Engaged Employees Tend to Engage Customers
By Michael Kust

This year – as in previous ones – external marketplace pressures will grow, internal company expectations will swell and customers’ demands will grow higher. You can’t directly control the competitive marketplace and you probably can’t really influence your company’s edict for enhanced profits.  So what’s left?

As a sales or marketing professional, remember that the ‘secret weapon’ in your arsenal for winning the game is delivering a superior customer experience. To do so, you need the basics: the ability to identify individual customers, to differentiate them by value and by needs, to customize aspects of your products accordingly and to interact with them in a continuous learning relationship. But where the ‘rubber meets the road’ – where these sales and marketing truisms literally come to life – is with your employees.  Actions speak louder than words, and as a consequence, engaged employees have the potential to shout your brand promise so that it’s clearly heard above the competitive din. 

There are many good arguments for justifying an investment in employee recognition and reward programs. From an altruistic perspective, it’s simply the right thing to do – treating one another with respect and thoughtfulness.  And then there’s the more self-serving considerations, too: enhancing the company’s public image, reducing expenses associated with employee turnover and retaining the competitive advantage encapsulated in the collective tacit knowledge of your workforce. But the best argument for an employee program is this: recognizing and rewarding employees drives engagement, thereby delivering a positive customer experience that will yield enhanced customer sales, loyalty and brand strength.  Is your company interested in more sales?  Better customer loyalty?  A stronger brand?  Then read on.

Sales.  In Jeffrey Pfeffer’s book, The Human Equation, a research study is described that documents a $27,000 improvement in sales per employee for companies that increase “high commitment work practices.”

Loyalty. SAS Institute is renowned for its employee practices. Is it any wonder it enjoys a 95 percent renewal rate on its products?

Brand Strength.  Ritz-Carlton is a widely cited example of a company that creates employee brand champions, such as “ambassadors” of the hotel.  As a result, the company has succeeded in winning the Malcolm Baldrige National Quality Award – not once, but twice. And from the customer perspective, Sun Microsystems has demonstrated a statistical linkage between employees recommending the company as a place to work and customers recommending it as a place to do business.

Contrary to what you might intuitively expect, the degree of business result achieved by your employees through delivering a positive customer experience is not symmetrical.  Research shows that a 1 percent increase in customer satisfaction yields a 2.4 percent increase in ROI – but a 1 percent decrease drives twice as large a reduction in ROI.  Another investigation examined the impact of personal bankers on customers’ likelihood to recommend and to stay. Top-notch employee performance enhances those business outcomes, but those who perform poorly actually weaken customer retention relative to not having a personal banker at all. It’s clear that engaged employees delivering positive customer experiences improve your company’s performance. But it’s equally clear that failing to create a positive customer experience through engaged employees isn’t simply money wasted – it’s actually a net negative to your business.

As you work toward achieving your company’s goals in the new year, remember that customer outcomes and employee initiatives are inextricably intertwined. If you want the former, then it’s not an option to neglect the latter. The links are amazingly strong.  A study documented that a one point change on a six-point rating scale for employee satisfaction drove a 40 percent increase in the quality of client relationships which in turn yielded a 104 percent increase in financial performance.

Here’s the bottom-line. Engaged employees are an essential prerequisite for enhancing your sales, loyalty and brand image this year and every year. Too often, however, the chosen path to achieving these objectives is through the adoption of technology – buy more hardware, install more software. Truth be told, technology is important.  But it’s a very special type of technology that makes the difference: one that is wireless, high-bandwidth and embodies the latest neural network architecture.  It’s called an employee. The good news is that you’ve already got this ‘technology’ in your company. All you need to do is ‘activate’ it by using well-developed recognition and reward strategies.

Mike Kust is Chief Knowledge Officer at Carlson Marketing Group. Contact him at MKust@Carlson.com.