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Employee Ambassadorship Profitably Linking Exec Brief


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There is a powerful, and actively monetizing, link between employee attitudes and behavior (on behalf of the enterprise, its product and service value proposition, and its customers) and customer behavior. This white paper discusses approaches for identifying key linkage factors and how organiztions can apply them.

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Employee Ambassadorship Profitably Linking Exec Brief

  1. 1. Profitably Linking Employee Behavior to Customer Loyalty: Driving Customer Commitment Through Employee Attitudes and Actions Abstract Everyone knows the classic questions: Which came first, cowboys or saloons? Chickens or eggs? While these may be ongoing questions in cultural anthropology or biology, the role of employees in impacting customer loyalty behavior is far simpler to understand. In order to truly have customer commitment and advocacy behavior, a company’s employees must understand their role as customer experience stakeholders and live that role as value delivery agents and supplier ambassadors. Author Just as with Customers, Employee The role of people...why they Michael Lowenstein, PhD, CMC Satisfaction is Almost Irrelevant can be so critically important. Vice President and Senior Consultant Harris Interactive Loyalty Employees are key stakeholders in value delivery Princeton, New Jersey and brand/supplier success, and they frequently represent the difference between positive experi- ences or negative experiences and whether cus- ...of customer ...of customers brand percep- tomers stay or go. leave because tion is deter- of poor mined by expe- While the extent of their role and impact needs employee riences with attitude. people. to be better understood, employee satisfaction ...of customers are loyal research isn’t the best way to do it. Why not? because of Industrial psychologists and organizational good employee attitude. behaviorists have been studying employee satis- faction for over 30 years, assuming that the level Source: Parkington and Source: MCA Brand Source: Ken Irons, Market Buxton, Study of the US Ambassador Benchmark Leader of staff satisfaction correlates with impact on per- Banking Sector, Journal formance. However, as one study concluded: of Applied Psychology “Researchers have been unable to confirm a rela- UK retailer: 1% increase in employee tionship between employee satisfaction and busi- commitment = 9% increase in monthly ness performance.” This is almost identical to the sales. Enterprise IG finding that the level of positive customer satis- faction has relatively little bearing on loyalty Study findings such as this demonstrate that behavior. (Conversely, transactional dissatisfac- employees are capable of directly contributing to tion can – and often does – undermine customer both customer disappointment and customer loyalty and advocacy.) delight. Beyond simply understanding employee satisfaction and what employees value and desire It has been found that employee commitment in their jobs, it is essential that companies have a and advocacy behavior has a direct and profound method which definitively connects staff per- relationship to the behavior of customers, and formance and engagement directly to customer also to corporate sales and profitability. As exten- marketplace behavior. This allows them to hire, sive academic and professional research into this train, recognize and reward employees appropri- effect concludes with regularity, employee atti- ately based on their contributions to customer value. tudes and actions can’t be separated from the effective delivery of customer value. 877.919.4765 ©2008, Harris Interactive Inc. All rights reserved. Other product and/or company names used herein are trademarks of their respective owners. EOE M/F/D/V 03.08
  2. 2. 2 HARRIS INTERACTIVE EXECUTIVE BRIEF Linking Employee Behavior to Customer Loyalty Linkages Between Employee Attitudes & Actions and express their commitment to a supplier can range from strongly Customer Behavior positive (advocates) to strongly negative (saboteurs). Employees As shown above there is a powerful relationship between employee can significantly impact customer commitment behavior toward commitment – to the company, to the brand value proposition, to their employer through a range of attitudes and actions on behalf of the customer – and their employers’ actual business performance the brand, company and customer. As it is with customers, these metrics. Northwestern University, for instance, conducted a hotel attitudes and actions range from highly positive to highly negative. chain study which showed that, for ‘The extent to which employees try to satisfy customers,’ a 10% increase in this factor resulted in a Our research framework for identifying this is Employee 22% increase in customer spending per hotel visit. In the 1990s, Ambassadorship. Its intent is to define the most active level of Sears conducted a study in 800 stores which showed that a 5 per- employee commitment to the company’s value promise, to the cent documented improvement in employee attitudes toward their company itself, and to optimizing the customer experience. It is jobs and commitment to the company directly resulted in a 1.3% linked to – but distinctive from – the productivity and empower- increase in customer perceptions toward the retailer and, in turn, a ment elements of employee satisfaction, engagement, and align- .5% increase year-over-year in revenue. Research by the Royal Bank ment research. With ambassadorship the emphasis is on strengthen- of Canada determined that the level of employee commitment ing bonds with customers, and creating positive transactional and accounts for 60% to 80% of bank customer satisfaction, and that long-term customer experience through employee interaction. 