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Why is Closing the Feedback Loop important?

Collecting Customer Feedback has become a necessary task for businesses. Customer Feedback is the only way to know what your customers think and feel about you and how satisfied they are with your products and services. Customer Feedback is vital for any organization to grow. Realizing the importance of Customer Feedback, you spend your time and money on creating surveys, sending them to the customers, motivating them to fill the surveys, and thus collecting Customer Feedback using the customer feedback tool in survey responses. But are you able to utilize the full potential and the benefits of collecting Customer Feedback?

According to Gartner, 95% of companies collect Customer Feedback, but only 10% work to improve their products and services, and 5% bother to tell their customers what they have done for them. In this way, we can say that in reality, only those 5 percent are utilizing Customer Feedback to the full extent. Rest others are not as they are not carrying out the process of Closing the Feedback Loop, which is of utmost importance.

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When you are gathering Customer Feedback, this process is extremely important to utilize the feedback and derive all its benefits for your business. Before moving on to the importance of Closing the Customer Feedback Loop, let's learn What is Closing the Feedback Loop?

What is Closed-Loop Feedback?

Closed-Loop Feedback is when businesses respond to Customer Feedback and manage it to understand Customer Experience from customers' point of view and make plans of action to provide a better experience in the future.

Closing the Customer Feedback Loop is the process of responding to Customer Feedback, taking meaningful actions to improve Customer Satisfaction wherever required, and thereby informing the customers that you have worked on their feedback.


All the aspects of this process are equally important, whether it is responding to feedback, taking action, or informing the customers that you have acted on it. For making a well-organized Closed-Loop Feedback system, you need to take effective steps concerning all these aspects of the process of Closing the Feedback Loop.

A proper Closed-loop feedback system helps you and your teams to make your business better and more successful. With Closed-Loop Feedback:

  • Customer Service Teams get guidance to provide a better service to the clients.
  • Customer Experience teams can make their strategies more effective for providing a better Customer Experience to the clients.
  • Customer Retention Teams can identify the causes of churn and work on them to retain customers.

Closing the Feedback Loop or making a Closed-Loop Feedback System is not an add-on service for your customers. Instead, it is a necessity for your business to survive and grow in the market. Let's understand why it is so important.

Why is Closed-Loop Feedback System so Important?

41% of the customers believe that the brands replying to their reviews do care about their customers. And if you do not respond to Customer Feedback, the customers would feel that you don't care about them, and they should find a better brand.

This ultimately increases your customer churn. Whereas, if you revert to their feedback and take the required meaningful actions and resolve issues, you can retain your churning customers.

Did you know that you can avoid 11% customer churn by just reaching out to the customers and can avoid 67% if you solve their issue in the first instance? Let's explore how Closing the Feedback Loop is beneficial for your brand.

Benefits of Closing the Feedback Loop

  1. Closed-loop feedback helps to increase Customer Satisfaction
  2. Closed-loop feedback helps increase Customer Loyalty
  3. Closed-loop feedback helps to save your Goodwill
  4. Closed-loop feedback helps in improving employee performance
  5. Closed-loop feedback helps to maximize your revenue

Let's explore how you can derive these benefits from the Closed-Loop Feedback system.

1. Closed-Loop Feedback helps to Increase Customer Satisfaction

Customer Satisfaction is the primary requirement for any business to survive and grow. Without this, you cannot think of your business attaining success.

When you close the customer feedback loop, it makes them happy and satisfied. By following this process effectively, you can improve Customer Experience, thereby enhancing Customer Satisfaction.

2. Closed-Loop Feedback helps to Increase Customer Loyalty

When you respond to Customer Feedback and suggestions, take the required actions and inform the customers about this, it gives them a strong feeling of being listened to and valued. This gives them a sense of owning the brand, which eventually increases their Customer Loyalty towards the brand.

By Closing the Feedback Loop, you build trust among your customers towards the brand. This can not only make your Passives into Promoters but can also help you convert your Detractors into Promoters.

3. Closed-Loop Feedback helps to save your Goodwill

If you do not gather Customer Feedback, customers share it through online reviews, social media, and negative word of mouth. And when you collect it, still do not do anything about it, customers get even more frustrated, and the intensity of their negative word of mouth and negative reviews about your brand increases to a large extent.

Negative reviews can literally ruin your goodwill! Having good word-of-mouth in the market is so crucial that 92% of all people trust a word-of-mouth recommendation over any other kind of marketing. Closing the Feedback loop helps to bring back the miffed customers and thus helps in saving your goodwill from getting ruined.

4. Closed-Loop Feedback helps in Improving Employee Performance

It is a well-known fact the Customer Feedback helps in evaluating employee performance. In this regard, Closing the Feedback Loop goes a step ahead by improving their performance.

WWhen you engage your employees in Closing the Feedback Loop, they learn how to fix up the things that earlier got wrong. This learning helps in their personal development and thus improves their performance.

5. Closed-Loop Feedback helps to Maximize your Revenue

When you receive Customer Feedback, you get rich data that helps evaluate your brand's performance and its product and services. You get to know the loopholes in your processes and faults in your products. Working on this feedback to Close the Feedback Loop helps in product improvement, resulting in the better quality of products and services that can yield more revenue for you.

Moreover, working on customers' suggestions and then informing them develops a strong relationship with them that helps to provide a great Customer Experience resulting in more sales and revenue.

Who Benefits from Closed-Loop Customer Feedback?

You and all your stakeholders derive the benefit of running a successful Closed-Loop Feedback process. Whether it's you, your customers, your employees, teams, and any other stakeholder of your business, everyone benefits from running a closed-loop feedback process.

How do Customers Benefit?

Customers do business with you because of the fulfillment of their requirements. When you take their feedback, work on it to Close the Feedback loop and satisfy them; they get what they wanted.

  • When you follow the process of Closing the Feedback Loop, you improve Customer Satisfaction, and your customers can derive the worth of the investment they made in your products and services.
  • Your customers feel valued when they realize that their feedback gets heard. It gives them inner satisfaction to deal with a brand that cares for its customers.
  • They get the ability to resolve any issues they have or may have in the future by contacting your service representatives who are ready to solve their problems and concerns.

How do Organizations Benefit?

Closed-Loop Feedback is really beneficial for your organization. Along with increasing Customer Satisfaction and loyalty, it attracts more repurchases and new customers as well. Building an effective Closed-Loop Feedback system helps get real-time feedback, providing real-time customer insights, and helps to take timely actions on it.

  • Your employees and team learn more about customer issues and how to resolve them.
  • Your staff understands more about Customer Experience and the impact of your performance on CX, which helps improve Employee Performance.
  • Based on this history and experiences with Closed-Loop Feedback, you can make better strategies and more effective decisions for your business going forward.

Learn more about the Closing the Feedback Loop

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Nikhil Dawer

Written by Nikhil Dawer

Sep 04, 2020

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