This week I filmed a cable show with a colleague of mine, Cherryll Sevy of Cypress Ridge Consulting, to explore the relationship between employee loyalty and customer loyalty.
We got started on this topic a month or so ago when discussing our respective work with clients: her focus is on employee retention and mine is on customer loyalty. We are both passionate about helping organizations be more successful from our different perspectives…and we realized that our clients that don’t focus on ‘loyalty’ as a priority are least likely to emerge from this recession in a healthy position…or at all.
As we explored this topic, we found a multitude of information that supported our hunch about the link between employee and customer loyalty:
- Southwest Airlines is rated the #1 place to work in Glassdoor.com’s 2nd annual Employees’ Choice Awards.…is it just coincidence that this same organization rates as one of the highest in customer satisfaction/loyalty?
- Deborah Schmidt of Loyalty Leader, Inc. recently wrote an article, “Unhappy Employees Create Dissatisfied Customers“, that explores the many facets of this connection and provides some great advice to employees.
- Walker Information has been tracking the relationship between employee and customer loyalty for the past 8 years and finds that both types of loyalty consistently move in parallel to one another.
Given this strong connection, it’s a very bad omen to those of us who are passionate about customer loyalty that employee satisfaction is at a record low. According to a study by the Conference Board, only 45% of U.S. workers are satisfied with their jobs compared to 61% in 1987…and the numbers have been declining over the past 20 years.
During a recession where companies believe that they are in the driver’s seat since unemployment is high, it’s especially vital to remember this inextricable relationship…if organizations don’t consider employee loyalty a priority, it will inevitably show up in the quality of their customer relationships. Just remember the last time you had contact with someone from a company that had obviously ‘checked out’ and was unhappy with their job…how good was THAT experience? What did that do for your commitment to that company?
Let’s all spread the word out there to not forget about the importance of employee satisfaction/loyalty…it’s common sense, but another area that is not common practice.
January 18th, 2010 - 11:10 pm
Jen, You’re right on the mark. As companies focus on creating revenue or identifying new markets and new customers, it is imperative they also focus on their employees and their internal communications. To the customer, the EMPLOYEE with whom they communicate IS the company. A business transaction/sale/service is the relationship between two people—not between two faceless corporate entities. If the employee truly represents the values and quality of the company, they will reflect that in their relationship with the customer. And yet, more money is spent on marketing and not enough to ensure adequate resources and time, as well as train and develop employees to serve the customers and create a positive experience. Right now, employees don’t feel very valued or loyal–they feel weary. Companies need to address employee loyalty to ensure customer loyalty. What if the customers come and there were no employees to serve them?
January 19th, 2010 - 9:36 pm
This seems to be a hot topic…KGO Radio in SF had a segment today with John Gibbons, Program Director of the Conference Board, talking about the results of their survey (listen via this link, starting around the 9:00 minute mark) http://tinyurl.com/ykpoufb. Their theory is that the content of work is the issue…employees are not challenged or engaged…thus not as satisfied as they have been in the past…also, the fuzzy boundaries of work now, due to technology, could be a contributing factor…what do YOU think?
January 20th, 2010 - 3:35 pm
Many thanks, Jen (and Cheryll), for this poignant yet incisive discussion. I have been having similar conversations with about half a dozen folks lately and am working on a panel discussion with a key organization to address this on an end-to-end solution basis. Not to pitch here (a promise!), this is also why I have repositioned my company: to embrace this connect-the-dots for leverage/wins scenario. So, in a sense, this is “the choir” reporting for duty!
On an international basis, my field of expertise, this scenario becomes even more complex; more important; and, often more delicate. In many markets, where the employment rates are truly crippling, the staff attitude is generally lethargic and complacent to customers because the message to them is, “You don’t like it? Well, there’ s someone standing behind you (who’d be only too happy to take your job).” Regrettably, many of my friends here in Silicon Valley are experiencing similar treatment despite the glaring differences between these two economies; for now.
When I am a customer in an Emerging Markets environment, I often receive a similar message, given the few vendor choices available (“You want to buy a towel? It’s us or John Doe and they’re 10 miles away.”). As you both point out so effectively, similar scenarios, same message: you’re dispensable…as SNL’s Seth( and Amy) would say, “Oh, really?”!
Perhaps we in the US will be looking at the “opportunity cost” of staff defections (as well as the documented direct costs) leading to customer defections but in a much more strident manner; to paraphrase Cheryll, what if they gave a business and nobody came? I often wonder who will be working in 2 years at a one-time favorite corporation here, after alienating both staff and HR vendors alike. I guess that will depend on how accelerated the alienation “seepage” becomes to reach beyond the last firewall to the customer.
Today, a US company totally frosted Customer Me (Financial Services, no less!), but yourblog post, Jen, made me reflect on the fact despite “domestic” status, I was actually speaking to someone in Bangalore; perhaps he was being treated much worse by his employer than they were treating me with a groundless $40 charge. Somehow, that moment of compassion made me feel a bit better – but like the scenario you so aptly describe, I’m still gonna dump’em first chance I get!
January 23rd, 2010 - 8:46 pm
Thanks, again, Jennifer (and Cheryll) for the chance to reflect on both this issue and its implications. I now want to write about what I see as The Engagement Chain: employees, customers and partners, based on the emerging thought-path from your insights here, and oh, yes: I’m hoping you’ll agree to serve as a Guest Blogger soon!
Thanks for keeping our focus on the prize: vibrant, mutually effective customer relationships.
January 25th, 2010 - 1:09 pm
Thanks Jen and Cherryll for the interesting and timely topic. A while back, I had the opportunity to hear the former President of Southwest Airlines, Colleen Barrett speak to a group at Stanford Business Briefings on the outstanding financial success of the company. She explained that their record breaking financial growth in the airline industry was due to the fact of employee satisfaction being directly related to customer satisfaction and loyalty. I had the chance to talk to her afterward and she said about the audience ”you know they had this deer in the headlights look on their faces when I was explaining it. They just couldn’t get it.”
I for one understand it and agree with you wholeheartedly, if employees at any place in the company are unhappy it will definitely affect the “customer experience” and therefore loyalty. People create the service, and the quality, that the customer buys.
January 25th, 2010 - 6:58 pm
Jen, I watched the video mainly just to see what my friend was up to. But what you said had such relevance to me as a business-owner/CPA, I was riveted. Your insights hit the mark with me. I cannot wait to talk with you about working with me to understand what my clients want. I have always “assumed I knew”. It would be much better to ask and get a clear understanding. Congratulations on being part of such an informative video.
January 26th, 2010 - 4:45 pm
This is an important discussion! Thanks for raising awareness on this topic; it’s one that needs to be discussed everywhere! I wonder when employers will begin to “get it.”