A feedback loop, in customer relationship management (CRM), is a strategy for gathering information about a buyer’s perception of a product or service in order to determine future actions. The term is borrowed from engineering control systems that use output about a system’s performance to create new input which will either maintain the status quo or improve performance.
In both engineering and customer relationship management, a feedback loop has a minimum of three stages. During the first stage, input is captured and stored. During the second stage, input is analyzed and during the third stage, the insight gained from analysis is used to make decisions.
The goal of a customer feedback loop is to continually improve the customer experience. The collection and analysis of customer data becomes an iterative process that allows business decisions to be repeatedly refined, using insight gained from earlier analysis and previous decisions.
To create a loop, customer feedback can be captured through a variety of channels, including call center transactions, surveys, direct email marking, interactive chat and social listening. One of the major challenges of analyzing customer feedback is how to integrate structured and unstructured data. Feedback gathered from electronic forms, for example, is automatically stored in a structured format, while feedback gathered from mining social media for sentiment requires processes in place to incorporate that unstructured data with other data stored in a structured format. Once that challenge has been met, feedback can be analyzed in a holistic manner and the insight gained from analysis can be used to do more of what is already working well and make changes to aspects of the customer experience that need improvement.
Customer feedback can be classified as positive or negative in sentiment, but perhaps more importantly, can also be classified as positive or negative in terms of loop response. Positive feedback, in terms of loop response, is that feedback which indicates a change should be made, while negative feedback, in terms of loop response, is that feedback which indicates the status quo is working just fine.