40% of the difference in how customers view RBC’s services can be We most typically concentrate on what drives active, positive, vocal linked directly to their relationship with bank staff. commitment – in other words, ambassadorship. However, it is at Yet when considering and measuring the pivotal elements of staff least equally important to identify where employee indifference and performance and productivity, most companies are primarily negativism – potentially leading to sabotage attitudes and actions – focused on employee attitudes around satisfaction, company loyalty, exist, why they exist, and how they can be mitigated or eliminated. alignment with goals and objectives (such as corporate citizenship), “Branches” of employee research, now including Employee and levels of engagement. These are important, to be sure (and, in Ambassadorship, can be illustrated as follows: fact, Harris Interactive conducts a great deal of this type of employ- ee research); but historically they only superficially and incidentally Employee Research Techniques correlate what employees think and do to customer behavior. Employee Employee Ambassadorship: Measuring the Effect of Attitudes and Employee Beliefs and Behavior on Customer Behaviors Research Experience and Commitment Employee commitment and advocacy has become a major focus of many organizations, as they have come to realize the financial and cultural consequences of a workforce that is committed to the over- arching goal of optimizing customer loyalty and advocacy behavior. Employee Employee Employee Satisfaction, Engagement Commitment and Most employee research has traditionally been conducted as a Values, and and Ambassadorship means of identifying levels of staff satisfaction and performance, Loyalty Alignment (Advocacy) perceived values, and engagement with company missions and cul- ture. But there is also growing recognition of the need to relate Like commitment for customers, advocacy is a fairly new term in and link employee perceptions, beliefs and behaviors to company understanding employee behavior, and there’s not a great deal of missions and strategies. Until recently, very little employee research academic literature on it (and none from professional employee (qualitative or quantitative) has been conducted in these areas – nor research sources). But it's quickly becoming more actively used. had a proven technique been created. The Employee Ambassadorship solution has been built to be con- Harris Interactive Loyalty has developed a highly effective suite of sistent with the Harris Interactive Commitment Model, a revolu- research techniques for understanding stakeholder behavior and tionary research technique that allows Harris Interactive to accu- decision-making dynamics. For example, customers who actively rately predict loyal customer behavior. The solution also introduces 877.919.4765 ©2008, Harris Interactive Inc. All rights reserved. 03.08
  3. 3. 3 HARRIS INTERACTIVE EXECUTIVE BRIEF Linking Employee Behavior to Customer Loyalty categories of employee commitment, similar to those used in the Leveraging Employee Positivism Commitment Model to describe customer commitment. Polar employee positivism is the essence of ambassadorship – and it is absolutely critical for companies striving to be optimally customer- At the high end of commitment are employee ambassadors. centric. Customer experience management processes can be tightly Ambassadors represent employees who are strongly committed to managed, but executing and sustaining them is virtually impossible the company’s brand promise, the organization itself, and its cus- without the genuine and enthusiastic support of employees. These tomers. They actively behave and communicate in a consistently experiences, and resulting levels of customer loyalty behavior, are positive manner about the company, both internally (to co-workers greatly influenced by employee interactions. For example, many and customers) and externally (to family, friends, and others). studies have determined that customers who complain to an organi- zation and have their complaints satisfactorily resolved tell an average At the low end of commitment are employee saboteurs. Saboteurs of 5 other people about the good treatment they received. If they are active and frequently vocal detractors about the organization receive poor treatment? They tell at least 20 people. Many of these itself, its culture and policies, and