Customer Feedback Loops: Overview, Importance and Stages

Running customer retention surveys is an important part of your feedback loop. But what is a feedback loop and why does it matter? And how do you run a customer retention survey? We’ve got the answers to all of your questions. 

What Is a Feedback Loop?

A customer feedback loop refers to when your business proactively gathers, responds to, and learns from input from your customers. Surveys are among the most common tools in a feedback loop, but they can also include direct calls and the use of QR codes that lead to feedback forms. They can also include pop-up boxes after online purchases.

The big difference between a feedback loop—and feedback in general— is what you do. Specifically, with a feedback loop, you close the circle and respond to the customer.

Inner and Outer Feedback Loops

As you look into feedback loops, you’ll notice that there are inner and outer ones.

An inner feedback loop is a one-to-one interaction following feedback from a customer. To close this loop, you reach out to the customer and listen to their views. After you do something about their suggestions or complaints, you let them know.

By contrast, an outer feedback loop refers to the larger changes your company makes based on feedback from multiple customers over time. Closing the outer loop focuses more on changing strategies, performing large-scale analysis, and creating new products.

How a Feedback Loop Improves Your Business

Why do you need a feedback loop for your business? There are a few reasons, with your customers being the most important one.

You need to take customer feedback to heart, as unhappy customers are bad for business. When you use customer feedback properly and communicate with your customers, you build customer loyalty, boosting retention.

Successful feedback loops will also make your customers feel as if you value their opinion. That can further improve customer loyalty and retention.

Creating a feedback loop helps you grow your business and keep your customers happy. We’ll teach you how to do it with surveys.

Running customer retention surveys is an important part of your feedback loop. But what is a feedback loop, and why does it matter? And how do you run a customer retention survey? We’ve got the answers to all of your questions.

What is a feedback loop?

A customer feedback loop refers to when your business proactively gathers, responds to, and learns from input from your customers. Surveys are among the most common tools in a feedback loop, but they can also include direct calls and the use of QR codes that lead to feedback forms. They can also include pop-up boxes after online purchases.

The big difference between a feedback loop—and feedback in general— is what you do. Specifically, with a feedback loop, you close the circle and respond to the customer.

Inner and Outer Feedback Loops

As you look into feedback loops, you’ll notice that there are inner and outer ones.

An inner feedback loop is a one-to-one interaction following feedback from a customer. To close this loop, you reach out to the customer and listen to their views. After you do something about their suggestions or complaints, you let them know.

By contrast, an outer feedback loop refers to the larger changes your company makes based on feedback from multiple customers over time. Closing the outer loop focuses more on changing strategies, performing large-scale analysis, and creating new products.

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Why are feedback loops important?

Why do you need a feedback loop for your business? There are a few reasons, with your customers being the most important one.

You need to take customer feedback to heart, as unhappy customers are bad for business. When you use customer feedback properly and communicate with your customers, you build customer loyalty, boosting retention.

Successful feedback loops will also make your customers feel as if you value their opinions. That can further improve customer loyalty and retention.

Streamline your entire business.

See the immediate impact of Podium’s suite of lead management and communication tools.

Watch a demo

How Does a Feedback Loop Work: 5 Stages

Customer Interaction

The first stage of the customer feedback loop is when a customer interacts with your brand, service, and/or product.

Feedback Generation

After interacting with the customer, the customer will have an opinion of your business based on their customer experience. They may feel neutral, positive, or negative.

Feedback Collection

You’ll collect feedback about the customer experience during this third stage of the feedback loop. You may use reviews, customer service surveys, and other options to capture the customer’s opinion.

Analysis and Action

After getting feedback, you will analyze the results. You’ll look for patterns in customer responses, trends toward positive or negative feedback, and any areas in which you could improve. Then, you’ll take action to address problems and improve the customer experience.

Implementation

During implementation, you’ll take the actions your brand feels are necessary to improve and increase customer satisfaction. Implemented changes might include different customer service strategies, changes to your products, and more.

3 Customer Feedback Loops Best Practices

Acknowledge and Thank Customers

As a part of your feedback loop, ensure you thank customers for taking the time to give their opinions about your products or services to your brand. Letting them know you’ve heard them can improve their opinion of your brand.

Automate Where Possible

You should also automate the feedback loop when possible. Simple tasks, like sending out customer surveys and responding to incoming messages from customers, can be done with automation tools and artificial intelligence (like Podium’s AI Employee).

