Front Line Employees Hold the Key to Long Term Growth

The strong correlation between Long Term Growth and Employee Satisfaction

I’d like to start this post by asking three quick questions. They all relate to important issues that affect your business.

  1. When was the last time you were delighted when you did business with a service company?
  2. What role did an employee of that company play in the delightful experience?
  3. Do you think you could make a guess about that employee’s attitudes toward his or her job based on what happened?

Even though great service is a rarity these days, we’ve all had at least one experience with a company that really knows how to take care of its customers. In fact, I distinctly remember a small dry cleaner in an area where I used to work. I was so happy with the service, I’d drive halfway across town to give them my business, passing other dry cleaner’s shops in the process.

Why did I go out of my way to deal with them? The employees went out of their way for me. Once, they even made a special, after hours delivery to my house when I needed something in a hurry. They also welcomed me and called me by name whenever I stopped by. That made me feel like they really appreciated my business.

If you place people first, then good customer service and profitability will follow. 

“Employee behaviors and attitudes , even more than leadership principles and ideals, communicate most directly to customers just what the company stands for.”  Fred Reichheld, Loyalty Rules!

When you get right down to it, employees have the power to start a chain reaction that leads to success. Here’s how it goes in reverse. Customer Loyalty drives long-term growth. Customer delight drives loyalty. Appreciation and interest drive customer delight. And guess who’s in the best position to show your customers that you really care about them? That’s right. Front line employees.

Not everyone understands the connection

Despite the obvious importance of employee satisfaction, the great recession has resulted in many companies not placing nearly enough emphasis on developing and retaining employees. Consider these survey results:

  • 84% of employees feel that their workplace is headed in the wrong direction according to a November 2011 survey by Right Management
  • According to a June 2011 study from Mercer, one in two US employees are either actively looking for work or have mentally ‘checked out’

“Diminished loyalty and widespread apathy can undermine business performance, particularly as companies increasingly look to their workforces to drive productivity gains and spur innovation,” said Mindy Fox, a senior partner at Mercer.

Of course, great leaders have always known that taking care of their employees is important. The companies that have continued to make employee satisfaction a priority will come out of the current economic environment stronger and will ultimately put a lot of  distance between themselves and the competition.

If your employees are happy, customers see that, and they respond by giving you more of their business.

Those Pesky Customers by Emily R. Coleman, Ph.D

We all know them:

  • Those unreasonable people who don’t understand business efficiencies and want to talk to a live representative.  And worse, a live representative who actually can speak their language.
  • Those people who don’t grasp the concept of “try, try again,” and immediately call for technical support or complain about the product.
  • Those delusional types who think executives have nothing better to do with their day than solve customer problems.

Doing business would be so much easier if we didn’t have to deal with customers.

Okay, okay.  This is obviously an exaggeration.  Unfortunately, however, not by that much.  Even today, with a down economy, with a rapacious competitive environment, and with buyers who can go elsewhere, customers are seen as a group to be measured and managed.

I recently read a fun article on the subject by Greg Harris.

http://www.jameco.com/Jameco/email/corner/listenandlearnall.html

His position is that “the customer’s voice can serve as a company’s guiding light and everyone on [our] management team makes talking to customers a high priority.”

I’m all for “customer engagement” and matrices to measure it.  I’m all for customer satisfaction studies so you can see where problems lie.  I’m all for “this call may be monitored” to see how employees handle customers.

But mostly I’m for the fact that marketing is about communicating with customers, users, and prospects.  And the best way to do that is to talk to them – and with them – and get to know what actually makes them tick (as opposed to what we think makes them tick).

Therefore, allow me to propose something revolutionary:

Let’s put aside our assigned roles, our job-defined turfs, and our egos.  Let’s agree that no one can claim to be a marketing professional without spending a portion of our day – or our week, or our month – without actually talking to real customers, users, and prospects.  Let’s go out on real-world sales calls.  Let’s spend some time taking the calls customer support reps routinely handle.

