In today's volatile economic environment, companies are understandably worried about their customers. Will they stay or will they leave? After all, customers have options, and they certainly know it. Competitive overtures, often trumpeting lower prices and intriguing promotional offers, have intensified. The Internet beckons, with its impressive array of available alternatives. And so, as many company CEOs have attested, it appears that today's customer is indeed king.
Corporate mantras don't always translate to the "moment of truth" when the customer comes in contact with the employee.
But in focusing on maintaining the continuing patronage of their customers, too many companies appear to be ignoring their potentially most powerful marketing weapon. In their attempts to build stronger customer relationships, many companies emphasize managing the traditional "four Ps" of marketing -- Product, Price, Place and Promotion -- while appearing to overlook an essential fifth P: People. Admittedly, most organizations that have employees who touch customers will at least give lip service to the critical importance of their human resources.
Their websites proudly proclaim "our people are our most important product"; "our people make the difference." But these can be empty promises, representing nothing more than meaningless puffery. Corporate mantras don't always translate to where it really matters: the "moment of truth" when the customer actually comes in contact with the employee who has been challenged to "live" the company's brand promise.
The reason why companies seem to emphasize the traditional four Ps is simple. The "people" P is the toughest one to manage. In clear contrast, product attributes can be changed relatively easily. New features can be added, and product designs can be altered. New pricing structures can be announced, and discounts can be offered. Promotional campaigns can be launched, involving everything from television commercials to social networks and interactive videos. Additional retail locations, even of the "pop up" variety, can be established.
But the human component defies easy management. Unlike prices or product attributes, people cannot be meaningfully managed from on high. They must be locally managed. And people vary to a frustrating degree in their ability and commitment to add value to the intended brand experience. People aren't all the same.
But people are powerful. Our research has shown that, when it comes to building customer loyalty, the "people" factors are often the most important element, outweighing the combined impact of product features, convenient locations, and even low prices. Of course, customers do show loyalty to the companies they see as offering superior product performance or consistently better prices. But we typically find that customer loyalty levels are even higher for those companies whose employees are judged by customers as standing apart from all others.
When customers come in contact with employees, those human encounters make a huge difference. Employees who sell, support, or service what the company offers are not merely serving a transactional function that's required to get the product into the hands of the customer. These employees are also helping to establish a relationship, the nature of which is heavily dependent on them. Through their actions and attitudes, they may enhance that customer relationship, or they may jeopardize it.
Engaging the customer
When the customer relationship grows stronger, when the customer becomes more "engaged," the company benefits impressively. Our research shows that engaged customers spend more money, come back more frequently, stay longer, and are less price sensitive. Engaged customers sing the company's praises, while disengaged customers spread their unhappiness on YouTube. Stores that do a better job engaging their customers greatly outperform other stores within the same system when it comes to sales growth and profit versus target. Engagement is good business. [See "The Constant Customer" in the "See Also" area on this page.]
It should be noted that customer "engagement" is a lot more than "satisfaction," and it requires a good deal more to achieve and sustain it. Engagement represents a meaningful and enduring bond between customer and company, one that is grounded in emotional considerations and not just in rational ones. It stems from customers' feelings about how they're being treated by the company.
And the arena of customers' feelings is where the impact of employees is most clearly evident. Employee-to-customer contact speaks directly to some of the more critical aspects of an emotionally grounded customer relationship. Our research has shown that an engaged customer relationship is characterized by four essential ingredients:
- First is Confidence, the customer's belief that the company can always be trusted to keep its promises.
- Second is Integrity, indicating that the customer is convinced that the company will always stand behind its offerings and will fix anything that might ever go wrong.
- Third is Pride, a feeling of mutuality on the part of the customer, sensing that his or her patronage is both appreciated and respected.
- The final component is Passion, the customer's feeling that the company is essentially irreplaceable.
Where does the employee fit into this? Employee-customer interactions are in many ways the acid test for determining the strength of each of these four emotional components of a customer connection. Employees give life to the company's promises, either supporting or refuting the company's stated commitments to keep its promises and remedy any problems. Employees also quite vividly demonstrate the degree to which the customer is truly welcomed and her patronage is truly appreciated. And, as we've learned in categories ranging from banking and autos to hotels and grocery stores, employee encounters are often what really differentiates a company that is judged to be irreplaceable from one that is merely acceptable. The human touch makes a critical difference.
Employees quite vividly demonstrate the degree to which the customer is truly welcomed and appreciated.
Engagement is Contagious
Of course, the goal for any company isn't just an understanding of the nature of an engaged customer relationship. The goal is to more effectively manage the relationship -- to build it and sustain it. Thus it's essential to be able to dig deeply into the factors that contribute to and "drive" an engaged customer connection. As indicated above, we consistently find that "people" factors are key among these engagement drivers.
Some of these people factors are what we might term "aspirational" drivers of engagement. These could include customer perceptions such as "provided me a warm welcome" or "the salesperson had my best interests at heart" or "the desk clerk showed real concern for my problems." Perceptions such as these would typically be revealed by research as important contributors to a customer's overall feeling of engagement.
Interesting but elusive
But what, in turn, can account for high customer ratings on these "aspirational" drivers? What makes the difference between a cashier who provides a "warm welcome" and one who simply fulfills a customer request? That's where we need to understand something more basic -- something that reflects what is essentially the employee's level of energy and his or her commitment to the company and its brand promise. This we refer to as employee engagement, something we've been studying for many years. And, as with customer engagement, it's something that can seem interesting but elusive. Yet it's also something that we've learned can be both reliably measured and meaningfully managed.
Employee engagement represents the degree to which employees have an emotional tie to their workplace and to the company that they're called upon to regularly represent (and whose brand promise they're being challenged to "live"). Employee engagement represents the engine, the power that the company might harness in its efforts to create enduring, business-enhancing customer relationships.
Engaged employees are those who not only feel they have the equipment they need to do their job, but who also have a clear understanding of what's expected of them, evidence that their efforts are truly appreciated, and a strong sense of personal involvement in the company and its brand promise.
Engaged employees -- and customers
Our research shows a strong positive correlation between a company's level of employee engagement and its level of customer engagement. Each builds upon the other. Energized, passionate employees help create passionate customers. And, in return, customer enthusiasm clearly contributes to the morale and enthusiasm of any employee who comes in contact with those customers. It works hand in glove. And it's equally true that disengaged, disaffected employees will serve to poison the customer well, as well as spread their disaffection within the walls of the company itself.
For these reasons, employee engagement becomes not just a powerful offensive weapon -- setting the stage for engaged (and profitable) customer relationships -- but also a defensive weapon, precluding the potentially negative business consequences that can result from a disengaged workforce.
And so, there's a clear conclusion to be drawn. If a company is aiming to build customer loyalty and reap the benefits that should then accrue, it must first pay very close attention to those whose actions and efforts will determine the ultimate success of the company's efforts. It has to start with the employees, the vital engine that is entrusted and tasked with building customer engagement. After all is said and done, it's the company's employees, even more than its marketing activities, that truly determine the health of the brand.
This article is adapted from one originally published in Customer Engagement magazine. Reprinted with permission.