Close the Loop: Meaning and Best Practices | CustomerGauge Close the Loop: Meaning and Best Practices

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Close the Loop: Meaning and Best Practices

Introduction


The Net Promoter® System is sometimes referred to as a circular 3-step business process.

First, survey your customers, then analyze their feedback and fnally follow up with appropriate actions. The last step – Act – closes the loop before you start again.

Most customer research includes listening to customers through surveys, social media and other channels as well as analyzing their feedback in combination with other data such as CRM and fnancial data. But acting – quickly – on feedback is a unique feature of the Net Promoter System and improves customer loyalty when carried out correctly.

In this eBook, we explain in more detail why acting – or more specifcally the Closed Loop Process – is important, what it should achieve and the best practices associated with a successful implementation.

  • Why closing the loop is essential
  • What defnes a good closed-loop process?
  • Closing the loop at different levels 
  • Respondents B2B accounts
  • Management level 
  • Structurally and strategically
  • Go beyond just measuring health and create change

Why closing the loop is essential 

Why closing the loop is essential

Show that you care
Few people really like taking surveys, so when a customer goes through the effort of completing a survey, make sure to to show them that you care about them and their feedback. First and foremost, thank them. Then blow past their wildest expectations and show them you really care by demonstrating that you not only listened to their feedback, but changed your business as a result of the feedback. 

Determine root causes
Improving the Net Promoter Score requires an understanding of the root causes of the underlying motivations that make up each score. Irrespective of the number of questions and how you design each question, you will not identify all root causes. No matter the length there is always something left unknown. Instead, keep the survey short and use your closed-loop processes as a way to incorporate additional root cause information into your overall analysis.

Improve the customer experience and retention
How loyal your customer become is a direct result of the experiences you create for them in their customer journey. Use customer feedback to not only identify, but fx issues in the journey that are inhibiting the creation of promoters.

A recent npsbenchmark.com survey also found that by closing the loop companies can improve their customer retention by an average 10%! Since 5% retention increase translates into an additional proft between 25% - 85% (see Reichheld and Sasser’s HBR article “Zero Defections: Quality Comes to Services” from 1990), closing the loop certainly pays off if done well. 

Utilize promoters
One of the most powerful aspects of Net Promoter is your ability to identify and utilize promoters to your advantage. A promoter is very likely to recommend you when asked but how do you get them to recommend you when they are not being asked?
Use the closed loop process to get them to refer new customers, share their opinions about you on social media, volunteer for case studies or help you in your product development

Improve the next loop
By showing your customers there is something in it for them, they will be more likely to respond to the next survey in fact, our research shows that customers are 21% more likely to answer the next survey if you closed the loop.

What defines a good closed-loop process?

What defines a good closed-loop process?

Impact
Any process should always be measured on results and a good closed-loop process can help you achieve the following:

  • Future response rates increase when customers understand there is something in it for them. 
  • An increase in the Net Promoter Score is likely when you listen, act and communicate your actions. Improvement rates differ a lot, but the average NPS increase in our client base is 29% higher when closing the loop! 
  • With the proper tools, closing the loop becomes a Solution Selling tool for account managers. It allows you to Identify customer problems immediately, establish subject matter expertise and trust...it’s almost not even fair!

Agility
Agility means being fast and graceful during the act of closing the loop. How fast you respond to customer feedback or take action to resolve issues is essential. Responding to customers months after they leave feedback means they may have forgotten about the issue, it may no longer be an issue or worse they are infuriated at how long it took to respond. Alternatively,
a speedy closing the loop process impresses customers and shows that you really do care. A good way to ensure speed, is to create automatic alerts for feedback defned as needing action.

Closing the loop gracefully is about making the experience effortless for the customer. The closed loop process should not feel like another touch point to the customer, but rather as a natural follow-up. A good example of this is refning call scripts so the customer spends as little time with you as needed, but gets as much out of it as possible.

