Blog

Michael Lowenstein, Ph.D., CMC Thought Leadership Principal, Beyond Philosophy

Today, there’s a lot of discussion among corporate strategists, and even senior HR folks, about “putting employees first”. Whenever this is surfaced, it’s useful to ask some relevant questions with regard to ultimate enterprise value, particularly the employee experience vis-à-vis the customer experience.

What takes precedence, employees or customers? Which came first, cowboys or saloons? Chickens or eggs? While these last two important questions may never resolve, the role of employees in leveraging customer loyalty behavior is far simpler to understand. It’s impossible to have customer loyalty and advocacy without employees understanding their role as customer experience performance stakeholders. And, just as importantly, this extends to living the role, and behaving with full commitment, as value delivery agents and supplier ambassadors, inside and outside of the organization.

Satisfaction Is Almost Irrelevant

Employees are at least as important as other aspects of customer management in optimizing benefits for customers. They are key stakeholders in value delivery and brand/supplier success, and they frequently represent the difference between positive and negative experiences and whether customers stay or go.

The extent of their role and impact needs to be better understood, but employee satisfaction isn’t the best way to do it. Why not? Industrial psychologists and organizational behaviorists have been studying employee satisfaction for more than 30 years. But they have been unable to confirm a sustainable, causative relationship between employee satisfaction and business performance.

But researchers—including James Oakley of Purdue University, Northwestern University’s Forum for People Performance Measurement and Management and relationship experts Dwayne D. Gremler of Bowling Green State University and Kevin P. Gwinner of Kansas State University—have found that employee behavior and advocacy—regardless of the employee’s level of satisfaction—have a direct and profound relationship to the behavior of customers, and also to corporate sales and profitability.

Employees are capable of directly contributing to both customer disappointment and customer delight. It is essential that companies have a research and analysis method that links staff experience and performance directly to customer behavior, so they can hire, train, recognize and reward employees for how they contribute to customer value.

The Employee Ambassador

Companies must weigh the role and impact of employees, especially in creating benefit for customers. When examining the leverage employees can exert on customer states of mind, a few companies have learned that employees loyal to the company are also loyal to its brands—and are more likely to act as ambassadors in creating customer commitment and advocacy. Two U.S. marketing professors, Eugene Fram, of Rochester Institute of Technology and Michael McCarthy of Miami University, Ohio, found that companies with employees highly loyal to their brands are more positive about their employment with the company, itself; are more likely to believe the company is customer-focused; and are more likely to have pride in the company and believe that it is well managed (See “From Employee to Brand Champion” in the January-February 2003 issue of Marketing Management.) The figure below illustrates their findings.

The dual message here is that companies should focus greater attention both on creating brand “champions” and advocates among customers and on building these same capabilities within the job descriptions of all employees within the organization, irrespective of function or level.

How customers think and feel as a result of their touch and transactional experiences with suppliers links directly to customer mindset and behavior. These are the “moments of truth”, and the emotions behind them, that drive what customers do downstream.

Today customers have more ways to engage with suppliers of goods and services than at any time in the past. So companies have more ways to succeed in creating a relationship—and also more ways to fail. Whether the “touch” is by paper, by a human being or by electronic or mobile means, organizations must offer consistent, seamless and positive experiences for customers. Service, especially, is often a major differentiator and lever for either customer advocacy or, if done grudgingly or poorly, customer defection.

Also important is gathering customer ane employee feedback at key touch-points so the company can know, in as real time as possible, what is working. Finally, because touch-points are so critical in managing the overall experience—and frequently the key source of customer delight or pain—there must be a C-suite executive accountable and responsible for executing all of the touch-point elements. Such an individual—let’s call this person a chief customer officer—is missing from the organization chart of many companies. Experts like my colleague Jeanne Bliss have done a great job in identifying the value and scope of contribution from these individuals.

My own research into the impact of delightful and disappointing customer experiences has shown that disappointing experiences will lead directly to indifference in the relationship and engagement with a supplier. As customers become increasingly positive with their supplier experiences, and more emotionally bonded, there is a direct correlation with advocacy levels. In fact, the rate of correlation between type of experience and degree of customer advocacy is almost 100 percent.

Increasingly, we are beginning to understand, and even predict, the effect on customer advocacy of employees. This is a “holy grail” for many organizations, as they strive to leverage human capital to best effect. As Fortune columnist Thomas Stewart said three decades ago, “Human beings want to pledge allegiance to something. The desire to belong is a foundation value, underlying all others” (Fortune, July 8, 1996).

When that “something” is the optimization of customer loyalty behavior, coupled with the highest levels of employee participation and investment in reaching that goal, all parties benefit. Employee experience, then, isn’t necessarily a chicken-and-egg precursor to customer experience, but it is certainly parallel at minimum.

Finally, for employee ambassadorship to thrive, humanity and leadership must be built into organizational DNA, and evident, everyday, throughout the enterprise. Here is one of my favorite quotes in this regard, from Hal Rosenbluth, former CEO of Rosenbluth International (now part of American Express Travel Services):

“Companies are only fooling themselves when they believe that ‘The Customer Comes First.’ People do not inherently put the customer first, and they certainly don’t do it because their employer expects it. We’re not saying choose your people over your customers. We’re saying focus on your people because of your customers. That way, everybody wins.”

Republished with permission from CustomerThink.com