Choose the Right Channels

Finally, don’t forget to reach out to your customers through appropriate channels. A customer who calls to complain should get a callback, whereas someone who leaves a review online may prefer an email for a quick, text-based response.

4 Customer Feedback Loop Examples

Customer retention surveys are one of the best sources of information for your feedback loop, providing you with valuable insights. There are three main types of customer retention surveys, each of which gives you an important customer loyalty metric.

Customer Satisfaction Score (CSAT)

This type of customer retention survey involves asking customers to rate their satisfaction overall. You can ask about your company as a whole in addition to specific interactions, products, or services.

This customer retention survey typically uses a five-point scale. One is usually very dissatisfied, and five is usually very satisfied.

You can use the results of the survey in one of two main ways. Some companies like to calculate an average. Others prefer to calculate the percentage of scores that were four or five. The latter lets you see the percentage of satisfied customers, which many companies feel is more useful.

Keep in mind that you use CSAT for specific interactions or events, so it is a short-term metric.

Net Promoter Score (NPS)

The Net Promoter Score (NPS) survey asks respondents how likely they are to recommend your brand, service, or product to a friend. The survey uses a scale of 0 to 10, with 10 being extremely likely. Promoters are those who respond with a 9 or 10. Passives answer with a 7 or 8. Detractors answer with a score of 0 to 6.

To calculate your NPS, you subtract the percentage of detractors from the percentage of promoters. This is the most commonly used metric for customer experience and is very useful for tracking long-term customer satisfaction.

Customer Effort Score (CES)

The Customer Effort Score asks your respondents whether they agree with a statement on a 7-point scale. 1 is for strongly disagreeing, and 7 is for strongly agreeing. From there, you can calculate the results in various ways. One common method is to calculate the average score.

The goal is to measure effort in customer experiences when customers interact with your employees. You can use these customer retention survey questions as a short-term transactional metric to look at customer experience.

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Customer Survey Text Templates to Steal

We understand that it can feel awkward to ask for feedback, especially if you haven’t asked for any before. We made it easier by compiling some questions to ask and templates for you to use. You can easily combine them into a unique customer retention survey questions template.

• “Which of the following products or services have you bought from [company]?”
• “Overall, how satisfied are you with [company]?”
• “How is the quality of the product/service?”
• “How convenient is the product/service?”
• “Would you consider yourself a loyal customer of [company]?”
• “Do you plan on buying from [company] in the future?”
• “How much do you trust [company]?”
• “How well does customer support answer your questions?”

In addition to the above templates, you should keep the following tips in mind as you create your own customer retention survey questions and distribute the surveys:

• Keep your goal in mind
• Don’t include too many questions
• Use a sleek, professional design for the survey
• Time the survey properly
• Get enough responses before making any conclusions
• Pay attention to larger trends in addition to individual responses
• Continue gathering information
• Test changes based on the feedback before implementing them on a larger scale
• Remember to follow up with customers, as this is what makes it a feedback loop instead of regular feedback

How To Ask for Customer Feedback

While we’re talking about feedback loops, this is a good time to discuss another invaluable way to gather customer feedback: Reviews.

Before we get into how to ask for reviews, why do you even need them in the first place? Part of it is the need for feedback, just like you would get from surveys.

But customer reviews are also important from a marketing standpoint. Eighty-four percent of people trust online reviews just as much as they do personal recommendations. Additionally, 98% of consumers look at online reviews for local businesses.

So, how can you ask for reviews? The good news is that customers are willing to leave reviews as long as you ask them and make it convenient. One study found that 70% of people asked to leave reviews will end up leaving one.

Some common places to ask for reviews include:

• In-person after a transaction
• Over the phone
• Via text
• On your website
• Via email
• Via social media
• Via thank you pages
• On receipts

Remember that the goal is to make it easy for customers to leave a review. For example, if you text a review request, you should include a link that takes customers directly to the review form.

When asking for reviews, you should also try to do so in response to praise. It can also be helpful to personalize the request by mentioning the recipient’s name or the product or service you want them to review.

Gather Feedback With the Best Customer Feedback System

Surveying customers is crucial for collecting feedback and gaining important insights that help you retain valuable customers.

No matter the type of feedback loop you prefer to use, it will be much easier to gather feedback with the help of a tool like Podium. For example, Podium Reviews can streamline the process of asking for reviews and other information for your feedback loops. Once you have customer feedback, you can use it to improve customer retention rates.