Coverage
If you only close the loop for a fraction of your customers, you are likely to miss out on some root causes and a company-wide impact. Of course, if you have limited resources and thousands of responses, it may be diffcult to follow up with every response. A solution to this is to automate the feedback with emails or newsletters, explaining what you learned and what you plan to do or have already done. 

This type of communication can serve a purpose outside of your respondents as well. Send a quick update to your non-survey taking audience. In this update, talk about the adjustments you’ve made as a result of direct feedback from your survey responses. This is an advanced strategy that not many businesses utilize, however those who do have found it boosts future response rates from both audiences signifcantly.

Solving structural issues
Once you have decided to close the loop, the front line of your company can handle most operational issues. A lot of companies struggle, however, with issues that require cross-organizational cooperation, investments or even strategic changes. Dealing with such issues, if
not an executive management decision, then at least a senior management decision. After 2-3 years you typically “run out” of operational issues, so if you do not handle structural issues your NPS stops improving.

Closing the loop
at different levels

Closing the loop at different levels

Not all levels apply to all companies nor will all customer issues require closed loop actions across all levels, but it is important to realize that closing the loop is about more than just responding to customers. 

To be successful at closing the loop there is also four elements that need to be considered and addressed. These are when and how to close the loop, for which
customers and who in your company will close the loop. 

1. Closing the loop with respondents

Closing the loop with respondents

When do you close the loop?
Closing the loop starts in the survey. Ask the customer if they would like a follow-up call. Some choose to default the answer to yes, especially if the respondent is a detractor.

In B2B we often see that agreements are made per client whether you may perform follow-up or not. Some companies don’t want you to disturb their employees and prefer to take a meeting to discuss all their responses. 

A follow-up call should usually be done within 48 hours and some companies set even higher standards, by doing this within 24 hours or even 6 hours. The speed is important for two reasons:

1) The client remembers his/her feedback, which makes the follow-up call less of an effort for the client. If you wait too long, your follow-up call is not seen as part of the feedback but almost turns into a separate touch point.

2) You show that you care. Following up quickly and not at your own convenience shows that the client is more important than your other tasks.

How do you close the loop?
The straight-forward way to close the loop is with a phone call allowing you to help the customer with an unresolved issue or get more information about the root causes of their feedback. If the customer is a de tractor, make the call and see if you can fx the issue or compensate otherwise. And even if this is impossible or requires time, showing that you listened, care and plan to do something or at least explain why you can’t, usually improves the customer’s impression of your company and brand.

With limited resources you may not be able to do all required phone calls, an alternative – or addition – is to reply through emailing.

In general, we recommend that you communicate your plans and progress to customers. For instance, an introduction email to the next survey if you schedule them with a certain frequency is a good opportunity to communicate progress and results as it also increases
the response rates of the next survey

Which customers do you close the loop for?

Detractors only

This is the natural place to start for most companies when starting a Net Promoter program. Poor scores and comments from detractors create an instinctive urge to solve the issues raised. Unless you are really only measured and incentivized on fnancial results, most employees will want to fix detraction issues. If resources are limited, we suggest to start with the scores 4-6 to better.

Passives

Many companies fnd that turning passives into promoters is one of the biggest challenges in a Net Promoter program. Often companies blame some psychological reluctance in customers to give a 9 or 10. We don’t see this supported by our research but suspect that companies miss out on major opportunities to close the loop for passives. People giving you 7’s or 8’s are often satisfed so it is easy to see them as a safe client even though they may not be. Turning them into promoters often requires that you not only meet their expectations, but exceed them. Asking them what it takes for them to give you a 10 and then following up with real actions takes time and resources.

Promoters

If a promoter is loyal then why follow up? Well, just like any marriage or family needs nurturing so does a promoter. Listen to their daily challenges, their plans and visions, talk about yours, excite and surprise them. And invite them into your family! A good closed-loop process with a promoter can give you the input and assistance you need for future product developments, provide you with a case study or referrals, some positive mentioning on social media,  etc. Inviting them into a promoter community can yield many benefcial results if managed well.

