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The Link Between Employee Engagement and Customer Loyalty

The Link Between Employee Engagement and Customer Loyalty

Editor’s Note: This is a guest post by Emma Miller – a Sydney-based writer and contributor at Bizzmark blog. Her opinions are her own.  

Employee engagement is driven by the emotional commitment employees have with their company and its vision. This emotional commitment motivates employees to work better and harder. Employee engagement is one of the most essential criteria for running a successful business and it creates benefits for employers, customers and employees themselves. In this article, we’re going to analyze how employee engagement influences customer relations. Since the highest goal of most companies is to create an army of loyal and satisfied customers and use them as brand advocates, we’re also going to analyze how employee engagement can help employers achieve this goal.

Kevin Kruse, an entrepreneur and an author of NY Times bestseller: We: How to Increase Performance and Profits through Full Engagement, has recently published an article explaining the correlation between employee engagement and various other aspects of business. Since there’s no unique recipe for improving customer loyalty, in this article we’ll focus on several good practices that improve customer loyalty and inspect how employee engagement can make this process easier and more efficient.

Customer loyalty is very important for all types of businesses. It’s much easier to retain a current customer than to acquire a new one and that’s why companies invest a lot of time and funds in improving their customer retention rates. These rates are usually defined by the efficiency in some of these business fields:

Customer service

Many companies have specialized programs for improving their customer retention rates. These programs usually include giving out various incentives to the most loyal customers and targeting ‘checkout dropouts’ with advanced remarketing tactics. Most of these programs are being backed by advanced customer service practices, so we can conclude that customer service (also often referred to as ‘customer success’) is one of the most important criteria for improving customer loyalty.

Engaged employees understand the value of the brand they’re representing and therefore can easily engage customers and improve their overall experience. Employee engagement is directly tied to client satisfaction and a great example for this is Morrison Management Specialists. This food services company managed to improve their client satisfaction by 1%, for every 2% improvement in employee engagement.

Product quality

Engaged employees are more careful than their disengaged colleagues. This results in less quality errors and a smoother workflow. The relationship between employee engagement and product quality was also mentioned in the Employee Engagement: The Key to Realizing Competitive Advantage, Development Dimensions International study. The study mentions an unnamed Fortune 100 company, which decreased the number of quality errors from 5,658 to only 52 (per 1 million products), just by introducing an active employee engagement strategy.

Sales

Engaged salespeople are much better at sales and negotiation tasks. Most companies try to engage their sellers with sales commissions. This is a very efficient way to motivate sales personnel. This was acknowledged by Doug J. Chung in his How to Really Motivate Salespeople article. Chung advises managers to remove the caps from commissions and experiment with various compensation and reward programs.

How to improve employee engagement

Many employers think that the job itself and the financial benefits that come with it are enough to keep employees enthusiastic. Dozens of different studies have proven that financial benefits are not the most effective way to boost employee engagement. Of course, companies should use them to reward employees’ loyalty and effort, but there are also other more affordable and thoughtful ways that can be used for solving this problem.

Before managers and employers jump to specific solutions, they need to recognize the engagement gap. They often walk down the company hallways, seeing smiling and engaged-looking employees. These scenes give them the false impression that employees believe in their vision and that they’re giving their best effort. In order to get the right picture managers need to analyze employees’ performance on a regular basis and measure their engagement by using various productivity metrics.

When trying to introduce the right measures that will result in an increase of their workforce value, managers should first determine the factors that drive employee engagement in their industry. Apart from financial compensation, these are some of the factors that are the most critical for improving employee engagement:

  • Senior management’s interest in employees’ work;
  • Involvement in the decision-making process;
  • Career advancement opportunities;
  • Collaborative work environment and effective team-work;
  • Clear business vision, presented by the senior management;
  • Company’s care for employees’ well-being;
  • Managers’ fairness.

By comparing this list of factors with their company’s engagement practices, managers will be able to determine the measures that can improve employee engagement and productivity. These are some of the suggestions:

Understand the goals of your employees

In recent years, there’s been a drastic change in employer-employee relationships. Many managers haven’t recognized these trends, which has resulted in a big decrease in employee engagement across the corporate world. Employees are not searching for lifetime employment anymore, which is why the paternalistic approach to the company’s workforce has started to fetter their individualism. Managers need to conduct regular surveys in order to determine their employees’ goals and adapt their leadership strategy accordingly.

More collaboration at all levels

Managers should determine what kind of relationship their employees are seeking. Many young and talented individuals don’t want to be governed by managers who just assign orders. They want to be able to share their ideas with upper management and use their talent to climb up through the company’s ranks. That’s why management needs to be in touch with every employee, with anyone in the company being able to share their thoughts, concerns and ideas with the leadership team.

The power of acknowledgement

Unfortunately, there are managers who steal the ideas and efforts from their subordinates and present them as their own. These people are bad leaders and by doing this, they’re killing off employee engagement. Every employee need to be awarded for their accomplishments. These rewards can be more or less materialistic. Employees could be rewarded with gift cards, bonuses and company stocks, or simply with praises from upper management. The most important thing is to show employees that their work is acknowledged.

Proof of the correlation between employee and customer engagement

By linking employee and customer engagement, managers can improve their staff’s performance and make their company more competitive. Saks Fifth Avenue, one of the best-known New York retailers decided to measure the correlation between these two criteria. The results of their research proved that employee and customer engagement are closely related. Research motivated them to introduce new employee engagement measures, which created a constructive dialog between the Saks sales force and the upper management. These dialogs usually start with managers asking their employees what they need in order to do their jobs right. Their answers lead to concrete measures like: updating company’s computers, introducing new types of bonuses, etc. These measures have drastically improved customer engagement, loyalty and sales. According to Saks’ Vice President Jay Redman higher employee engagement has driven sales for up to 25% in some of their stores.

In this blog post we’ve listed some of the measures that can help employers better engage their employees and improve their customer loyalty. In addition to all the measures we’ve shared, one of the most important criteria for high employee engagement is great leadership. That’s why companies need to find, train and retain good managers, who realize how the emotional economy influences the work environment, and who are able to serve as leaders and mentors to their team members.

Emma Miller

Emma Miller is a marketer and a writer from Sydney. Her focus are digital marketing, social media, start-ups and latest trends. She's a contributor at Bizzmark blog and a mother of two.

  • I think now it is time when we can make more sales with the help of good engagements with potential customers. Many people says that your potential customer has to hear about you and your product at list 7 times. But what about thing that we can make it with the help of conversations? Sure, Employee could do it so good! But it could be a little expensive for workers. Much more cheaper to use chatbots ( https://chatboten.com/chatbots-business-make-money-bots/ ). They can make all first conversations (sure it’s depend what about you will teach chatbot), but than on the last 7 time, you can just make a deal with client 🙂

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