Definition: A negative feedback loop is a process where customers’ complaints are collected and used to improve new product and service designs. Listening to customers’ criticisms helps businesses become responsive in customer problems and also makes customers feel valued and appreciated.
What Does Negative Feedback Loop Mean?
What is the definition of negative feedback loop? Negative feedback loops are particularly important for small businesses that want to earn more loyal customers. By listening to their customers and interacting with them over time, businesses build strong customer relationships that boost customer loyalty and satisfaction. Satisfied customers are unlikely to switch to a competitor and are the best source of feedback for businesses that use feedback to further improve the customer experience.
It’s called a loop because the customers’ output is then used as input in the next product or service design creating a circle. What goes out inevitably goes back in.
Let’s look at an example.
Example
Established online retailer, Amazon.com, is a great example of a business that uses a feedback loop. Amazon has essentially transformed the world of online business by launching a constant process of interaction and dialogue with its customers. The negative feedback loop motivates consumers to offer their feedback and Amazon provides products and services that address consumer preferences.
These correspondences are evaluated by experts who delve into the power of consumers, offering their perspective on how Amazon can increase positive customer feedback. The goal of feedback experts is to thoroughly understand what the consumer needs and create more informative social interactions that can improve the entire customer experience.
Furthermore, customer service experts use these loops to motivate managers to solve customer issues, offering them incentives to get involved in the social dialogue. Consumers feel satisfied that the company’s leader is listening to their complaints or positive affirmations.
Amazon has proved that effective negative feedback loops lead to a greater appreciation of the company’s efforts, thus improving the customer experience and creating advocates for the company.
Summary Definition
Define Negative Feedback Loop: A negative feedback loop is an economics term where businesses use their customers’ unfavorable complaints to improve product designs and increase customer loyalty.
