Forbes.com

The chemistry of enthusiasm: How engaged employees create loyal customers

Building and sustaining high levels of customer advocacy hinge on earning the trust and enthusiasm of employees.

Par Domenico Azzarello, Frederic Debruyne, and Ludovica Mottura

First published on août 07, 2012
min


In a slow-growth economy, keeping the customers you already have can mean the difference between profit and loss. And as companies battle for loyal customers and return business, some have discovered a most effective weapon – highly engaged employees. Engaged employees go the extra mile to deliver. They provide better experiences for customers, approach the job with energy—which enhances productivity—and come up with creative product, process and service improvements. They remain with their employers for longer tenures, which reduces turnover and its related costs. In turn, they deliver an enormous payoff to the business, by creating passionate customers who buy more, stay longer and tell their friends, all of which generates sustainable growth. When engagement fires on all cylinders, the results can be impressive: companies with highly engaged workers grew revenues two and a half times as much as those with low engagement levels, a Hay Group study found. A big reason for this superior performance is that engaged employees direct their energies toward the right tasks and outcomes. Compensation and benefits still matter to them, of course. But when it comes to engagement, other characteristics of the workplace matter even more: a strong sense of purpose, ample autonomy, opportunity for growth, and a sense of affiliation. As one employee of online retailer Zappos put it, “The golden rule is the way of life here.” While the benefits of high engagement are clear, there’s no doubt that it’s tough to achieve. Among a broad group of global companies Bain surveyed in late 2010, only a minority of employees (34% in North America and 19% in Europe) said they would recommend working at their company to a friend or relative. For the companies that get it right, customer advocacy can yield a big financial payoff. In the telecommunications industry, for example, boosting customer advocacy by a few percentage points translates into hundreds of millions of dollar in customer base value for a large provider by reducing customer churn and increasing share of wallet with loyal customers. So how do engagement leaders do it? Simply put, they act differently. They regularly solicit feedback from customers and use that feedback to change business processes in ways that both empower employees and increase customer advocacy. At JetBlue Airways, staff members use customer feedback to focus intensively on making the customer’s life easier, and customers repay the effort by spreading the word to others. That has contributed to JetBlue’s No. 1 ranking, for seven consecutive years, in J.D. Power and Associates’ North America Airline Satisfaction Study for the low-cost carrier category. Loyalty leaders also work hard to listen to disgruntled customers and contact them, usually within 24 hours after the initial survey. At Charles Schwab, for instance, comments from customers, delivered quickly and in detail to financial consultants and other frontline employees, provide the basis for constructive criticism. Employees can learn, adjust their behavior and take appropriate action with the customer. Performance metrics can be powerful incentives to change employee behavior. Rate employees along metrics of time or cost, and they will respond in kind, even if cutting cost makes for a poor customer experience. Many call centers, for instance, have structured their performance reviews around cost-driven metrics such as “average handle time” for calls. When representatives then try to keep calls as short as possible, they’re unable to solve complicated customer problems, driving up the number of repeat customer calls and the level of customer frustration. Companies that focus on building loyalty adjust their metrics to promote customer advocacy rather than low costs at any price. At Belgacom, a telecommunications provider in Belgium, the call center switched from using average handle time to a combination of two metrics, one on customer promotion and another on resolving the issue on the first call. Previously, a difficult case would get transferred to phone-tree purgatory; with the new system in place, a representative had the power to raise her hand for a nearby technical expert to join the call. Not only did the new approach help to reduce the overall volume of calls by 20%, it also ignited higher customer advocacy scores and employee engagement scores. Along with listening closely, engagement masters encourage, or even mandate, cross-functional collaboration. JetBlue promotes a system of “desired behaviors” that foster a collaborative work environment to improve customer service. For example, the airline encourages pilots, flight attendants and gate agents to work together to help clean the main cabin, which reconciles potential conflict between cabin cleanliness and speed of turnaround between flights, as the aircraft crew is responsible for both. This does not mean “anything goes”. The most effective companies give employees decision rights and accountabilities for daily operational decisions that can add or destroy a lot of value – but within an explicit decision framework that has clear guidelines for behavior. Higher decision effectiveness has a strong correlation with greater employee engagement, Bain research shows. Building and sustaining high levels of customer advocacy hinge on earning the trust and enthusiasm of employees. When both elements kick in, a company can pull ahead of competitors and power through a tough economy. By Domenico Azzarello, a Paris-based partner in the Customer Strategy & Marketing and Organization practices for Bain & Company; Frederic Debruyne, a Brussels-based partner in Bain’s Customer Strategy & Marketing and Telecommunications, Media & Technology practices; and Ludovica Mottura, a Boston-based manager for Bain’s Organization practice.

