From banking to investments to credit to insurance, customers want to work with financial services organizations they feel they can trust to have their best interests at heart as they make vital decisions about their money.
And cultivating customer trust is increasingly important. Research shows that approximately 8%-10% of customers open and close accounts each month, but in the wake of several high-profile bank failures in 2023, 15%-20% of customers moved some or all of their money. [1]
As in any good relationship, it takes effective listening and two-way communications to build the kind of trust that drives loyalty. Direct and effective communication is particularly important for nurturing and maintaining high-value relationships, such as those between financial services providers and their customers or clients.
However, while many financial services organizations have launched voice of the customer (VOC) programs that focus on listening, they fall short of delivering on a critical aspect of their CX strategy: “closing the loop” with customers.
What is a closed-loop process?
At a basic level, a closed-loop process is about taking meaningful action based on what you hear and learn from customers—transforming customer feedback into impact. It focuses on addressing needs, improving operations and customers’ experiences, and generally focuses on continuous improvement.
There are two main forms:
- Individual closed-loop: This involves following up with a customer to address their dissatisfaction, outstanding questions, or issues.
- Systemic closed-loop: This involves using aggregated insights from customer feedback to uncover and address enterprise-wide opportunities to improve operational inefficiencies or provide better CX.
Both types of closed-loop processes can be achieved using advanced VOC solutions that automate the process of gathering and analyzing customer feedback, and orchestrating corrective actions, at scale—all within a single unified platform.
7 benefits of an effective closed-loop process
An effective closed-loop process can help you uncover and address hidden sources of friction and dissatisfaction, delivering many positive outcomes, including:
- Increased customer retention
- Improved operational efficiencies
- Deeper customer relationships
- Higher customer satisfaction and NPS® scores
- Driving brand affinity by delivering differentiated experiences
- Better employee and organizational engagement
- Demonstrable customer-centricity to meet regulatory guidelines
What’s more, the trust that’s built when you effectively close the loop with customers creates a positive ripple effect.
Data from a leading global research and advisory firm found that 93% of US banking customers with high trust in their primary bank say that they would recommend it to friends and family—while only 39% of those with low trust say they would. [2]
So, how do you design an effective closed-loop process?
Start by defining closed-loop process goals
As is true with any process, you should start by defining your goals. For example, a P&C insurance company might establish goals for its closed-loop process to:
- Identify and follow up with at-risk customers (e.g., customers who provide negative ratings following an interaction and/or mention unresolved problems or issues).
- Isolate specific pain points impacting a particular customer journey moment (e.g., new customers having trouble setting up online auto-pay for their premiums).
- Identify cross-sell/up-sell opportunities (e.g., customers give high ratings and positive feedback following an interaction, and they only have one line of insurance with the company).
- Build upon things that work well (e.g., identify the types of experiences and actions that yield high levels of customer satisfaction and loyalty).
The company might decide that all these important goals can be achieved with effective process design, or, they may decide to keep it simple at first and only focus on high-value at-risk customers.
Key considerations when designing your closed-loop process
With your goals in mind, you then need to scope out an end-to-end process to create accountability and visibility. That includes addressing these key questions about your process:
- Triggers: What are business rules and definitions for identifying customers or areas that should be in focus? This is key to scaling the volume of alerts that you process will generate—and your organization’s ability to manage them.
- Owners: Who will be informed about the closed-loop process, receive alerts, and take action?
- Handling: What are the business rules and expectations around follow-up methods, information shared, resolutions considered, and how alert follow-ups are documented and reported?
Additionally, you’ll need a defined escalation process: who are the additional owners if an issue needs to be escalated? How will that information be documented and shared?
Getting to the root of the matter and taking action
One of the most important outcomes from a closed-loop process is identifying and aggregating the root causes of customer dissatisfaction or problems and issues.
Root cause analysis helps to ensure appropriate actions and key learnings from your closed- loop process—which will help you achieve your defined goals.
Root causes can be:
- Company-related: leadership, policies, rules, or brand-related
- Product-related: usage, feature/function, availability, etc.
- Employee-related: poor performance or behaviors
- System-related: broken functionality, wait time, downtime/no access, etc.
By aggregating and reporting on individual closed-loop alert root causes, you gain valuable insights to help you prioritize follow-up, and uncover potential systemic issues, before they get out of control.
For example, based on the root cause(s) identified, your organization might decide to:
- Coach or re-train staff
- Redefine or refresh your approach to delivering certain experiences
- Make system updates or streamline digital interactions
- Engage in a broad continuous improvement process to redefine CX in a particular area
- Bring together different departments to make cross-functional improvements
And taking the right actions to improve CX is where your closed-loop program and VOC program deliver real business impact.
Build trust by closing the loop
A closed-loop process tangibly demonstrates to you customers and clients that not only are you listening, you’re really hearing them. It demonstrates your commitment to making things right when issues arise, and to transforming their feedback into meaningful action that improves their customer experience.
If you’re ready to create or evolve your company’s closed-loop process to follow best practices, our expert Consulting Services team is here to help. Contact us to get started.
Learn more about the best practices for building an effective closed-loop process in this eBook: Why and How Financial Services Companies Should Create a Closed-Loop Process.
[1] Money: Most Americans Still Trust Banks Despite Recent Collapses (2023)
[2] Forrester blog: Financial Services Firms Need To Learn How To Earn Customers’ Trust (2022)