Only key customers

If short on resources, follow the money. Prioritize the biggest and most proftable customers.

Customers who don't respond

It is not common to close the loop for customers not responding, but sending an email to all customers explaining what you learned and which actions you have taken (or will take) will also show these customers the value of the survey and why they should answer the next one.

Who closes the loop?

Customer-facing employees, a central NPS team, e.g. market researchers or managers? There are no best practices here as everyone with a bit of service-mindedness and some interviewing skills is capable of closing the loop. We see companies where every customer-facing employee closes the loop. In other companies only senior employees or managers close the loop. The one constant across both of these types of organizations is skill-level. The good news however, they’re easily learned!

We have two recommendations: Think about 1) buy-in and 2) impact. If you only close the loop on a few, less people will learn the benefts of NPS and you may experience resistance in the organization towards the program and concept. 

When managers close the loop, customers tend to think that the company takes them more seriously. Having a managing director call a customer really leaves a footprint. Of course the MD doesn’t have time to close the loop for all customers, but either selecting a random sample or sending all scores below 3, for instance, to a management team emphasizes the
importance of NPS to customers and employees.

2. Closing the loop at the account level in B2B

A great way to close the loop in B2B is as part of a Quarterly Business Review (QBR), also known as the Business Review, the Account Review or the Executive Business Review. As the other names indicate, the quarterly frequency isn’t carved in stone and we recommend that you schedule surveys to be able to discuss NPS results in such meetings.

From an NPS point of view, the objective of a QBR is to close the loop with the decision makers of the company. Presenting their company scores back to them with the comment “This is how your organization sees your investment in us” is a great start to get discussions
going.

The key is to not simply look at the score as a measure of satisfaction with your product and service. Instead, turn the conversation towards the decision maker’s own motivations and how they can extract a return on their investment (in you)!

Discussing the top drivers, comments and how to improve the scores builds trust and improves the relationship for a number of reasons: 

  • Closing the loop forces you to focus on customer issues and their “ROI”, not your own sales agenda. 
  • Showing them the scores may give them insight they didn’t have and it shows your honesty (especially if the scores are low).
  • If you can agree to some follow-up actions, you get the chance to show your reliability and credibility by delivering results.
  • Agreed actions may allow your company to work together with and expand relationships in the customer’s organization.

Closing the loop at the account level lets you achieve the following results:

Higher response rates
If response rates are low, explain that there may be detractors in the customer organization. People not responding are in general less engaged than people responding and more frequently detractors. Devising a strategy to increase response rates for the next survey brings more reliable insights.

Prioritize drivers affecting the scores
A good Net Promoter tool will show you which drivers affect the scores most. However, the decision makers in a company may disagree with their colleagues, so discussing the drivers openly and if needed, getting permission to investigate these further, will help you gain focus on the main issues. It may also give you an idea about future scores when you decide which actions to focus on. 

Follow-up actions

As mentioned before well-handled actions expands your cooperation with the customer and makes you look more credible as well as reliable, two trust factors. If you want to improve customer scores, carrying out actions will have a big impact. We have seen multiple examples where companies have increased Net Promoter Scores for individual clients by more than 50 points between two QBRs. In our customer base, the average Net Promoter Score increase from a QBR is 10 points – which comes on top of other NPS increases!

3. Closing the loop at the management level 

Managers usually have the responsibility for a segment, e.g. a business unit, a market, a product or a service. Closing the loop at the management level is therefore a matter of understanding the loyalty drivers for relevant segments and how these affect the Net Promoter Score.

Start by understanding how each driver contributes to a segment’s Net Promoter Score. 

Seeing which drivers create detraction or promotion gives management input to prioritize actions. For instance, if the customer support creates detraction, management can focus their efforts here. Also understanding which elements of customer support that create detraction is important to improve the scores.