its products and services. These studies were conducted pre-Internet era, so the potential for negative individuals are negative advocates, communicating their low opin- informal communication (blogs, forums, chat rooms, online commu- ions and unfavorable perspectives both to peers inside the company nities, rating sites, etc.) is even stronger in today’s connected world. and to customers and others outside the company. Service studies have also shown that, of the customers who register a With the introduction of Harris Interactive Loyalty’s Employee complaint, between 54% and 70% will do business with the organi- Ambassadorship solution, we felt that it was important to conduct zation again if their complaints are resolved. This figure goes up to ‘research on research’ to gain insight into the levels of and contribu- 95% if the customers feel the complaints are resolved professionally, tors to employee positivism and negativism. Accordingly, we com- quickly and proactively, depending upon positive employee attitudes pleted a pilot study on these subjects. and actions as well as the systems in place to manage complaints. The Roots of Employee Negativism A short series of questions for full-time employees, 18 and over, was So, it is both culturally desirable and financially rewarding for organi- included in the September 11-18, 2007 national Harris Poll ®. zations to foster employee positivism. On the topic of word-of- These questions were answered, through an online questionnaire, mouth about their employer, our respondents tended to express posi- by a total of 1,165 individuals. tives frequently, which is a very good outcome (for employers and customers) to this research. Overall, 34% of the respondents said One of our first objectives with these questions was to identify they frequently tell others how good their company is, and 48% employees’ overall commitment level, loyalty, and impression about sometimes communicated positive messages. Within this positivism the company and its perceived ability to earn customers’ trust and however, it should be noted that the lowest percentage of frequent loyalty. This was accomplished through a series of four simple positive communication was by 18-24 year olds (24%), while the agree-disagree statements. On two of the questions – ‘commitment highest was among those 65+ (43%). to the organization’s success’ and ‘ability to earn customer trust and loyalty’ – there was fairly high positivism. The two statements Finally, we asked respondents if they tell others how good the prod- which addressed overall impression and loyalty, however, showed ucts or services of the company they work for are. Encouragingly, a significantly greater negativity: total of 88% said they do (38% frequently and 50% sometimes). Employers should be gratified by the marked proclivity of employees to be positive and vocal about their products and/or services, com- Not pared to the likelihood of being negative and vocal. Principally Yes No Sure through HR, they will want to identify those opinions, actions and I am very committed to the success characteristics of employees which are most positive and train of my employer organization. 78% 12% 9% employees to emulate the positive drivers. We consistently earn our cus- 76% 12% 12% tomers’ trust and loyalty. I feel very loyal to the organization 70% 20% 10% I currently work for. I have a very positive impression 68% 22% 10% about the organization I work for. 877.919.4765 ©2008, Harris Interactive Inc. All rights reserved. 03.08
  4. 4. 4 HARRIS INTERACTIVE EXECUTIVE BRIEF Linking Employee Behavior to Customer Loyalty Employee Mirroring: Reflections of Perceptual Reality and In the example below, retail service staff had significantly different Unreality Relative to Customers perceptions of performance than customers of a specialty store Years ago, quality guru W. Edwards Deming said that each person chain, especially in need anticipation and making the customer feel in a company has one of two functions: They either serve the cus- special, both key components of relationship and bond creation. tomer or serve someone who does. So it’s clear that understanding Employees felt they were doing an excellent job. The reality, based where perceptual gaps between employees and customers exist on the customers’ perspective, was far different. should be of prime importance, especially to key groups such as Human Resources in their efforts to optimize the effectiveness of Note: Mirroring studies can be conducted as part of Employee employees in terms of productivity and delivering value to customers. Ambassadorship – where they add an important dimension to the understanding of ambassadorship and sabotage behavior – or inde- We’ve frequently found that customers consider the emotional, rela- pendently, concurrent with research into customer perceptions of tionship-based aspects of value delivery – trust, communication, value. interactive/collaborative components of service, anticipation of needs, brand equity, etc. – much more important, and more lever- In another example, mirroring questions were included in both the aging of behavior, than the functional aspects. Customers tend