Let’s get beyond the numbers.

Keep the matrices.  Keep the market research.  Keep the technologies that, hopefully, make us more efficient.  But as we create our strategies, our tactics, our messages, wouldn’t it be useful to have some personal, gut-level, insight into the people we are trying to reach?

About Emily R. Coleman

Dr. Emily R. Coleman is President of Competitive Advantage Marketing Inc, a marketing firm that specializes in taking small, medium, and large companies to the next level by helping them develop and deepen their competitive edge in the marketplace. Dr. Coleman has more than 30 years of hands-on executive management experience working with companies, from Fortune 100 firms to entrepreneurial enterprises. Dr. Coleman’s expertise extends from the integration of corporate-wide marketing communications to the development and implementation of strategy into product development and branding. Dr. Coleman can be reached at ecoleman@colemanmgt.com.    At LinkedIn:  http://www.linkedin.com/pub/emily-r-coleman/0/5a/714  On Facebook:  http://www.facebook.com/pages/Competitive-Advantage-Marketing-Inc-CAM/223500261070884  At Twitter:  http://www.twitter.com/e_r_coleman

The Difference Between Service, Satisfaction, & Loyalty

In an attempt to create a loyal following, Leaders are often disappointed because they confuse the concepts of Service, Satisfaction, and Loyalty. While error-free service and pleasant interactions are key components to any product offering, loyal customers are the only ones that can help you grow your business (see Raising the Bar on Customer Satisfaction http://wp.me/p28Mqi-7) and create the environment that leads to continued innovation.

A quick story that illustrates the differences between Service, Satisfaction, and Loyalty:

SERVICE

Mr. Smith walks into a banking center with tall pillars, marble, mahogany teller windows – he could feel “money” in the air. Then he saw a maze with 10 people in line. Since there were 10 tellers, he figured he was 2nd or 3rd in line. So far so good.

He came to the head of the line and looked to the right. Then he heard a woman shout from the left “NEXT!” As he approached the teller, she was looking down – but when she looked up, he was certain that she hated him.

When he asked for change for a $50, she quickly counted out the change, handed it to him, and yelled “NEXT!”

He checked his change, and it was correct – No Defect!

SATISFACTION

Now what if at the head of the line he heard “Could I please speak to the next gentlemen in line?” He was given correct change and was thanked for coming.

This is satisfaction.

LOYALTY

Even better, what if at the head of the line he heard: “Mr. Smith can I help you?” When the change was counted out, he was handed $45 in change and 5 silver coins because “I know you collect them.”

This is Loyalty.

LOYALTY FUNDAMENTALS

Of course there is more to earning a customer’s loyalty, but there are some fundamental truths that cut across industries:

  1. A great product is reliable and personal. This means no defects, timely delivery, and delivered with appreciation and care for the customer.
  2. A brand is a promise. If a company doesn’t keep that promise in every interaction, they are not seen as trustworthy. If they aren’t trustworthy, they are seen as liars which ultimately chips away at the brand.
  3. Employee Engagement. Every employee in the company knows the values top to bottom and the values are aligned with the customer’s needs.

In addition to more referrals and expanded share of wallet, employees discover unmet customer needs when their primary focus is delivering a great experience. These unmet needs are the seeds of innovation that ultimately keep you ahead of the competition.

Customer Retention: How to get the Gift that Keeps on Giving

Small improvements in customer retention can lead to significant improvements in the bottom line . . . year after year after year.
When it comes to Customer Retention, you can do better

Most companies retain 85% to 87% of their customers. That’s not bad. In school, you’d get a B+ for that kind of performance. But when you convert that retention rate into actual customer losses, you quickly see that there’s a “hidden problem” here.

After all, when you retain 87% of your customers, you lose 13%. And when you have a huge nationwide customer base, that means millions of customers are packing up all their accounts and heading for the door each year. (see How to keep clients from heading for the exits http://wp.me/p28Mqi-1D for tips on how to improve).

