With so much riding on each interaction with your brand, you can’t afford to leave a negative customer experience unresolved. Research shows that it takes about 12 positive experiences to make up for one unresolved negative experience. In fact, a study by Lee Resources reveals that 91% of unhappy customers won’t return to your brand at all. That’s where a closed-loop system comes in!
What Is a Closed-Loop System?
A closed-loop system is “the ability to identify and resolve individual customer issues and larger organizational patterns and trends based on those issues while communicating solutions back to customers and employees,” as defined by Bain & Company in“The Ultimate Question 2.0.”
This system consists of an inner loop, the ability to identify and resolve individual customer issues while communicating solutions back to customers and employees, and the outer loop, the ability to identify and resolve larger organizational patterns and trends based on individual customer issues while communicating solutions back to customers and employees.
Why Is a Closed-Loop System Important?
And though closed-loop systems have been around for a while now, they are still just as vital to your customer experience (CX) program! Here are just a few reasons why:
- A closed-loop system gives you a competitive advantage. Many organizations don’t have a formal process for closing the customer feedback loop. If you have one, that places you above more than half of the competition in terms of making your customers feel seen and heard.
- A closed-loop system increases your customer loyalty. Did you know that 83% of customers feel more loyal to brands that respond and resolve their complaints? Getting feedback is one thing, but acting on that feedback is what will keep your customers coming back time and time again.
- A closed-loop system will decrease customer churn. By reducing your customer defection rate by just 5% using an effective closed-loop system, you can increase profits by 25-95%!
Are you convinced? Great! Now that you’re on board, we’ve outlined the 7 most important steps you need to take to get started with an effective closed-loop system.
Getting Started with a Closed-Loop System
1. Get Executive Buy-In
Customer experience is an investment, and for your program to have a positive impact—and succeed—you need buy-in from your executive team. For best results, we’ve found that closed-loop pilot programs focused on a few locations usually are the easiest for executives to get behind. With fewer locations, it’s easier to prove the efficacy of the program without straining your brand’s resources too much.
2. Prioritize Initiatives
Implementing a closed-loop system is a marathon, not a sprint. No matter the size of your company, setting up your program will take time. As your program matures, look for the easy wins to gain credibility and prove success within your organization. Once you’ve found your stride, gradually move on to more complicated issues.
3. Harness Existing Business Knowledge
Identify employees with an understanding of your organization’s operations, and empower them to resolve customer issues as they occur. Your employees know your business and are in a unique position to help your customers and quickly close the loop on customer issues.
4. Commit to Faster Resolution
As technology advances and the customer experience evolves, consumers expect more and more from your brand. Expectations have risen to the point that 42% of consumers said that if they contact your brand for support, they expect a response within 60 minutes. Resolve customer issues in a timely fashion, and your customers will reward you with repeat business and brand advocacy throughout the years.
5. Increase Organizational Agility
Don’t get too comfortable with the way things have always been done in regard to your CX program. Treat every customer issue as you would if you were a small business, and resolve it as quickly—and personably—as possible. Customers want to feel special, and the quicker you’re able to adapt to individual customer issues, the more you’ll be able to reduce customer churn and ensure organizational success.
6. Make Individual Contact
Your customers don’t care about the size of your business; they care about how your brand treats them on a personal level. Study your brand’s customer journey, gather feedback, and identify ways to increase the amount of personal contact during the process of resolving a customer issue. A simple note or phone call can have a profound impact on the success of your program.
7. Empower Your Employees
As mentioned earlier, your employees understand the way your organization operates better than anyone else. This knowledge puts them in a unique position to understand customer issues and know the right solution for resolving the problem. Have faith in your employees and give them the autonomy they need to address customer issues on a case-by-case basis and resolve them as efficiently and personably as possible.
The Value of Closing the Loop
Closed-loop systems are one of the most effective ways to not only reduce customer churn, but prove the financial impact of your brand’s customer experience program. One client of ours implemented a closed-loop system that helped them identify nearly $23 million in potential revenue.
Other studies have found that closed-loop programs help retain customers, which can increase company value (up to 30%) and increase profits (up to 125%).
You can learn more from InMoment expert Jim Katzman about the value of closing the loop in his article here.
3 Myths Around Closed Loop Systems
When developing an effective closed loop system, it is just as important to think about what to do as well as what NOT to do. We’ve put together a list of 3 myths revolving around closed loop systems—and what you can do to avoid them.
Myth #1: Closed-Loop Systems Are Not Profitable
An effective closed loop system will not only help you break even, it will help save you money! While many people think that closed-loop systems handle singular cases, they actually help you identify business trends and get ahead of them! By anticipating, not merely reacting, to your customer’s needs, you’ll be improving experiences before they even happen.
Myth #2: Closed-Loop Systems Are Only Relevant for Certain Industries
There is a stigma surrounding closed-loop systems—that they only belong in certain industries, such as retail or food service. While those industries definitely benefit from closed-loop systems, they are not the only ones with something to gain! Every business, regardless of the industry they operate in, can benefit from a system that gives you the ability to identify the next best action for a customer, and address the root cause of issues to ensure continuous improvement.
Checkout this case study to see how one of our Financial Services clients utilized a closed-loop system to improve their NPS score as well as other business-specific metrics!
Myth #3: Closed-Loop Systems Are Too Complex
A system that allows you to quickly respond to customer complaints, analyze data to identify customer trends, and share knowledge within your organization to create a holistic view of the customer experience? It sounds like it would be a headache to implement. Well, that couldn’t be further from the truth—if you have the right partner!
Get the Closed-Loop System Starter Kit with InMoment’s Closed-Loop Action Package
Not sure where to start? No worries, we are here to help. We have developed a Closed-Loop Action Package that contains everything you need to get started with a system that will improve your business tomorrow, today!
Our Closed-Loop Action Package consists of four products: Case Management, Alerts & Notifications, Moments, and Reporting. Let’s break down what those are and what they mean for your business.
- Case Management: Manage, track, prioritize, and resolve customer experience cases. Supports the ability to track communications with customers about their experience and helps to surface the root cause of customer issues from the employee perspective. Case Management is available on all managed survey programs purchased with XI Platform and allows for flexible filtering, for example: case status (closure or expiration), case owner, or case timer
- Alerts & Notifications:Provides the ability to notify designated users based on specified criteria which may include scores and/or verbatim content tags. Includes up to 5 notification workflows per survey program from employee recognition, phrase/score recognition, and customer rescue alerts. Alerts can be sent via email, text or other custom systems.
- Moments: Case Management integrates with the Moments mobile application to enable creation of cases and close the feedback loop on the go. With Moments, users can create and amend favorite collections, share feedback, create a case, mark moments invalid, or complete and close the loop so they get the insights they need to take immediate action.
- Reporting: Offers insights into closed loop data. Users can visualize and monitor cases at a high-level. Program owners can immediately see stats such as average days to close a case, hours to first action, and number of escalated cases.
- Voice of Employee: Supports the ability to track communications with customers about their experience and helps to surface the root cause of customer issues from the employee perspective. Incorporate the voice of the employee tasked with case resolution with a built-in questionnaire to uncover actionable intelligence from your employees; including customer and employee sentiment, and the root cause of the customer issue.
Ready to start closing the loop? Schedule a whiteboarding session with our experts today!
