Employee Satisfaction: The Key to Happy Customers?

by Tom Taber, Managing Director, VOC ABOUT TOM

Surveys of customer satisfaction have become commonplace among most companies throughout most industries. Nearly every company seeks customer feedback in one form or another. Better yet, more companies are acting on the survey feedback; they’re actually working to fix the problems so their satisfaction scores will rise in the future.

That’s significant progress. Companies realize that good service pays. But in the rush to take care of the customer, many companies are overlooking one critical element — their employees.

What do happy employees have to do with retaining customers?

Over the years, there have been numerous articles in the business press about the link between customer satisfaction and employee satisfaction. Empirical studies have demonstrated that if an organization can raise levels of employee satisfaction, customer satisfaction will rise as well.

In a 2000 study in The Journal for Quality and Participation, researcher Randy Brooks reported on the relationship between financial success, customer satisfaction, and employee satisfaction. He found that “depending on market segment and industry, between 40 and 80 percent of customer satisfaction and customer loyalty was accounted for by the relationship between employee attitudes and customer-related variables.”

How do you get employees to treat your customers better?

In my work with clients, I’m reminded of this phenomenon nearly every week, especially when I work with companies with low Net Promoter Scores (NPS). Company leaders want to understand and address customer dissatisfaction, but they often look for answers in all the wrong places. They command their employees to better serve customers — “Return every phone call within two hours!” “Smile more!” “The customer is always right!” — but they are overlooking the most critical link to a better customer experience.

All too often, these low-scoring companies are plagued with higher turnover, morale problems, and other symptoms of worker discontent. Conversely, client companies with high NPS have engaged and motivated workforces. See the connection?

Example 1: flying the happy skies

Consider the airline industry. If you’ve ever flown Southwest, you’ve undoubtedly encountered employees that genuinely enjoy their jobs. They smile, often crack a witty joke, and generally try to make guests feel welcome. Compare that experience with flying United, American, or one of the other long-standing carriers who don’t appear to make employee satisfaction an integral part of their business strategy. Employees at these other airlines seem to be going through the motions, performing perfunctory pleasantries because that’s how they’ve been trained. But it may not be how they truly feel as employees representing their company.

How is it that Southwest enjoys such a wonderful and widespread reputation and others do not? Look at what’s happening behind the scenes. Southwest employees are known to be treated well by their company while competing carriers like United or American have a history of contentiousness, cutbacks, and forced concessions with their workforce. Ask yourself where you’d rather work!

Example 2: steeling for a slowdown

Another great example of the “employee first” ethos is Nucor Steel, a leader in the U.S. steel industry. Nucor has an industry-leading NPS score driven largely by providing incredible customer service. They also have a distinguished track record of taking care of their employees.

In the recent economic downturn, when construction halted and demand for steel plummeted, Nucor never laid off a single employee because of their pay-for-performance practice. Sure, their employees felt the same pain that anyone would feel during tough economic times — lower wages, fewer hours — but Nucor employees kept their jobs and benefits while Nucor addressed other internal needs such as training, landscaping, and building maintenance.

The impact was universal. Nucor employees who were surveyed all agreed that a workplace where everyone is treated equally, and where safety comes first, is key. Dedication, teamwork, and job security were critical to maintaining both employee and customer satisfaction.

Nucor even warned Wall Street that earnings would take a short-term hit because of their absolute commitment to avoiding layoffs.

How can you make meaningful improvements?

First, ask yourself two basic questions: Does your company conduct employee engagement surveys? (Probably yes.) Does your company apply as much zeal to improve those scores as your NPS rating? (Probably not.) You must apply as much effort to raising employee satisfaction as you do with customer satisfaction.

If your company runs employee engagement surveys, be sure to communicate the results to your employees! And be brutally honest. Employees need to feel like they’ve been heard — and that their thoughts and feelings are valued. Don’t hold anything back, or your employees will surely scatter into smaller groups behind closed doors to continue venting their frustration or disappointment.

Commit to making your company a better place to work. Respond to your employees’ top complaints with actions that are both concrete and highly visible — not just feel-good talk. Enforce accountability with both follow-up employee surveys and management incentives directly linked to improved scores.

Yes, it may be that simple

Sound intuitive? Maybe even obvious? Even so, few low-scoring NPS companies seem to understand the importance of acting decisively to improve employee happiness. Skipping this critical step undermines a company’s effort to raise customer NPS scores — which in turn stifles revenue gains and market share increases.

Treat your employee like you’d like to be treated. It is, after all, the Golden Rule.

Take better care of employees. Customer satisfaction will follow.