Another tool that helps prioritize efforts is a “What-if” scenario that calculates how the Net Promoter Score will improve under a given scenario. A simple and therefore very popular scenario is: Identify detractors and passives that have marked the same issue. If the issue was solved and the identifed customers increase their next survey score by one point, how much will the Net Promoter Score increase?

Of course not all customers will increase their score, if they have given other reasons, but we typically see that if you solve an issue or just communicate that you plan to solve an issue, customers will improve their next score by more than one point.

One of our customers, an IT company, conducts such simple “what-if” scenarios. Here’s where it gets interesting: Based on customer feedback from detractors as well as passives, the company discovered they could increase their NPS score by a whopping 8 points by simply updating their manuals more frequently to better reflect new features. 8 points!

The company also knew that each extra NPS point would lead to an additional 0.5% sales to existing customers - every year! So, this revelation would potentially translate to an additional 4% yearly sales … certainly nothing to sneeze at.

Knowing this, here’s what they did: The CTO hired a few more technical writers and went out of their way to make manuals easily accessible online by purchasing a well-known digital documentation tool. Gone are the days of printing out-dated manuals. Updates could be made to the documents and pushed to their customers in real-time. However, the work didn’t stop there. They launched a marketing campaign to inform their customers of the changes and thanking them for bringing this issue to their attention. As you can imagine, their Net Promoter Score grew and the root cause vanished in later surveys.

4. Structural and strategic issues

Many companies struggle with these issues due to the lack of a simple closed-loop process. If not handled, your Net Promoter program will stand still at some point in time and you may even experience a decrease in your Net Promoter Score, as the pool of operational issues that your customer-facing units address usually dries up after some time. If you do not prove to customers some progress on structural and strategic issues, your clients will lose faith in your program and your ability to solve their issue. As illustrated above, operational issues can be solved quickly and often lead to a quick score increase. Structural and strategic issues take more time to solve and the reason why the effect on the score is slow in the beginning but over time, typically, leads to higher NPS increases.

To deal with issues of structural or strategic nature, you need to gather the right people with suffcient decision power. Decision power means that they can alter business processes, make investment decisions and even adjust the strategy.

Some companies have a fxed team of senior or executive managers meeting at least once a quarter. The purpose of the meeting is: 

  • Prioritizing or rejecting new issues based on their impact on the Net Promoter Score and the cost of solving them. 
  • Tracking the progress of previously agreed action. 
  • Deciding how to communicate issues, rejections, priorities, plans, their progress and achieved results to customers and employees.

As mentioned you may reject issues. If the team judges that the beneft is simply too small, the cost too high or the issue contradicts the company strategy, the right choice may be to reject it. Remember to explain to customers why you reject an issue (preferably to decision makers in B2B).

Go beyond just measuring health and create change

Closing the loop is an essential part of NPS. Without it you are only measuring your health and will fail to improve the experience you provide and raise the loyalty of customers. Closing the loop shows customers that you are listening and you do care, it helps you determine the root causes of customer satisfaction, it allows you to make use of your promoters and it improves the response rate for future surveys.

A good close the loop process, though, is defned by measuring the impact of closed-loop actions, being agile (speed and grace/effortless), the coverage of the process across respondents and being able to go beyond organizational fxes and create cross-organizational cooperation to resolve larger structural problems. 

  • Closing the loop at the operational level is just the start. Closing the loop is: 
  • Responding to individual feedback, but with time you should... 
  • For B2B, conduct Account Reviews/ QBRs to create more successful client relationships. 
  • Managers investigating how different loyalty drivers contribute to their segments NPS. 
  • Structural - resolving issues that are the product of cross-organizational processes and require senior level oversight and strategic realignment.

And no matter what level, you always need to think about how, when and who will close the loop, and for which customers. 

To find out how easy it is to start closing the loop immediately, try CustomerGauge for free or visit us at customergauge.com to learn more about NPS and our mission to help companies create happy, loyal customers.

 

Next Up: NPS® Use Case for Financial Services Companies

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