline of your company; as such, they have hands-on knowledge and experience with what is working and what is not.

Companies make a huge mistake when they only value their customers’ feedback and do not give their employees a space to voice opinions, complaints, or suggestions.

Positive Feedback Loop

A positive feedback loop involves gathering inputs from your staff and employees about your company’s policies, practices, products, methods, and services. Your employees are the face of your company and are the ones who come face-to-face with your clients and customers.

They interact with your customers directly, whether online in social mediaapps, on the phone, or in-person inside your physical locations.

Employees can provide valuable insight about what is and what isn’t working and probably know much sooner than management where problems are brewing. They hear complaints from customers far quicker than you do. Additionally, your employees implement your strategy and service; therefore, they are keenly aware of the effectiveness of certain products and services.

The positive feedback loop allows your employees to participate in the positive change your company needs and wants to implement.

In doing so, your employees feel valued and respected and become active participants in the evolution of your company’s success. This pride can lead to higher retention rates, increased company morale, and better performance and quality of products and services.

Negative Feedback Loop

The negative feedback loop is the most common of the two and comprises the inputs received from your customers and clients. While the name may be misleading, it is important to know that customer input is not necessarily always negative. Negative, in this sense, just identifies the input source and not necessarily the spirit of the content elucidated.

Despite being frightening at times, do not be shy to ask your customers to identify areas of your products and services that could use some improvements, even if the customer had an overall positive experience.

A happy customer can still be beneficial in helping you identify what needs improvement. Perfection is unobtainable. Therefore, you and your company should not fret about being informed of weaknesses.

Excellence, however, is obtainable and is accomplished by a constant pursuit of improvement and innovation. One great way to find the areas you should focus on is through negative feedback loops, the input being simple feedback and customer complaints.

The Benefits Of A Feedback Loop

Thus far, we have discussed the mechanics of the feedback loop and the two different types, and we have touched the surface level of how you can use them to benefit your business. Now let’s take a deeper look at how each type of feedback loop can help your company and contribute to growing your success.

Benefits Of A Positive Feedback Loop

As we just discussed, your employees are the backbone of your company. They are the bookends that hold and keep it all together. Good and key employees are essential to your continued growth and success. Positive feedback loops contribute tremendously to their happiness. Examples of positive feedback loop benefits include:

  • Employee Retention
  • Communication and Teamwork

Employee Retention

First, valued employees stay where they are and do not usually look for employment elsewhere. Recruitment of good and qualified applicants is expensive and timely. Therefore, the more employees you can retain, the smoother and more effective your company will operate. This inevitably leads to profitability and success.

Communication and Teamwork

Secondly, creating a space for collaboration and honest input leads to strong communication amongst your company’s ranks. Effective communication is essential in any relationship, especially in the workplace.

Strong communication inside your company limits opportunities for misunderstandings, thereby increasing the efficacy of your product design, research and development practices, manufacturing, product delivery, and customer experience.

Benefits Of A Negative Feedback Loop

Like your employees, customers also want to know that their wants, desires, and needs are being met and heard by the companies they choose to do business. Negative feedback loops offer your business a way to satisfy this crucial need and ensure your customers know how much you care.

Customer Retention

If a customer provides negative input during a survey, you should make every reasonable effort to correct the error or fix their issue. Of course, some customers are impossible to satisfy. But, in most cases, as long as you put in the effort, the customer will feel valued and heard.

Despite having a negative experience, that customer will likely continue doing business with you. Most reasonable customers know that your company is managed and operated by people.

Because those people are human, they are apt to make mistakes because, after all, your customers are also human, at least for now they are. Customer retention is just as important as employee retention to sustained growth and success.

Implementing Your Feedback Loop

Now that you know the differences between positive and negative feedback loops and their benefits, it’s time that we discuss how you and your company can implement these feedback loops into your marketing strategy and business practices.

Surveys

The easiest and most commonly used method for implementing feedback loops involves surveys. However, there are various tools you can use to gather the necessary input data you need to identify weak points and strong points inside your new products, customer services, and customer experience.

SMS Marketing

SMS Marketing is one of the tools available to you which utilizes the power of mobile phone text messaging to reach your customers and is far more effective than email marketing. Gathering feedback Loopinput data through SMS texting allows your company to send out surveys or questionnaires to your clients and customers to collect valuable information about what you did right and what you did wrong.

Positive feedback loop implementation inside your company can use the same tools used in your negative feedback loop data collection.

How To Execute Change Based On Feedback Loop Data

Knowing where you excel and where you fail is the first and most crucial step in helping you identify what areas you and your team need to focus on to implement positive change inside your company. This is also the first step in determining your need to outsource, or SmartSource, as we call it.

SmartSourcing

SmartSourcing is a great way to adapt to the insight from your feedback loops while minimizing costs. Outsourcing weak service areas of your company has many incredible benefits, but the greatest is savings. Implementing improvements or building departments and programs from the ground up can be costly.

Instead of investing precious cash assets to develop or improve areas of your business that lack strength, consider outsourcing those needs to a company that already has the infrastructure, support staff, and expertise in that field established. What may be a weakness to your company is a strength to another and vice versa.

Conclusion

Earlier, we discussed why having knowledge and intelligence is insufficient for success whenever you refuse or fail to put that knowledge to work.

It’s not enough to know what you need to focus on improving based on data gathered from your positive and negative feedback loops. You must be willing as a leader and company culture to embrace critical analysis of your services and products with optimism and excitement.

You may think that excitement is too much of a stretch; after all, hearing what others think you fail at is not usually easy or pleasant. But as a business leader, you must resist the urge to react defensively and instead harness that negative feedback as fuel for innovation.

At Awesome OS, we possess the skills and technology you need to develop and implement feedback loops that will take your company’s success to the next level. The most significant benefit gained from positive and negative feedback loop data is knowing where your weaknesses and strengths are so that you and your team can begin the journey towards excellence.

 

Sources:

Good News or Bad News: Which Do You Want First? | National Geographic

Creating A Positive Feedback Loop In Your Business | Indeed

Feedback loop | Psychology Wiki

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