Feedback loop definition
A feedback loop is a process in which the outputs of a system are circled back and used as inputs. In business, this refers to the process of using customer or employee feedback (the outputs of a service or product), to create a better product or workplace.
The Definition of a Negative Feedback Loop
A negative feedback loop is a process where a company listens to customers’ complaints or grievances, and then uses that feedback to improve their products or customer service. It’s considered a loop because the customers’ feedback (output) is used as constructive input on a redesign of their product, creating a circle.
The negative feedback loop benefits both businesses and customers — customers feel valued and respected by the business and are more likely to become long-term advocates for the brand, and the business’s design is improved to increase customer satisfaction.
To explore successful negative feedback loops in more depth, let’s take a look at some examples.
Negative Feedback Loop Examples
1. Best Buy
Best Buy, the world’s largest consumer electronics retailer, effectively uses a negative feedback loop to improve their customers’ experience.
In 2010, Best Buy created a research tool, called VOCE (Voice of Consumers Through Employees), and used it to collect customer feedback and complaints.
Steve Wallin, Senior Director of Best Buy’s Consumer Insights Unit, said, “Our ability to listen and learn from our customers in real time allows Best Buy to lead the industry, helping people bridge gaps in selection, service and convenience.”
After they collected customer feedback via VOCE, Best Buy took immediate and drastic steps to improve their service model. Among other things, they streamlined their mobile pickup orders, separated the Customer Service and Geek Squad so customers weren’t confused where to go for which service, and created a “Geek Squad Lounge,” so customers could find one-on-one help before leaving the store.
Ultimately, Best Buy saved money and guesswork by listening to their customers and strategically improving areas their customers cared about most. If, instead of a negative feedback loop, Best Buy used market research, they might not have been as effective in targeting aspects of their service most directly impacting their customers.
2. Trader Joe’s
Trader Joe’s, a grocery chain, ranked in third place in 2017 for the grocery store with the highest customer satisfaction, ahead of Whole Foods. To maintain that high standard of customer satisfaction, Trader Joe’s doesn’t employ traditional customer service methods, like service reps manning phones.
Instead of traditional customer service, Trader Joe’s puts a strong emphasis on in-person interaction between employees and customers. Their retail staff spends most of the day on the floor, interacting with customers and immediately responding to their needs.
Trader Joe’s employees’ attention to human interaction is necessary for impressive customer service. Trader Joe’s often goes above-and-beyond to respond to any negative feedback. For instance, when Marynne Aaronson requested her favorite soy ice cream cookie in their Reno, Nevada branch, they stocked up on it just for her. In Phoenix, Trader Joe’s opened before nine a.m. so the Phoenix customers could shop earlier, when they wanted.
Those one-off experiences aren’t necessarily easily replicable, but they’re hugely influential for creating long-term customers.
The Definition of a Positive Feedback Loop
A positive feedback loop is a process where a company listens to employees’ complaints or grievances, and uses that feedback to improve internal structure and workplace satisfaction. As a result of improved workplace satisfaction, the company is then able to increase their profits. It’s considered a loop because employees’ feedback (output) is used as input on a restructuring of the work culture, creating a circle.
A positive feedback loop, essentially, focuses on employees’ input to make the workplace better — as opposed to a negative feedback loop, which focuses on customers’ input to make the product better.
A positive feedback loop can be a formal or informal process, in which you collect employee feedback on their overall work satisfaction, and respond to that feedback to make your employees’ happier.
A positive feedback loop is essential for your business’s long-term success. Having happier employees is valuable, but not just for employee retention — it’s also critical for your company’s financial success. In an excerpt from Noelle C. Nelson’s book, Make More Money by Making Your Employees Happy, she found stock prices for Fortune’s “100 Best Companies to Work For” rose an average of 14% per year since 1998 — compared to six percent rise since 1998 for the market in general. Ultimately, studies have found employees are willing to invest more time and effort into their work when they are happy at the company.
Positive Feedback Loop Examples
In 2014, Microsoft hired a new CEO, Satya Nadella, to deal with Microsoft’s toxic work culture. The high pressure and intense internal competition at Microsoft had turned employees against each other. The employees no longer felt united.
After Satya Nadella was hired, his first major project was restructuring the company to alleviate the competition between departments. To tackle this, he asked every employee to re-focus on three common goals. He outlined these goals in an email sent to his employees, along with his new mission statement for Microsoft’s culture: “Team, I believe that we can do magical things when we come together with a shared mission, clear strategy, and a culture that brings out the best in us individually and collectively.”
Satya Nadella ended his email to Microsoft employees with this remark: “I believe that culture is not static. It evolves every day based on the behaviors of everyone in the organization.”
Nadella used employee feedback to improve internal structure and unify the company. Now, Microsoft doesn’t operate under divided teams with competing goals. Instead, each product falls under one vision, so employees can happily share responsibilities and work together.
2. Southwest Airlines
Southwest Airlines, a U.S airline, first started flying in 1971 — at the time, their vision was “to make flying affordable enough that anyone could fly.”
Katie Coldwell, Director of Communications at Southwest Airlines, said, “Once we achieved this mission, it would have been easy to step back and say, ‘Okay, we’ve done it, we’re done.’ But we didn’t. We kept aspiring for something greater.” In the summer of 2013, Southwest Airlines rolled out a new mission statement: “to become the world’s most loved, most flown, and most profitable airline.”
While it might’ve been easy to remain loyal to their old mission, Coldwell explained it was important for Southwest to outline a deeper purpose in their mission to inspire employees and make them feel like they were making a difference. This is more important than ever — in a 2016 Purpose at Work LinkedIn Global Report, 75% of purpose-oriented professionals reported satisfaction with their jobs, compared to 64% of non-purpose oriented professionals. Additionally, purpose-oriented professionals were more likely than non-purpose oriented professionals to stay at a job for more than three years.
To increase a sense of purpose in the workplace, Coldwell encourages companies to ask their employees, “What is the value you bring to the world?”
Southwest Airlines has been listed on Glassdoor’s Best Places to Work for eight consecutive years, from 2010 to 2018. Their flexibility and openness to change, despite being an older and well-established business, enables them to grow and continually inspire employees.
How to Gather Your Feedback
If you’re ready to use a negative feedback loop to improve your own product or service, take a look at our Customer Feedback Strategy guide. You might choose a survey, an NPS, or a feature request board to collect valuable information from customers — or, depending on your business’s onboarding process, you could collect product feedback when you speak with customers.
If you’re ready to use a positive feedback loop to improve employee satisfaction, consider some of the steps Microsoft or Southwest Airlines took to make their employees happy — perhaps you try collecting feedback via email or department leaders, or adopt anonymous feedback systems like the Employee Net Promoter System (ENPS).
Ultimately, there’s nothing better for your business than happy customers and happy employees, and both of these loops are critical for achieving both.