The Outer Loop
The outer loop’s explicit purpose is to prioritize and support the kind of customer-friendly changes that employees and teams can’t make on their own. But there’s an implicit purpose as well. An effective outer loop makes employees feel supported. It gives them a voice in the firm’s priorities. It creates confidence that the company’s priorities support customer centricity—and that leadership is putting its money where its mouth is.
An outer loop must employ a rigorous, well-defined process for addressing issues. A team—usually led by the customer advocacy office, or CAO—gathers input from a variety of sources. That team uses clear and explicit criteria to prioritize opportunities for improvement. The CAO makes recommendations to senior executives about which opportunities to address and who should be accountable for leading the charge against each one. The assigned team then investigates root causes and develops solutions. Throughout the process, the CAO makes sure that both customers and employees are informed about progress whenever doing so is relevant or required.
The data that feeds the outer loop begins with input from customers, but it doesn’t end there. In fact, there are four distinct sources of information the central team should review to identify issues:
- Data from the inner loop. This is the customer data that comes from inner loop feedback. It identifies patterns, trends and changes in frequency. If a complaint crops up repeatedly, for instance—and if it can’t be addressed by frontline employees or teams—it’s grist for the outer loop mill.
- Analysis of operational data. The outer loop team also digs into all the operational data that affects, or indicates opportunities in, the customer experience.
- Employees. Frontline teams’ daily or weekly huddles often identify issues that can’t be resolved within the team. Employees provide a rich source of opportunities for improvement.
- Marketplace insights. Competitors may have addressed an issue or opportunity in a way that merits consideration. Sometimes this comes to light through competitive benchmark Net Promoter research. But direct competitors aren’t the only businesses worth looking at. A bank can learn from Disney, a retailer from Apple, an insurance company from Amazon.
Prioritizing the opportunities
In the prioritization phase, the team creates a portfolio of initiatives with the most important ones at the top. The criteria for ranking them should be rigorous, explicit and transparent, so that everyone can understand what they are. For each initiative the team has to ask itself four critical questions—and then one more, an “X factor” that may shoot a seemingly secondary initiative to the top of the list:
- What will be the initiative’s impact?
- How hard will it be to implement the initiative?
- Is the organization ready to address the issue?
- What is the timing of the economic impact?
And then there’s the X factor, meaning the visibility and symbolic impact of the initiative on employees and customers. A given change might hit just a few customers a month and have a modest economic impact while resolving a longstanding irritant for a vocal subset of employees or customers. It might be largely meaningless to most employees but have a significant impact on the company’s reputation in the marketplace.
A CAO team that takes all these factors into account should be able to produce a carefully constructed portfolio of initiatives, one that is high in its impact yet entirely manageable and practical.
In this short video, Rob Markey discusses why a robust, rigorous and transparent "outer loop" is essential to a solid Net Promoter System.
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