Customer service has rapidly evolved beyond the boundaries of call center aisles and front desk counters. Today, it is considered a critical faucet of business strategy. Customers will not tolerate their experience to be treated as a simple afterthought - or a replicated one size fits all process. Businesses can no longer survive with this strategy. Yet, why do so many companies still struggle to devise operational strategies for closing the loop at every level of their organization?
In 2017–2018, CustomerGauge collaborated with MIT CISR for their NPS® & CX Benchmarks Survey which surveyed 468 companies to assess Net Promoter® and customer experience strategies and practices across industries. The findings confirmed many held beliefs within the CX industry around closed loop practices, but also uncovered an increasingly urgent narrative around companies churning customers as a result of sub-optimal closed-loop practices.
According to the study, companies that do not close the loop at any level increase their churn by a minimum of 2.1% per year.
In contrast, companies who close the loop at every level — which includes respondents, management and the executive level — decrease their churn by a minimum of 2.3% per year.
But does a 2.3% reduction of churn a year really impact bottom line revenue in a significant way? The short answer is yes. Say you’re a $500m company with a 20% churn rate per year. Keeping revenue growth completely flat, if you reduce churn by 2.3% every year over a 5-year period, you’re adding $234 million back to your bottom line over that entire period.
At this point you may be going, “Well of course WE ARE closing the loop. Who wouldn’t have a customer support option?” And yes, many companies have a closed loop strategy in some way, shape or form. However, more often than not, these companies only close the loop with their front-line staff or customer service teams directly with respondents,
Directions
Closing the Loop at the Frontline Level
Depending on whether your company is B2C or B2B, the frontline closes the loop with respondents or accounts. These are your business developers, sales staff, or team leaders that interact most frequently with your clients. The frontline closes the loop with respondents when they need to:
Ask for the root cause of an NPS® score if it is unclear
Fix open issues with detractors and passives
Understand what it takes to turn a passive into a promoter
Understand reasons for promotion and encourage referrals
When closing the loop with accounts, account managers can review scores, drivers and comments in client meetings to decide a bespoke course of action. Do these customers require a personal follow up or call back? Are these your key accounts?Closing the loop at the frontline means saving detractors from churn. In addition, the faster the frontline closes the loop, the more retention grows. Closing the loop within 48 hours to 2 weeks will lead to a cultivation of higher retention rates.
Closing the Loop at the Management Level
When closing the loop at the management level, companies need to:
Understand the NPS drivers, and what needs to be improved to grow your NPS. Knowing the contribution that each driver has on a company’s NPS score will allow management to pinpoint what areas need improvement. This will also allow management to set targets and prioritize action steps when improving customer experience.
Identify the best performances and share best practices If certain people or departments are performing better than others, management should identify the reason for this and then train other departments accordingly to deliver the same level of performance. Identifying reasons often include other metrics like first-time resolutions (see figure below), employee churn, experience level and employee buy-in.
For management, closing the loop is about improving internal performance based on feedback to ensure issues do not continue down the line.
Closing the loop at the executive level happens due to organizational limitations, financial requirements, or implications of strategic initiatives. Before closing the loop at the executive level, the frontline or management identifies issues. The executive level then processes these issues, including creating case studies and overseeing meetings.
In addition, the executive level is also responsible for communicating structural changes or larger initiatives to customers and employees so everyone is on the same page.
There are numerous benefits to closing the loop at the executive level, including:
Addressing customers individually and/or telling them what the company learned, and which actions have been taken, will retain more customers
Sharing scores, results and actions internally will help the company grow faster
The transparency of communication with customers as well as internal communication can lead to increases in retention on both sides.