What Are Feedback Loops? How It Works and Why It Matters

What are feedback loops? That's a a term that can be applied to different fields, and a critical system if you are looking for ways to improve your business based on customer and team feedback.

Customer reviews have become very common and valued in ecommerce. They are placed on the product page to help customers decide if they want to buy an item or not, and also to give credibility to an online store.

But, the multiple types of feedback a company receives can be applied to much more than that. Check out the article to learn more.

What Are Feedback Loops?

When the question is "What are feedback loops?", the Cambridge Dictionary defines them as "a system for improving a product, process, etc. by collecting and reacting to users' comments".

A feedback loop is composed of 4 stages at least:

1. You define what you want to hear feedback from. It can be a product, a service, or a process inside the company, for instance.
2. Establish how to collect feedback and organize it.
3. Analyze the feedback received.
4. Implement actions based on the feedback.

Instead of guessing how to enhance your business, through feedback loop implementation you can identify the weak and strong points, and act strategically. Then, you will be able to create much better products and services and have a healthy and productive working environment.

Negative Feedback Loop

A negative feedback loop consists of asking customers for feedback to improve a product or service and using it to implement necessary improvements. That's very common in software companies where the employees may struggle to understand what features they should prioritize.

Instead of making multiple tests based on their guesses, they ask their customers' opinions, for example, through surveys sent by email. Their feedback will show how to modify the software to provide a better experience.

Positive Feedback Loop

A positive feedback loop is a process that happens inside the company when employees' opinion is required to enhance internal structures and create a better workplace. Knowing what your employees think is very helpful in increasing retention rate, productivity, and profit.

When a company acts based on employees feedback, it shows their opinion is important and this helps to stimulate engagement among the team.

What Are Feedback Loops For?

As you may have realized by the definition of "what are feedback loops?", this method has the purpose of enhancing something, which can be a wide variety of things, according to the feedback given by its target audience.

Basically, feedback loops serve to detect problems and determine future actions. In marketing, It's often used to understand the most effective ways to reach out to leads and customers and measure content performance.

Software developers use feedback loops to perfect computer systems and provide apps with intuitive interfaces and great user experience. Human resources can use feedback loops to identify the level of employee satisfaction and define what needs to be changed in the office.

Benefits of Feedback Loops

When it comes to what are feedback loops, it's important to know the benefits they provide, so then you can understand why it's worth using them.

Enhance Products and Services

The customer feedback loop's main benefit is it enables you and your team to improve your products and services based on the opinion of who matters the most. You can change a product so it fits your target audience's needs as best as possible, which will increase sales as a consequence.

Increase Customer Retention

With accurate product and service improvement, based on the feedback, it's more likely that customers will keep buying from your company. They feel heard and valued with the efforts made to meet their requirements, and this encourages them to be loyal to your brand.

Improve Workplace

Feedback loops are also very useful to enhance the workplace. You can identify what employees lack in your company, and make changes accordingly. Showing their feedback is heard is an effective way to motivate them and build an environment where they feel safe and encouraged to share their ideas.

Reduce Employee Turnover

As a consequence of motivating employees by hearing their feedback and implementing changes, they feel much more to invest in a career in your company, instead of leaving when the first opportunity comes up. They start seeing your company as a place where their dedication is valued.

Improve Team Work

Feedback loops can have a high impact on teamwork as well. Creating processes to collect and analyze feedback, and promote changes based on that is a way to engage with your team, and it helps to solve communication problems.

Feedback Loops Best Practices

Automate Feedback Processes

To create feedback loops, first, you need to collect them, whether from your customers or employees. You can automatize this process to make it easier and faster, for example, by sending a satisfaction survey every time a customer makes a purchase.

Choose the Right Channels to Ask for Feedback

Have you ever asked for feedback from your customers but didn't have any response? This may be because of the communication channel you chose. Pay attention to what channels your target audience uses the most.

If they don't have time for phone calls, for example, they will hardly ever answer a survey through it. On the other hand, rating a product via email is quicker, and can be done with just a few clicks. You need to know your target audience to know where and how to ask for feedback.

Reward Feedback

To encourage customers to send their feedback, you can reward them with exclusive coupon discounts, free samples, a gift card, and other advantages to your ecommerce. This shows your appreciation and strengthens their relationship with your brand.

Another alternative to making customers and employees feel rewarded by giving their feedback is showing public recognition. You can thank them in a speech, for instance, or send a personalized email explaining how their opinion impacted the company's decisions.

Integrate Feedback Loops Into Your Planning

Now that you have learned what are feedback loops and what they serve, it's important to add them to your planning. This includes not only how to collect feedback, but also how to analyze and use them to make improvements.

Making changes based on feedback must be part of your sales, marketing, and financial plan. Beyond that, it should be included as a significant piece of your company culture, so feedback loops will be encouraged in every sector.