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Does Employee Loyalty = Customer Loyalty? And, Did It Ever?

Michael Lowenstein, PhD, CMC | Nov 22, 2016 369 views 8 Comments

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Many HR and corporate leaders consider employee loyalty (often conflated with employee satisfaction and engagement) a crucial element in any customer loyalty or customer experience program. They believe that, without requisite employee loyalty, plus alignment with goals and productivity, the chances of a customer loyalty program succeeding are, in the long-run, not very good. The equation and presumption of employee loyalty=customer loyalty has been around for decades, but is employee loyalty, alone, really enough to drive desired customer behavior?

In the United States, employment rates are high. Staffing and staff retention have become critical priorities. There are few industries not experiencing high pressure on finding, and keeping, qualified personnel. It has been suggested that companies should apply a marketing perspective to the challenge of attracting and retaining employees. The logic goes like this: You have a product, called a ‘job’ that is being sold to a customer, called an ‘employee’. When you think about employee loyalty as a marketing challenge, the questions to ask are what actions should be taken to turn prospective employees into new hires and once that happens, what actions and initiatives are required to turn new hires into longer term employees and ultimately, staunch company advocates and ambassadors?

With every employee life cycle comes predictable crisis points when staff defection risks are greatest. These crises often have, as well, influences on customer behavior. The better a company can predict and plan for these job experience-related stress points, the more chance risk and defection can be prevented and the employee can be retained and refocused on delivering value. Three common crisis periods for employees are:

(1) New-hire hysteria. This condition can be brought on by a number of ‘new job’ circumstances including under-whelming assignments, friction with a new boss or an unexpectedly heavy workload. It doesn’t take much for the new employee to call a headhunter or even the old employer and say the four deadly words: “I made a mistake.” Solution: Pair the new recruit with an experienced associate who can help guide the employee through this difficult transition time. In addition, provide a new hire with in-depth orientation to acclimate, and assimilate, the individual into the company.


Engage with customers in real-time across every channel, no matter the medium. Use visitor tracking and email analytics to know what your customers are seeing.

(2) Promotion peril. A employee is vulnerable to defection when he or she is ready for a promotion but a slot is unavailable. Ambitious, upwardly-mobile employees ‘waiting’ for promotions are ripe for the picking from competitors who are only too happy to give them that next step up on the ladder. Solution: Buy some extra time by putting the employee in a special project role (2-3 months in duration) that recognizes his or her achievements. In the interim, find that promotion slot!

(3) Boredom blues. The most productive employees typically don’t tolerate boredom well. No promotion on the horizon? No new project to look forward to? New jobs outside your company will look more and more attractive. Solution: Find out what specific areas most interest the employee and find ways to tailor at least some of the bored employee’s assignments around those areas.

But managing the employee life cycle is more than simply managing employee loyalty crisis points. It’s about laying a strong foundation that helps build the employee experience and preempt risk and defection issues before they even occur. That means creating a stakeholder-centric culture within the organization that nurtures employee commitment and ambassadorship from the moment the new hire walks through the door and throughout the life span of the employee. The good news is that employees, by their very nature, desire to part of something bigger. As Fortune Magazine columnist Thomas Stewart has said, “Human beings want to pledge allegiance to something. The desire to belong is a foundation value, underlying all others.”

Some years ago, my colleague Jill Griffin and I identified nine ‘best practices’ for generating employee behavior which extends beyond loyalty to contribution and commitment.

1. Build a Climate of Trust – That Works Both Ways
2. Train, Train, Train and Cross-Train
3. Make Sure Each Employee Has A Career Path
4. Provide Frequent Evaluations and Reviews
5. Seek To Inform, Seek To Debrief
6. Recognize and Reward Initiative
7. Ask Employees What They Want
8. By All Means, Have Fun
9. Hire The Right Employees In The First Place

To build more of the first best practice, employee trust and empowerment, into the company culture, consider the following:

• Insure staff trust and empowerment are key values in the firm’s mission and vision statements
• Practice effective story-telling
• Create company rites and rituals that help reinforce the rewards of employee trust
• Maintain a free flow of information between management and staff to reinforce the trust factor and help prevent negative communication and gossip.
• Actively expose all employees to customers’ perception of experience value
• Teach senior managers the importance of ‘walking the talk’ and inspiring employee trust.

Employees often complain that, while they are working harder than ever, their contributions or thoughts on anything beyond their immediate jobs are rarely sought. Says an employee in a communications company, “I have lots of ideas, but I’m not one of the inner circle of people making those decisions and don’t know how to approach them. They all sit in adjacent offices and seem to talk more to each other than anyone else. There’s little reaching out to a broad array of employees for ideas and input.” This is both a challenge and an opportunity.

