New Generation of Business: Connecting Employee Loyalty with Customer Loyalty

by Colin Shaw on September 25, 2013

CS_New Generation of Business-300Successful companies have loyal employees. They also have loyal customers. But the question for researchers and consultants for the past two decades is how these two groups are related, if at all.

Over the past 20 years, the connection between the two groups, loyal employee and loyal customer have only had a loose connection at best. However, one of Beyond Philosophy’s Thought Leadership Principals, Michael Lowenstein, PhD., CMC, may have found a way to connect the two. The foundations of his finding are based in the concept of the difference between employee satisfaction and employee engagement.

There is a difference between a satisfied employee and an engaged one, although many organizations do not see it. Simply put, satisfaction refers to how an employee feels about his or her job as it relates to compensation and benefits, room for development, work environment and related conditions while engagement refers to the employees desire to go above and beyond what is expected of them to innovate and further company goals based on their discretionary effort. While you cannot have an engaged employee without first being a satisfied employee, you certainly could have a satisfied employee who isn’t engaged.

Researchers saw that the need for engagement was critical to companies that wanted to thrive in the new global economy. This was the key to the new generation of business and its related success. What they also learned was that the engaged employees had the best ability to affect the customer experience, which is essential to building customer loyalty. In other words, they bring the customer the “wow” factor.

The Challenges of Customer Loyalty Today

Customer loyalty is tougher to develop these days. Companies face commoditization of their goods and services based on globalization and access provided by the Internet. More and more customers are finding new channels, and in some cases, suppliers for their brands. Doing things the way they have always been done will not continue to work for many businesses. They must continue to adapt to new technology and consumer channels in order to survive.

The only place where this isn’t as true is with older generations like the Baby Boomers and Generation X that are still loyal to their brands for the most part. They tend to stick with what they know and what has worked for them in the past. This group will usually only change when the pain of the change is less than the pain of sticking with what they know.

But The Millennials otherwise known as Generation Y are different than the Baby Boomers and Generation X. They grew up in world with the Internet and are more comfortable with technology than any other generation before them. They adopt new ways of doing things faster than their predecessors. They also believe that they should have it the way they want it, when they want it. Generation Y members are, as a group, good shoppers and are likely to employ an aggregator site to find the best price, which diminishes their store or company loyalty. But the one good bit of news in analysis of this generation, is that they do like their brands and they are loyal to them.

But not only have the customers changed, the proven methods of producing loyalty are changing too. The old tools that were used to create loyalty don’t work like they used to. Loyalty cards were once the 3” x 2” ticket to repeat business. But this is not as true today. The benefits gained from the “loyalty” program are perceived by today’s consumer as an extension of the service or offer from the company. In fact, I would argue that Loyalty Cards Do Not Drive Loyalty but instead are more like reward cards. That means that these customers are likely to bail if they find another “loyalty” program that has better rewards.

So the question becomes, how can you create loyalty these days when it seems to be as passé as parachute pants or twerking? The answer is: by creating a positive customer experience using the power of your engaged employees.

The Employee Ambassadors are the Key to Loyalty

A challenge that many companies have is to ensure that the brand image and its related experience make it through to the customer interaction every time, from every employee. Although employees are trained in the brand concept for how the customer experience is expected to go and even advertised to be, it doesn’t mean they are going to do it every time. Yet in order for the brand to be effective for the expected outcome of the customer experience, it must happen every time the customer interacts with the company. You can see the conundrum these businesses face.

Engaged employees are the ones that believe in the brand philosophy and are committed to upholding it on behalf of the company. They have been compared to volunteers who give their time to a cause they are passionate about. They are passionate about the company mission and goals and are willing to put in the extra effort to make sure they are met. When they are faced with obstacles, the think out of the box and come up with creative solutions to overcome the challenges. They are what Lowenstein refers to as Employee Ambassadors.

Employee Ambassadors, as Lowenstein explains in his post, “Employee Retention, Engagement and Ambassadorship Go Hand-in-Hand-in-Hand at Successful Companies”, are the most positive and active employees on your team. They are the ones that truly make your company perform and grow. And while they are usually only about 20% of your staff, they bring the other 80% along with them. They are the most engaged employees of your organization.

There are three traits of Lowenstein’s Employee Ambassadors.

1. They are committed to the company. This is the foundation to being an Employee Ambassador. He or she must be positive about the company and to being a part of the culture.
2. They are committed to the value proposition. This builds upon the commitment to the company in that the employee is also committed to the mission of the company and working toward its expressed goals.
3. They are committed to the customers. Ambassadors understand the customers’ needs and does everything they can in their performance at the company to meet those needs, while delivering the highest values in both product and service.

Ambassadors know that the company they work for is a great company, has a great mission, and has great customers. They are likely also the type of Engaged Workaholics that I discuss in my post, “Are you a Workaholic or and Outlier?” All of these traits of ambassadors are exactly the kind of thing you find in engaged workaholic behavior. But most importantly, this type of enthusiasm is likely to align with the achievement of goals for the company and stronger bonds with the customers.

In other words, Lowenstein says that by studying these ambassadors that make up the top 20% of your work force you can gain insight into how to sell the other 80% on these guys’ Kool Aid. By taking what makes them tick and communicating it to less convinced coworkers, you can not only improve employee morale but also improve the experience for customers. This in turn will drive customer loyalty.

Our next webinar ‘Employee Ambassadorship: Generating and Delivering “Wow” Customer Experiences’, will discuss Employee Ambassadorship in more detail. In the webinar, we will show you how to develop your satisfied and engaged employee, moving them toward employee ambassadors. Register today to learn more about this interesting concept and to start harnessing the power of your ambassadors to create customer loyalty.

Colin Shaw is founder & CEO of Beyond Philosophy, one of the world’s first organizations devoted to customer experience. Colin is an international author of four best-selling books & recognized Business Influencer by LinkedIn. Beyond Philosophy provide consulting, specialised research & training from our Global Headquarters in Tampa, Florida, USA.

Follow Colin Shaw on Twitter:
@ColinShaw_CX
Colin ShawNew Generation of Business: Connecting Employee Loyalty with Customer Loyalty

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