In this Renaissance of business models, the customer has become the center of corporate strategies. We’re so interconnected and hyper-connected 24/7 that it’s impossible to sustain long-term success and growth without happy customers.
So what makes your customers happy? Undoubtedly, there are many factors involved but your employees are a key factor, one that we’ll discuss today in the context of employee engagement.
Remember the good old times?
Remember the time when you would go to your local store, around the corner and that nice man with a hat would know your name and smile as you paid for your groceries? We all crave those times back and it’s not because we are not satisfied by the variety in a hypermarket but because human interaction generates emotion. And emotion is what makes us a happy customer.
Your employees are your company when dealing with a customer. Often times, those interactions are what define a brand, despite of carefully constructed advertising campaigns and marketing efforts.
So how can you replicate the “good old times” experience for your customers?
A: Through employee engagement. Bluntly put, happy employees make for happy customers.
The service-profit chain theory has been around since 1994 and it’s proven to be more and more relevant as businesses have evolved. This idea establishes relationships between profitability, customer loyalty and employee satisfaction. The links in the chain (which should be regarded as propositions) are as follows:
- Profit and growth are stimulated primarily by customer loyalty.
- Loyalty is a direct result of customer satisfaction.
- Satisfaction is largely influenced by the value of services provided to customers.
- Value is created by satisfied, loyal, and productive employees.
- Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers.
Make your employees happy first
By focusing on employee engagement and employee happiness, you reinforce your brand as well as retain your talent. People are emotionally attached to a company that values their needs and aspirations, a company that recognizes and rewards their efforts.
Their attachment translates into a higher quality of services and products for your company. If your employees feel valued they will increase their discretionary effort because they feel part of the company. This sense of belonging and being responsible for the company outcome will naturally result in a customer-focused mentality.
This client success story featured in Harvard Business Publishing shows a strong correlation between employee engagement efforts and the quality of services provided. Vi, a luxury senior-living community established in 1987 as Classic Residence by Hyatt, is dedicated to helping older adults live more active and fulfilling lives. Their Management Development Program (MDP) is aimed at ensuring employees deliver on Vi’s brand promise, revealing that high employee engagement and low voluntary attrition are interwoven with high resident satisfaction.
In an article for Forbes, Kevin Kruse mentions a study published in the Journal of Occupational and Organizational Psychology that shows how organizational commitment has an undeniable impact on business unit performance.
In looking at the organizational commitment of 755 retail bank employees from 2005—2008, along with financial performance and customer satisfaction of the business units they worked in, researchers Silvan Winkler, Cornelius König and Martin Kleinmann proved that there is a reciprocal relationship between job attitudes and business performance. This can be observed within a one-year time frame. However, when the time frame is increased to two or three years, the correlation only remained in the direction of engagement preceding business outcomes.
“Results indicated that organizational commitment had a more persistent influence on performance at the business unit level than vice versa. Consistent with prior research, this suggests that job attitudes may come first, and that practitioners might be well advised to aim to improve job attitudes in order to boost performance.”
Key insights into figuring out the “how”
Here are some essential pointers identified in a study by Northwestern University – Linking Organizational Characteristics to Employee Attitudes and Behavior – A Look at the Downstream Effects on Market Response & Financial Performance.
• There is a direct link between employee satisfaction and customer satisfaction, and between customer satisfaction and improved financial performance.
• The key organizational characteristic for explaining employee satisfaction is organizational communication (a measure of the downward and upward communication in an organization).
• Employee satisfaction is a key antecedent to employee engagement. Interaction between managers and employees with regards to supportiveness and goal setting, as well as job design were also key drivers of employee engagement.
• Organizational culture was another significant driver of employee engagement, where employees must be expected to cooperate and work together, but also to take charge and provide a voice for the customer within the organization. A fully cooperative culture feels the need to reach consensus on a single option, where a culture promoting healthy competition provides multiple choices which are then balanced against one another in an attempt to develop an optimal solution.
• When individuals and teams are competing to implement the optimal behaviors oriented to the market and its customers, such competition can work to the advantage of both the organization and its customers.
• Organizations with engaged employees have customers who use their products more, and increased customer usage leads to higher levels of customer satisfaction.
• It is an organization’s employees who influence the behavior and attitudes of customers, and it is customers who drive an organization’s profitability through the purchase and use of its products.
• In the end, customers who are more satisfied with an organization’s products are less expensive to serve, use the product more, and, hence, are more profitable customers.
Becky Dannenfelser makes a great point in her article on Customer Satisfaction and Engagement, which is that the focus must begin with front line leadership, as they are the ambassadors for the brand and the face of the franchise. Furthermore, she recommends that companies create a culture of leadership training and growth for all employees with a commitment to training.
Getting employees aligned behind a customer-focused strategy can only be done through a sustainable employee engagement strategy.
Engaged employees make a productive, customer-centric, and profit-generating company, driving incremental growth in both guest satisfaction and revenue.
Your employees make the difference. If you concentrate on creating a great workplace for them, they will in turn focus on creating a great experience for your customers.