Feedback Loops: Reaping the Benefits

Lana J. Chandler
December 30, 2009 | COMMENTS

Feedback loops are a key mechanism for understanding what drives loyalty and defection. They enable you to garner insights from clients on how you are doing, what else clients would like you to do, and where you can improve.

“Without feedback loops, the institution will become detached from the client experience,” observes Constance Anderson, president of Anderson & Associates (Jersey City, NJ). Feedback loops include:

• Mystery shopping
• Client surveys
• Focus groups

The success of these depends on the skill of the moderator and the organization having a firmly established objective in conducting the group. “Focus groups are best for testing product ideas, names, brand positions, etc. They are not a substitute for quantitative research and will shed little light on an organization's service level,” says Anderson.

Use the Feedback

“Investing in feedback without using it to improve products or service performance is like buying a sports car and keeping it in the garage. It looks good, but it isn't taking you anywhere,” says Anderson. To reap the benefits of feedback, Anderson offers these tips:

• Establish benchmarks first to give context to ongoing results. Anderson's company, for example, recommends that their clients do two months of mystery shopping or online surveys before they set goals for staff. Tip: Set a minimum standard based on what 60 to 70 percent of performers are able to achieve.
• Hold people accountable for achieving the minimum standard and reward those who exceed the standard. If you've done a good job of creating a valid feedback loop, you will want to include results in employees' performance evaluations.
• Take feedback seriously. “If a client takes the time to fill out a survey, do them the honor of considering the feedback and change course, if necessary, based on patterns in the feedback,” Anderson says. “Let clients know via your communications channels about the improvements you are making based on their feedback.”
• Ask executives and coaches to read the comments on surveys and immediately respond to any client who asks for a response. Otherwise, you risk alienating an irate client. Anderson's company, for example, does lending quality surveys. Clients who are denied a loan often request a callback. “We encourage our clients to make these calls so that the person will return to the financial institution when their credit situation improves,” says Anderson.
• Bring the results of all feedback loops to your strategic planning session and use them to set organizational goals and to measure progress.

Branch Managers Play a Critical Role

Besides using feedback loops to coach for performance improvements, branch managers play a crucial role in explaining feedback loops to employees. Your team needs to understand why feedback loops exist, how they work, and the benefits they provide. “The staff will reflect the coach's attitude toward the feedback loop,” Anderson says. “If the coach views it as a positive learning tool, the staff will also. If the coach shows negativity toward the loop, the staff will mirror his or her attitude.”

This story appeared in Branch Manager's Letter at www.branchmanagersletter.com and is reprinted with permission. Contact publisher Lana J. Chandler at 304-343-0206 or Lana@BranchManagersLetter.com.