to guest satisfaction (a study conducted on behalf of a major Las Vegas see the functional aspects of delivery as more basic and expected, in Hotel/Casino in June 2006) and employee satisfaction question- other words one-dimensional and non-differentiating. naires. Overall results – namely those showing employees consis- tently giving higher ratings (top two box on seven point scale) to For key interaction and touchpoints between customers and suppli- performance attributes than guests – was concentrated among ers, the level of true focus and centricity can be identified quite eas- employee ambassadors and minimized among employee saboteurs. ily. We have long advocated including at least one cell of supplier staff – from Field Sales, Marketing, and especially Customer Service – in every customer loyalty study done for our clients. The results are frequently eye-opening. We simply ask staff respondents to answer the same questions asked of customers, in the way they believe customers will rate and evaluate them as a supplier. Measuring Specialty Retail Customer and Staff Alignment Product, Service Interest in My Follow-Through on Responsiveness Makes Me Feel Part Anticipates My Inspires My Gets Answers Knowledge Needs, Goals Problems of a Special Group Needs Trust Quickly Based on % 6/7 performance ratings on a 7-point scale 877.919.4765 ©2008, Harris Interactive Inc. All rights reserved. 03.08
  5. 5. 5 HARRIS INTERACTIVE EXECUTIVE BRIEF Linking Employee Behavior to Customer Loyalty The range of high scoring concentration was 71% to 84% of of new initiatives and changes on behalf of customers that may employee ambassadors giving these scores, with only 5% to 15% of affect staff directly or indirectly. employee saboteurs giving these scores. These results were consis- tent across all attributes evaluated by both employees and guests. Studies have shown that customer support groups consider meeting defined service levels their highest priority, while relatively few Mirroring and Employee Ambassador Technique Beta identify generating revenue and optimizing customer retention as Results – Example Commitment Diagnostics key goals. This often results in considerable disconnect within the organization, especially when one group has a different set of cus- tomer-related metrics, goals and objectives compared to another Guests All Employees Ambassadors Saboteurs (e.g., Marketing vs. Customer Service). 90 When companies are innovative and inclusive with staff, all parties 80 benefit. The company gets more effective employees. Employees 70 like the participation and learning. Customers like the improved 60 processes and enhanced experience. Another key advantage of con- 50 ducting employee ‘mirror’ research is that, in all likelihood, com- petitors don’t have this kind of insight. They’re hearing only from the 40 external constituent group – the customers – but not from the equally 30 important representatives and deliverers of value: Company employees. 20 10 The Net Effect of Employee Attitudes and Actions Increasingly we are able to understand – and even predict – the 0 #1 #2 #3 #4 effect of employees as proactive company ambassadors and positive agents (or also agents of supplier distrust and customer turnover, if #1 Guests are committed to continuing their relationship with the hotel. the individual or longitudinal experiences have been poor) on cus- #2 Guests would continue to stay at the hotel because of the fun and tomer commitment and advocacy behavior. This is a ‘holy grail’ for fulfilling experience it provides. many organizations as they strive to leverage human capital to best effect. #3 The hotel has the guests’ best interest at heart. As Fortune magazine columnist Thomas Stewart said, “Human #4 Guests feel they have a personal relationship with the hotel as their LasVegas destination. beings want to pledge allegiance to something. The desire to belong is a foundation value, underlying all others.” When that ‘some- This suggests not only that employees had significantly different thing’ is the optimization of customer experience and loyalty perceptions of performance compared to guests, but also that there behavior, coupled with the highest levels of employee participation was a great deal of perceptual polarity among Las Vegas and investment in reaching that goal, everybody wins. Hotel/Casino employees. In case anyone should need more convincing of the benefits reaped from interviewing staff to understand their perceptions of cus- tomer-related performance, here are three key reasons why compa- nies should want to make staff a part of every customer survey: 1. Including staff in customer loyalty research enables employees to have a voice. This tells staff their opinions matter, which in turn helps build trust between the company and staff. 2. Surveying staff enables management to learn about specific process areas where there are disconnects between what staff perceives and what customers perceive. These revelations can open the door for needed process changes in how customers are served. 3. Surveying staff helps pave the way for staff buy-in and support 877.919.4765 ©2008, Harris Interactive Inc. All rights reserved. 03.08