In a slow-growth economy, keeping the customers you already have can mean the difference between profit and loss. And as companies battle for loyal customers and return business, some have discovered a most effective weapon – highly engaged employees.

Engaged employees go the extra mile to deliver. They provide better experiences for customers, approach the job with energy—which enhances productivity—and come up with creative product, process and service improvements. They remain with their employers for longer tenures, which reduces turnover and its related costs. In turn, they deliver an enormous payoff to the business, by creating passionate customers who buy more, stay longer and tell their friends, all of which generates sustainable growth.

When engagement fires on all cylinders, the results can be impressive: companies with highly engaged workers grew revenues two and a half times as much as those with low engagement levels, a Hay Group study found. A big reason for this superior performance is that engaged employees direct their energies toward the right tasks and outcomes. Compensation and benefits still matter to them, of course. But when it comes to engagement, other characteristics of the workplace matter even more: a strong sense of purpose, ample autonomy, opportunity for growth, and a sense of affiliation. As one employee of online retailer Zappos put it, “The golden rule is the way of life here.”

While the benefits of high engagement are clear, there’s no doubt that it’s tough to achieve. Among a broad group of global companies Bain surveyed in late 2010, only a minority of employees (34% in North America and 19% in Europe) said they would recommend working at their company to a friend or relative.

For the companies that get it right, customer advocacy can yield a big financial payoff. In the telecommunications industry, for example, boosting customer advocacy by a few percentage points translates into hundreds of millions of dollar in customer base value for a large provider by reducing customer churn and increasing share of wallet with loyal customers.

So how do engagement leaders do it? Simply put, they act differently. They regularly solicit feedback from customers and use that feedback to change business processes in ways that both empower employees and increase customer advocacy. At JetBlue Airways, staff members use customer feedback to focus intensively on making the customer’s life easier, and customers repay the effort by spreading the word to others. That has contributed to JetBlue’s No. 1 ranking, for seven consecutive years, in J.D. Power and Associates’ North America Airline Satisfaction Study for the low-cost carrier category.

Loyalty leaders also work hard to listen to disgruntled customers and contact them, usually within 24 hours after the initial survey. At Charles Schwab, for instance, comments from customers, delivered quickly and in detail to financial consultants and other frontline employees, provide the basis for constructive criticism. Employees can learn, adjust their behavior and take appropriate action with the customer.

Performance metrics can be powerful incentives to change employee behavior. Rate employees along metrics of time or cost, and they will respond in kind, even if cutting cost makes for a poor customer experience. Many call centers, for instance, have structured their performance reviews around cost-driven metrics such as “average handle time” for calls. When representatives then try to keep calls as short as possible, they’re unable to solve complicated customer problems, driving up the number of repeat customer calls and the level of customer frustration.

Companies that focus on building loyalty adjust their metrics to promote customer advocacy rather than low costs at any price. At Belgacom, a telecommunications provider in Belgium, the call center switched from using average handle time to a combination of two metrics, one on customer promotion and another on resolving the issue on the first call. Previously, a difficult case would get transferred to phone-tree purgatory; with the new system in place, a representative had the power to raise her hand for a nearby technical expert to join the call. Not only did the new approach help to reduce the overall volume of calls by 20%, it also ignited higher customer advocacy scores and employee engagement scores.

Along with listening closely, engagement masters encourage, or even mandate, cross-functional collaboration. JetBlue promotes a system of “desired behaviors” that foster a collaborative work environment to improve customer service. For example, the airline encourages pilots, flight attendants and gate agents to work together to help clean the main cabin, which reconciles potential conflict between cabin cleanliness and speed of turnaround between flights, as the aircraft crew is responsible for both.

This does not mean “anything goes”. The most effective companies give employees decision rights and accountabilities for daily operational decisions that can add or destroy a lot of value – but within an explicit decision framework that has clear guidelines for behavior. Higher decision effectiveness has a strong correlation with greater employee engagement, Bain research shows.

Building and sustaining high levels of customer advocacy hinge on earning the trust and enthusiasm of employees. When both elements kick in, a company can pull ahead of competitors and power through a tough economy.

By Domenico Azzarello, a Paris-based partner in the Customer Strategy & Marketing and Organization practices for Bain & Company; Frederic Debruyne, a Brussels-based partner in Bain’s Customer Strategy & Marketing and Telecommunications, Media & Technology practices; and Ludovica Mottura, a Boston-based manager for Bain’s Organization practice.