Anna-Maija Tanninen


Closing the loop – it is not just about quick reactions but understanding and eliminating customer pain points for good 

Closing the loop is the heart of customer feedback utilization. Closing the loop is often described as reaction to negative customer survey feedback in a timely manner. However, closing the loop is much more than reaction to customer feedback. It is about actions and understanding and eliminating customer pain points for good.

According to Bain & Company, the developers of Net Promoter Methodology, customer insight management comprises both inner and outer circle. The inner circle, or “inner loop” is about quick reactions to customer feedback and immediate response. In a typical setting this is about measuring NPS and reacting immediately to customer feedback.

Source: Bain & Company.

What is the inner circle or “inner loop” in customer feedback management?

Inner loop is about understanding individual customer cases and having ability as a company to react promptly to any feedback that causes concern. It is about gaining valuable insight on customer level and learning from the customer. When closing the loop is handled well in the inner loop -level it can foster customer loyalty and turn a bad experience around. Customer service or sales managers are often the responsible ones to handle this loop.

What does outer circle or “outer loop” mean and why is it more challenging?

Outer loop is where things typically get tricky. Outer loop is not about reaction but actions. Managing outer loop effectively means in essence, that organizations learn from re-occurring customer insight and other analyses, and have mechanisms to identify, prioritize and eliminate customer pain points for good. This goes beyond managing individual survey feedback. Managing outer loop effectively requires implementation of structural improvements, thus involving stakeholders such as process owners becomes imperative.

How do the inner and outer loop work in practice?

Think about yourself as a customer in a hotel. You have just woken up after a restless night. The air condition in your room was broken and room temperature was so high you were tossing around in your bed unable to close your eyes. You ring in the reception and complain. The reception apologizes and arranges you another room for the following night with a functioning air condition. As a result, you hopefully sleep soundly and are satisfied in how things resolved and how well your complaint was handled on the spot.

Now picture this. You are the hotel manager. On a weekly basis, you hear from your staff how customers are complaining about non existing air condition in their rooms, and you can witness the same feedback in customer surveys. Your employees are running around apologizing and trying to arrange a better room for guests, thus reacting to alarming and negative customer feedback. You are in a mode of fixing things and managing the inner loop.

Or picture this. You are the customer in the above story, returning for another stay. This time, you have a previous experience in your mind. You expect and trust that the hotel has learned from your feedback and fixed the issue with air-conditioning for good.

But what happens if the same issue keeps on re-occurring and once again you end up in a room where there is no air condition? How likely would you respond positively to an “inner loop” fix this time, knowing the same thing happened before and still you ended up in this situation. How likely would you keep on returning?

Outer loop is about moving from reaction to action

In the case above, there is a systematic issue in the hotel. Air condition is not working, and customer experience varies based on the availability of air condition in the room. If there is no outer loop in place, the issue most likely remains. Customers would see this either as a lack of listening to their feedback or a deliberate ignoring it and allowing issues to remain as-is. From a company perspective, replacing an air condition system with a new one costs money. But at the same time, losing customers over an issue like this will likely cost even more.

Outer loop requires moving from a state of reaction to state of action. Utilizing voice of the customer to full extent means it has to be integrated to other KPIs and management processes in the organization. Outer loop is about utilizing voice of the customer systematically to identify issues that require improvements in the processes, products or ways of working and putting an action plan in place. It requires going to the deeper level in the analysis, utilizing techniques such as Root Cause Analysis to understand and solve problems. Outer loop is not managed in customer interaction level, but in the organization level.

Implementing both inner and outer loops and managing these well requires a systematic approach on voice of the customer management. Inner and outer loops have very different use cases and needs. Thus understanding the importance and impact of both loops is critical if organizations take voice of the customer seriously and want to utilize it for continuous improvement.

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