What we're talking about 

A customer feedback loop is a way for a business to proactively gather, respond to and learn from the people who are using its product or service. That might be through email surveys, direct calls, QR codes leading to feedback forms, or post-purchase pop-up boxes. It's a loop because, rather than letting valuable insights disappear, you'll be communicating back to the customer – and thereby closing the circle.

For example, you might include a customer support email somewhere on your product packaging that you monitor and respond to. Over time, you'll be able to pick out recurring themes and make business-wide changes to fix them – before informing your customers about those changes via a blog or social media post, perhaps. 

Why it's important 

First things first: your customers are obviously essential to your survival. Taking their feedback into account, and ensuring they know their voices are being heard, will lead to a variety of good business outcomes. Though it's easy to think of sophisticated feedback systems as something for big corporations, if you're a small business still in the development stage, gathering and acting on feedback is critical. You should keep using your loop once you're established, making changes to your method where necessary. 

Building a solid customer base of repeat customers is something every business is after. A recent report from AI-powered software-as-a-service search engine Coveo shows that around 73% of people will abandon a brand after three negative experiences – you need to nip issues in the bud to keep customers. A customer feedback loop will ensure those who use your business feel listened to, in turn boosting loyalty, advocacy and revenue.

Things to note 

Think about the inner and outer loops. It can be helpful to differentiate between the two parts of the customer feedback loop. The inner loop involves the one-on-one interaction you have soon after a customer gives feedback. Then there's the outer loop, which concerns the bigger changes you make to your business every now and then based on feedback that keeps cropping up. Closing the inner loop might look like reaching out to a customer, hearing their views, passing these on to another team member, and then getting back in touch with good news to try and win the customer over. When closing the outer loop, yo'’ll be thinking more about large-scale analysis, new products and strategy changes. You need to come up with a strategy that tackles both in tandem. 

The customer isn't always right. Although your customers' perspectives are incredibly valuable, it would be a mistake to react to every single piece of feedback. There will be aspects of your business and strategy that they're not aware of, plus it's a rare offering that suits absolutely everyone. While you should listen to what people have to say, and let them know that you've listened, the general aim is to look for common trends and issues from within your target audience – and prioritize those. 

Tech is your friend. Your customer feedback loop should operate constantly and seamlessly. Sometimes, this can mean lots of intervention from a dedicated team. But to save time and money, it's worth looking into some of the many software solutions out there. These platforms effectively gather all the customer feedback from wherever you get it in a centralized location, and let you communicate directly. Check out Retently, Loop, Hotjar and InMoment as a start.

How to create the right feedback loops for your business

1. Assess the user journey. Beginwith an overview of how customers interact with your product. It may help to draw up a user journey map. Look at this through the lens of feedback. Are there touchpoints where you're already getting feedback? Which parts of the journey would you like to know more about? Have you created, or noticed, a space where customers can give feedback? 

2. Set goals. Set goals based on the parts of the user journey you want to focus on, and the results you want to see. That might be segments of the user journey with the highest drop-off, or the largest number of complaints or support requests. Narrow down what you want to learn, from who and when – and outline the business outcomes you're hoping to achieve.

3. Set realistic metrics. Come up with some metrics to track that what you're doing is having an impact. That might be tracking the number of support calls you receive; the hours in support reduced; the time until purchase; or other metrics that reflect an improved user experience, such as engagement or conversion rate. 

4. Allocate appropriate resources. Take stock of how much time, manpower and money you can dedicate to customer feedback and support. For a small team, that might be a couple of hours a week. Things like the complexity of your product, and how important the ‘personalized’ element is to your brand, will play a part in this decision. Ultimately, decide whether you're at the point of considering recruiting a customer service team or looking at a lower-intervention approach. For bigger teams, ownership will be shared across different departments (eg, marketing, product and customer service) so that this doesn't happen in a vacuum.  

5. Decide where you'll find feedback. Now onto the design of the customer feedback loop itself. Firstly, think about the gathering of info: where and how you'll ask for or find it. Options include surveys at certain points in the user journey, monitoring social and search engine mentions, setting up a dedicated helpline, in-store conversations and customer interviews. Choose the route (or routes) that you think will help you get to the heart of your target audience – one where they'll actually be inclined to interact with you. 

6. Consider how you'll organize it. Decide on a central location – often a third-party platform – to process all this feedback. It should be constantly updated and accessible to all the different team members involved in responding. Feedback should be sorted into categories, such as product, marketing and purchase experience. 

7. And how you'll analyze it. As you accumulate and sort data, you'll need to extract key learnings from it. This will involve looking at the good and bad insights that are recurring, who they're coming from, and what the full story is. 

8. Assign a process for individual issues. Not every piece of feedback will cause you to shake up your business strategy – but you should respond to as much as you can. Customers want to know that they've gotten through to someone, so speed and directness are of the essence. Whether it's responding to tweets or calling up to learn more, decide in advance on a ‘quick fix’ customer feedback strategy. 

9. Assign a process for bigger fixes. You'll want to act on recurring trends as and where it's in line with your priorities. This might involve small changes like redesigning things to improve usability or fixing bugs, or it might pave the way for a new product or line extension. After you've done this, it's crucial that you communicate that change back. You should have a strategy both for getting back in touch with individuals, and for alerting your wider customer base. 

10. Formalize things. You can't just design a customer feedback loop and be done with it. You need someone to take ownership of analyzing feedback and maintaining the loop. You also need buy-in from the team members who'll be implementing changes. Document your feedback loop in a central location, and redesign it as your goals and touchpoints change with time. 

Key takeaways 

• Customer retention and product improvement should be priorities for small businesses. Paying attention to feedback is key in both instances.  

• There are three broad steps in a classic customer feedback loop: gathering, analyzing and responding to data. 

• You should have strategies both for responding to small individual requests, and implementing company-wide improvements based on feedback. 

Learn more 

Perspective. Team members from eight tech companies outline their approach to feedback loops, and why they feel they're important, in this piece for startup community BuiltIn. 

Example. ‘How Glossier built customer feedback loops and a BFF brand’, from Laura Bosco at customer analysis company Discovery Sprints. 

Tools. There are some excellent tools to help you gather feedback from customers. Typeform helps you create good-looking questionnaires to send to customers; Hotjar shows you how customers behave on your website; and Reevoo helps you collect reviews from customers who have made a purchase. 

A version of this article was published in the Courier Workshop newsletter. For more deep dives into essential business concepts, sign up here.