The Dollars and Sense of Customer Loyalty

In this article you will learn how employee engagement impacts customer satisfaction and loyalty.

Graph resultsIn an alarming number of companies, massive lay-offs have decimated workforces and left those that remain feeling over-worked, stressed out, and devoid of clear expectations about their futures.

This toxic environment causes employees to become disengaged, apathetic and unable or unwilling to provide the exceptional customer service which in turn affects customer loyalty for the company.

I am on a mission to alert companies to the dangers of disengaged workers and the benefits of turning one-time buyers into loyal, long-term customers with levels of customer service.

Customer loyalty is the fuel that drives financial success, but a vast majority of companies are literally running on empty. That can spell disaster in today’s volatile, high-speed economy where customers will quickly abandon any business relationship that doesn’t deliver on its promise of satisfaction.

The Dollars and Sense of Customer Loyalty

It is impossible to overstate the bottom-line benefits of creating loyal customers with whom a company can continue to do business rather than constantly trying to acquire new customers. Let’s point to two key statistics that underscore this point:

A 5% increase in retention increases profits by 25-125%.

Acquiring new customers can cost five times more than satisfying and retaining current customers.

Research shows that 80% of people who do not receive good customer service do not complain. They simply take their business elsewhere.

According to our research, an engaged worker who is enthusiastic about the company he or she represents can provide the ‘first line of defense’ against customer bail-out by delivering above quality customer service experience.

I am urging businesses to “get the facts” rather than simply assume that their employees are committed to an organization and its goals and hoping that customers feel well-served.

A gaping disconnect between perception and reality was revealed in a recent analysis of 362 firms by a Aberdeen Research which found that “80% of the company executives and business owners surveyed believed that their company was providing a ‘superior experience’ to their customers.” When customers of those firms were surveyed about their perceptions, it was revealed that they rated only 8% as “superior” in their customer service efforts.

The lingering question then is what sets the elite 8% apart? We believe it is “an engaged workforce that demonstrates through words and actions that customer satisfaction is their number one priority.”

The challenge is measuring the level of engagement.

Taking Guesswork Out of the Equation

You can’t manage what you can’t measure and I strongly encourage companies to take advantage of a Workplace Engagement Survey to measure the degree to which employees are connected to the work they do; i.e. an employees’ level of engagement, satisfaction with the company, and satisfaction with their supervisors and managers.

The data from the survey can give management teams a detailed snapshot of what influences engagement across all workforce segments and how an organization’s employees compare statistically to the overall working population. But perhaps most importantly, it provides tangible recommendations for ways in which an organization can improve.

The Impact of Engagement on Customer Satisfaction and Loyalty

The qualitative difference between work done by engaged versus disengaged employees is enormous. Quoting from materials created by Aberdeen Research Group, these are some of the customer-centric qualities that engaged employee’s exhibit:

  • Excited and enthusiastic
  • More focused on their work than “watching the clock”
  • Give high levels of discretionary effort

It is this last attribute that is so critical. How you deliver can be as important as what you deliver, so don’t underestimate the impact emotions play in customer satisfaction scores.

An engaged employee will take the time to learn what a customer values on a personal level and then go beyond their expectations to demonstrate how important the customer’s satisfaction is to the employee as well as to the company.

In a bottom-line economy, everyone is looking for maximum return on their financial investment and a company whose engaged employees make it clear that it is an organizational imperative to give more than what is asked for is going to turn a one-time buyer into a long term, loyal customer.

In addition to creating loyal customers, engaged workers are, themselves, more loyal to their organization. This reduces employee turnover and saves money by reducing the high cost of hiring and training.

Show Me the Money

Economic Value Proposition refers to the financial implications in the relationship with a customer, such as the economic impact of having or not having a supplier’s products or services. In better words, it answers the question, “How do we help each other make more money and stay in business?”

When value creation is a mutual goal then loyalty prospers; but when value is one-sided, loyalty suffers.

Knowledge + Relationships + Economic Value = Exponential Success.

About the Author

Business consultant Eva Jenkins is on a mission to help companies understand the bottom-line value of going beyond short-term customer satisfaction. She is also co-author of Conversations on Success, a collection of powerful interviews with accomplished entrepreneurs in a variety of industries.

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