Balancing or Reinforcing? | Customers, Etc.
When you approach a job, it's important to know your loops.
Let’s say you’re hired as the “customer person” for a new and growing startup. Your first job is to take control of the inbox of incoming customer communications. If you wanted to model this out, you might start by just acknowledging you have an inbox.
Those tickets don’t just sit there (let’s hope). You have to actually work on them, to make the number of tickets go down1.
This is a simple loop. If the queue has tickets, Tickets in Inbox, we do work to make the number of tickets go down, Inbox Productivity. This exists as a balancing feedback loop because our productivity opposes the number of tickets in the inbox. In other words, it goes down.
This is all well and good and also very simple, but I want to pause here for a second. Remember, we’re imagining that you were hired as the customer person at a startup, so let’s ask the question:
Have you done your job?
Satisfying your balancing feedback loop
As the first dedicated “customer person” at the company, very likely one of the reasons you were brought on was to take care of the inbox that you’ve been tackling every day. The founders knew they needed help, so they hired you, and they experience a great deal of relief because the inbox goes down to zero every day. Before, they had to answer tickets all day and do their actual work (?) after 5 PM, but now they can actually focus. It’s nice.
We of course know there’s more to customer care than just processing tickets—you have account management, customer success, product documentation, team management, figuring out which new AI startup’s chatbot to use, etc.—but we pause here because this is where it feels good, at least in the short term, to be done. You could be forgiven for hiring someone “just to take care of the inbox” because of the immense value you place on it “being taken care of” and getting those tickets down to zero.
What should we focus on next?
Finding your reinforcing feedback loops
We might think our next challenge is picking one of those areas of customer care listed above and “investing” in it, but I would argue that before we do that, we need something far more simple: we need to acknowledge and properly account for our reinforcing feedback loops. (And there’s one reinforcing feedback loop in particular that may be more important than any of the others.)
In my post from a couple years ago about reinforcing feedback loops, we used stock-and-flow diagrams to create at a relatively simple model of customers “flowing” through a business from sales through to retention2. What if we wanted to expand our basic inbox feedback loop above and look for a reinforcing feedback loops? What might that look like? Here’s one take:
Here’s how we might explain it:
We started with Tickets in an Inbox, but where do tickets come from? Tickets come from Customers. Having customers can drive Customer Loyalty, which in turn can positively influence Prospective Customers, which can help feed our Sales Funnel, which completes the loop by generating more Customers. This is a reinforcing feedback loop. Increasing Customer Success Efforts has a direct impact on Customer Loyalty, which can can amplify the loop.
In our made-up scenario, remember that we’re trying to find somewhere to invest. We’ve taken care of the inbox and we’re trying to figure out where to focus next.
Balance vs Reinforcing
This is where a fundamental difference between balancing feedback loops and reinforcing feedback loops come into play.
Balancing loops are goal seeking. As such, the most efficient thing to do is to invest the minimum amount of resources necessary to maintain that goal state.
Reinforcing loops grow exponentially (or go extinct, in the case of negative reinforcing loops). For reinforcing loops with desirable outcomes (like, for example, sales or customer success expansion), it makes sense to continue increasing investment in the loop until some external factor causes the loop to slow down3.
You don’t invest in balancing feedback loops. You minimize investment to control costs. You invest in reinforcing feedback loops that grow and continue to produce desirable outcomes. Maybe like this:
If you’ve worked in customer support, you might be screaming, “Support isn’t just a cost center!”, and I would agree with you, but not because the image above is wrong, but rather because it is incomplete.
Next week we’re going to take a look at one additional reinforcing feedback loop, which arguably might be the most important feedback loop to consider if you’re part of a growing organization.
If we wanted to be more complete on our systems thinking here, we would say that Tickets in Inbox needs a desired “goal state”, such as “Inbox Zero” or something like that. We would model that in our causal loop diagram by drawing the goal state off to the left and pointing to the Tickets in Inbox variable.
Stock-and-flow diagrams are a bit clearer than causal loop diagrams, but they’re also a tad more complex to work through. If you find yourself really wanting to measure something in your diagram, like number of “customers” or “tickets”, that might be an indication you want to shift to a stock-and-flow diagram.
For example, let’s say you hypothetically have a perfect product and perfect sales & marketing function. You would pour resources into your sales & marketing machine until you’ve acquired the total addressable market. At some point, there won’t be anyone else to sell to.