16
Apr

Linking Employee Satisfaction to Customer Loyalty

By Evan Klein

Happy Employees Can Help Drive Profitability

Achieving true customer centricity requires participation from employees across the organization. Customer interactions don’t occur just with customer service personnel.  “Touch points” take place throughout the customer lifecycle and likely involve staff in nearly every department. It may be someone in your finance department answering a question about an invoice, a salesperson discussing a contract renewal, your event planner confirming details for the annual customer event or a product marketing employee delivering technical specifications for the latest release of your software. This is why any company seeking to differentiate itself by offering a superior customer experience should engage all employees in the effort.

A well-known Harvard Business Review article entitled “Putting the Service Profit Chain to Work” described the relationship (or “links in the chain”) between employee loyalty and customer loyalty. A simplified version of what the researchers found – employee satisfaction rises when you equip employees with the skills and power to serve customers. Employee satisfaction in turn raises employee productivity and higher productivity means greater service value for customers. This increases customer satisfaction and loyalty, which stimulates profitability.

It stands to reason that a happy employee is more likely to go the extra mile to service a customer. If they feel appreciated and empowered, they will probably be more pleasant to deal with and show a greater willingness to ensure every customer interaction is handled in accordance with the high standards you expect.  It has also been well documented that dissatisfied employees are less productive and contribute to higher employee turnover in a company.

Fast-forward to today and there are a number of companies that live and breathe these concepts. Southwest and Zappos are two that immediately come to mind. What can leaders of smaller organizations do to promote employee loyalty?

– Show a willingness and ability to listen to employees. Engage with them often, ask for feedback and suggestions on how to improve both the work environment and the customer experience. Make it safe for employees to talk about workplace dissatisfiers.

– Set clear expectations and hold employees accountable to a high standard of service. Reinforce to all employees how they contribute to satisfying customers, and thus generating profits.

– Recognize success, both on a company and individual employee level.  When an employee does something extraordinary, use it as an opportunity to celebrate achievement.

– Understand factors that contribute to employee turnover.  Uncover the root cause of employee frustrations so they can be quickly addressed.

– Provide ongoing coaching, training and education so employees have the tools to make decisions that are beneficial for the company and each individual customer.

– Use metrics to measure and track employee satisfaction and retention, including employee surveys and exit interviews.

– Finally, communicate effectively and keep your employees ‘in the loop’ when you implement any changes that stem from their feedback.

The linkage between employee loyalty and financial performance is proven and strong. Investing in employees provides companies with another opportunity to gain competitive advantage.