Open-loop and closed-loop feedback systems refer to how businesses gather, analyze, and act on customer feedback. There are several differences in the approach of the two feedback systems.
Here are six differences between the two:
01. Definition:
A close loop is a process in which you gather customer feedback, analyze, and act upon the insights. The feedback loop is closed because you take action to communicate back to the customer about how you are going to use their feedback. In this feedback approach, the results of the actions you take are measured to ensure satisfaction.
On the other hand, an open-loop feedback system is a process where feedback is collected but not necessarily acted upon. The company gathers customers’ feedback, but they don’t communicate back to the customers. The feedback is not necessarily used to make changes to the product or service.
02. Purpose:
The goal of a closed-loop feedback system is to improve customer satisfaction, loyalty, and retention. Gathering customer feedback and following up with them to explore further helps you identify areas of improvement. Closed-loop communications with customers help you make changes that meet customer needs.
The purpose of an open-loop feedback system is to collect data and insights. It allows you to understand the customers better. The feedback is collected with the purpose of gathering data. There is no goal to make feedback-driven actionable improvements.
03. Timeliness:
In a close-the-loop feedback system, you gather, analyze, and act upon the feedback in real-time. The goal is to address customer concerns promptly to maintain customer satisfaction. You reach out to customers to understand their reason behind the feedback and inform them of how you are planning to use the feedback.
However, in an open-loop feedback system, there is no requirement to act on the feedback or respond to customers immediately. While you may gather the feedback in real-time or after a certain period, the analysis and action may not be immediate. You can use the feedback for future product or service development.
04. Customer Engagement:
The objective of employing closed-loop feedback systems is to create a highly customer-centric experience. The focus is on creating that caters to customers’ needs, preferences, and pain points. The goal is to establish trust and maintain a positive relationship with customers.
On the other hand, open-loop feedback systems may not be as focused on customer engagement. Since the feedback you collect doesn’t come with the expectation of immediate action.
05. Results:
You can evaluate and compare the results of closing the customer feedback loop in a business. When you act on the feedback and make improvements, you can track and measure its impact on customer satisfaction.
The results of an open-loop feedback system may not be as measurable. Since the feedback may not lead to immediate action, you may not be able to evaluate its impact.
06. Anonymous surveys:
In a closed customer feedback loop, feedback collection requires a point of contact from customers. So that once the feedback is collected, the business can follow up with customers to ensure that their concerns are addressed and that they are satisfied with the resolution. As a result, anonymous surveys are of no use in closed-loop communications.
In contrast, an open loop system can use anonymous surveys to collect feedback from customers without a predetermined action plan. The focus is on gathering feedback and opinions that can inform future product development and innovation. While the feedback is analyzed, there is no plan to follow up with respondents or to act on it.
In short, the main difference between a closed loop and an open loop is that the former is focused on analyzing and acting on that data to improve customer satisfaction and loyalty. In contrast, the latter is focused on collecting data.
This sums up the general differences in open vs. closed customer feedback loops. Let’s look at the advantages of the two approaches.