That’s a lot of lost business. And it takes an extraordinary amount of effort and expense to acquire new customers to replace this customer attrition. In fact, GartnerG2, a division of Gartner Inc., says it costs nearly five times as much to acquire a new customer as it does to retain one. High value customers are even more expensive to replace.

Some attrition comes with the territory

That brings up the big question: “Why do customers leave in the first place?” There are a lot of reasons.

In banking for example, some customers move to areas where the company doesn’t operate any banking centers. SOme find that they no longer need their services. And some, unfortunately, come to the end of their lives. Let’s face it. There is nothing you can do to keep a customer who dies or moves to Tahiti.

In addition, some banks close out accounts every year for valid risk management reasons. Add it all up, many banks lose about 6% of customers every year for reasons that they can’t – or shouldn’t – do anything about.

Keeping more customers can add millions to the bottom line

But what about the rest of the customer attrition? Most of the customers are lost for a host of reasons that companies CAN do something about.

Poor or inhospitable service, payment and deposit errors, inconvenience, the failure to provide the value people expect . . . if you work hard to correct these problems you can retain many of these customers. And if you do that, you can create an annuity revenue stream the size of the Mississippi.

Even a small increase pays big dividends

How big is the potential windfall? At a large bank, a 1% increase in overall customer retention was found to add about $70 million to the bottom line in the first year after improvement. At the two-year mark, the net present value (NPV) jumps to $200 million. After three years, the financial benefits – which multiply like compound interest – will reach approximately $400 million in NPV.

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Key Drivers Ed: How to find opportunities for big improvements in Customer Delight

“Knowledge is the process of piling up facts; wisdom lies in their simplification.” – Martin H. Fischer, American Scientist, educator, and author

Focusing on Customer Delight is an admirable goal, identifying the specific issues that have the biggest impact on the customer experience is where the real work begins.

I call them “Key Drivers” of delight and dissatisfaction.

Drivers of delight are outstanding service or product related features that help build customer loyalty. Drivers of dissatisfaction are problems and other shortcomings that damage your relationship with customers.

Finding these drivers is one of the most important steps in the entire business improvement effort. Because once we identify the drivers, we can develop targeted initiatives to increase customer delight and eliminate customer dissatisfaction.

These improvements in turn, boost customer loyalty, decrease attrition, increase share of wallet and generate favorable word of mouth advertising, which helps attract new customers.

A brief introduction to drivers inspired by my refrigerator

Let’s consider the impact of a common household appliance – the refrigerator – on delight and dissatisfaction.

When I take the milk out of the refrigerator, I don’t say, “Wow! That’s cold. Isn’t that great?” And I don’t sing the praises of the manufacturer either, because I expect the milk to be cold. That’s why I bought it in the first place. In other words, the refrigerator isn’t a driver of delight, because its just doing it’s job. And that’s exactly what I expect.

But what happens if the refrigerator goes on the blink? The unexpected failure is going to spoil the milk and make me very unhappy. If I go to the extreme, I will probably never buy anything else that carries that brand again — whether it’s a stove, microwave, vacuum cleaner, or anything else.

From the manufacturer’s standpoint, that’s bad enough. But the situation can get even worse. After all, I will probably tell friends and family members about my unhappy experiences with the refrigerator. And some people I talk to avoid that brand in the future too.

That gives you some idea of the huge impact drivers of dissatisfaction can have on customer loyalty, word of mouth advertising and the bottom line.

Drivers change with the times

Now, let’s turn back the clock, and you’ll see a different side to the refrigerator story. After all, when the electric version of the icebox first hit the market, people were delighted. Even if it didn’t work perfectly all of the time, it was still a driver of delight, because it provided a new exciting, time-saving convenience. As the years passed, however, reliable refrigeration became so commonplace that it lost its ability to delight people.

So what happened? Manufacturers add icemakers, cold water taps and other bells and whistles. And for a while, each of these innovations did cause customer delight. Then they too became commonplace features that met – but did not exceed – customer expectations.

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