the surest path to customer loyalty is through motivated & engaged employees

By in Engagement and Leadership
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North Americans tend to be a results-oriented bunch. We applaud an endeavor’s result, but are sometimes myopic about how that result was achieved. The same can be said about some business leaders. They revel in high net promoter scores and loyal brand consumers, but fail to appreciate the efforts of those who are nurturing customer relationships on a daily basis to attain those results.

The Hay Group publishes the World’s Most Admired Companies (WMAC) list. A recent study of the organizations on the WMAC list analyzed the connection between employee engagement and a company’s business development and consumer relationship.

An overwhelming 94 percent of respondents from the WMAC believe employee engagement creates a competitive advantage in the market place and leads to better relationships with customers. Additionally, 71 percent of respondents believe their company is successful at linking employee engagement to customer satisfaction.

“Employee engagement is increasingly being recognized as a major driver of business performance, revealing important information about an organization’s health and future prospects,” says Mark Royal, a senior consultant with Hay Group Insight.

“Companies on the WMAC list are not only better at engaging employees in a way that reduces internal frustration and fosters loyalty, they are also better at sharing those metrics with influential groups outside the organization – and translating their success into new business and an enhanced customer experience.”

A wealth of other research also supports the evidence that employees are the key to brand success, frequently determining positive or negative consumer experiences, and ultimately, influencing a customer’s decision to remain loyal or not. Employees not only represent the brand to the customer – they become the brand.

Overwhelming opportunity exists for business leaders to increase customer loyalty and profitability by creating the same buy-in to products, services, and organizational philosophy among its employees as they would for customers.

Mel Stark, Vice President of Hay Group’s Reward Practice, agrees, “The WMAC communicate their objectives to all employees, connecting the goals and objectives of every employee to the overall business strategy, and, as a result, were able to come out of the downturn with motivated and loyal employees.”

Royal Bank of Canada also sees the value in this approach. According to their research, the level of employee commitment accounts for 60 to 80 percent of bank customer satisfaction, and 40 percent of the difference of how customers view the bank’s services can be linked directly to customer relationships with bank staff.

Harris Interactive also found that employee committment and advocacy behavior has a direct and profound relationship to the behavior of customers, as well as to corporate sales and profitability:

  • 68 percent of customers leave because of employees’ poor attitudes
  • 41 percent of customers are loyal because of employees’ good attitudes
  • 70 percent of customer brand perception is determined by experiences with people

These study findings demonstrate that employees directly contribute to customer disappointment or customer delight. The best path to achieving loyal consumers is through the creation of motivated and engaged employees.

By michelle m. smith, CPIM, CRP
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Comments (1)
Jeff Birk

Great stuff Michelle. This speaks directly to what we’ve been focusing on the past few months: engaged employees create engaged customers.

September 21, 2012   |   Reply
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