Employees who feel underutilized, non-empowered, non-enabled or ignored become unproductive and often seek jobs elsewhere. Bringing all employees into closer proximity with customers on a regular basis, for example, is a great way for them to be part of the action of the stakeholder experience ball game. Southwest Airlines, often singled out as an exemplar of employee cross-training around customer experience enhancement, also succeeds in this endeavor by having employees make a positive difference in their own experience as well Employees need to be more than just loyal and they need to be more than engaged. They need to be ambassadors: committed to the organization itself, to its products and services, and to its customers.

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8 Responses to Does Employee Loyalty = Customer Loyalty? And, Did It Ever?

  1. Bill Fotsch November 23, 2016 at 5:15 am (12 comments) #

    Southwest Airlines, (a client of mine), was identified “as an exemplar of employee cross-training around customer experience enhancement”, which is correct. But you did not lay out why they are so successful. They don’t take the top down approach embedded in your 9 suggestions. Instead, they empower their employees to think and act like owners, making the economics of their business transparent and asking employees to come forward with ideas to improve the business economics. United by this common goal, and sharing in company profits and stock appreciation, they naturally beat the competition, which has no such environment. SWA referrs to this as “Plane Smart Business”, with typical SWA humor. This Forbes article provides more context: http://www.forbes.com/sites/fotschcase/2016/05/31/engage-your-employees-in-making-money/

  2. Michael Lowenstein November 23, 2016 at 10:02 am (1197 comments) #

    Bill –

    Thanks very much for your comments, and also thank you for the link to your Forbes article about Southwest. I’m familiar with what Southwest does with and through employees, and have great admiration and appreciation for it. Just didn’t have the space to fully discuss what they do so well.

    The approaches outlined in my post, however, aren’t top down, nor are they bottom-up.. They depend on, and function within, enterprise environments where there is effective leadership and a stakeholder-focused culture – the first precept listed is the climate of trust that works for all stakeholders – and can exist within virtually any management style or concept.

    Michael

  3. Thomas Wieberneit November 23, 2016 at 9:00 pm (180 comments) #

    Michael, thanks for your article. I think most companies already fail at your premise. They are not looking at the job as the product to sell and the employee as a customer but they are looking at the employee as a material that is needed to create the product and that can be substituted at any time. What would be your approach to make these companies change their ways?

    But maybe I am a bit of a cynic 😉

    Thomas
    @twieberneit

  4. Michael Lowenstein November 24, 2016 at 8:06 pm (1197 comments) #

    Thomas –

    Thanks for your observations. From my perspective, cynicism is welcome when it calls out a prevailing construct that would benefit from more contemporary thinking. Your cynicism is well-placed and contributory. Most companies, indeed, see employees as simply another element in the bucket of resources (along with time, money, and technology) rather than as a committed partner, co-equal in importance with other stakeholders. In the clamor to be more customer-centric, and though often saying that “employees are our most important asset”, they insufficiently recognize the need, and value, of taking a ‘people first’ approach to employee experience optimization. It’s really all about stakeholder-centricity, and my long-time prescriptive for this has been employee ambassadorship: https://beyondphilosophy.com/eyes-on-the-customer-experience-prize-will-2016-finally-be-the-year-of-the-emotionally-driven-employee-ambassador/

    Michael

  5. Thomas Wieberneit November 24, 2016 at 9:47 pm (180 comments) #

    Thanks, Michael! Another interesting article that you linked. In an early retrospective, how much closer to the ideal expressed in your former article have we come this year?

    Cheers
    Thomas
    @twieberneit

  6. Michael Lowenstein November 25, 2016 at 6:54 pm (1197 comments) #

    Thomas –

    Although there is greater awareness that more needs to be understood about what connects employee experience to, and drives, customer experience, HR and senior corporate management have much to learn here. Also, much needs to change in an area of study which is complacent and accepting of antecedent, minimally actionable approaches. I’m continually finding consultants and HR execs who conflate employee engagement, recommendation, loyalty and the like with both employee and customer experience. One common shortfall is that they insufficiently evaluate the emotional components of value for both employees and customers.

    Michael

  7. Dave Fish December 2, 2016 at 3:21 pm (3 comments) #

    Don’t disagree with looking beyond “loyal employees” as a goal, that’s an outcome…occasionally an unwanted one if all the wrong one are and the right ones aren’t. That being said we have a fair amount of evidence that retail units with high tenure employees have happier and therefore more loyal customers. Your people are not your product but they certainly drive creating great (or bad) experiences for your customers.

  8. Michael Lowenstein December 2, 2016 at 6:42 pm (1197 comments) #

    Dave –

    Thanks for your comments. We also have deep research evidence that, if their experience, training, and career paths have been neglected, or given less attention than more recent hires, longer-tenured employees can become more negative emotionally and less committed.. They’re still doing the job everyday, but are less contributory, less invested, and less focused on delivering customer value: https://beyondphilosophy.com/eyes-on-the-customer-experience-prize-will-2016-finally-be-the-year-of-the-emotionally-driven-employee-ambassador/

    Michael

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