One letter saved the ATO millions – great example of a feedback loop Relating something the ATO did, to something we do.

The tax office and a specialist behavioural economical research unit within the federal government used a randomised trial to target 2000 tax agents, specifically naming individuals lodging higher than expected work-related expenses claimed in a letter.
three people surrounding paper and laptop inside room
Alongside a control group of tax agents who didn’t receive letters, the trial found individual clients identified by correspondence reduced their work place claims by $191 compared to the $2 increase in the group who received no letters.
The premise of a feedback loop is simple: Provide people with information about their actions in real time, then give them a chance to change those actions and push them towards better behaviours. You can do this with your business in working with debtors, suppliers and staff. But off of course keep it simple.
Without the development of our Precis accounting service we never would have been believed the power of the Cruncher. We present clients with information that can easily explain their cashflow, where the businesses money came from and where it went. In the accounting scheme of things, this is in real time as new information is produced every month. This will allow our clients to understand their business and react to improve on it.
two men shaking hands
A feedback loop involves four distinct stages. An example using our cruncher –
So Many business owners never understood the profit and loss, but they certainly react to our cruncher report –
Here are the 4 stages of the cruncher report as a feedback loop
First comes the data: – This is the evidence stageThe information of the business is taken through a bank feed which provides us with raw data on what has happened in the business.
Second, the information must be relayed to the business owner in a context that makes it emotionally resonant. This is the relevance stageOur system now processes this data so that a business owner can understand the information given to them.
Third stage: consequence. The information must illuminate one or more paths ahead.The business owner can digest the information, ask questions and understand what has happened in their business.
And finally, the fourth stage: action.There must be a clear moment when the individual can recalibrate their behaviour, make a choice and act. The action taken by the individual is measured and the feedback loop can run once more. Every action will stimulate new behaviours that inch us closer to our goals.The business owner can now make large to incremental changes to improve the business. These changes will be seen in the following months report – and this cruncher feedback can begin again.

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