Employee Loyalty Research
By John Hennessy
According to research by author and entrepreneur Dianne Durkin, spending the time and resources to cultivate employee loyalty can mean a big difference to the long-term health and profitability of any company. An employee that believes in the worth of the company he or she represents will be more likely to communicate that belief down the line to the most important part of the equation: the customer.
In her book The Loyalty Advantage: Essential Steps to Energize Your Company, Your Customers, Your Brand (AMACOM, 2004), Ms. Durkin offers the following.
- Employee loyalty drives customer loyalty, which drives brand loyalty.
- If you haven’t thought about quantifying the effect of loyalty, you’re not alone. But companies on the leading edge of loyalty know that it has a long-term impact on a wide range of factors, including a company’s reputation, productivity, and profitability; customer loyalty and long-term value; brand development; and business growth.
- Christine Wright-Isak, Ph.D., president of Northlight Marketing, Inc., a research firm specializing in business sociology, says, “Loyalty is something that comes over and above compensation. The company culture has to consider some intangibles, for instance, the common human need to feel valued.”
- Why do customers make the choices they do? Customers come to your company because they hope to find a product or service that they need—even if sometimes they don’t know what they need until they find it. That belief – that your company can fulfill these spoken or unspoken needs – is often directly related to the attitudes and beliefs of your employees. A knowledgeable, enthusiastic employee can often turn even a skeptic into a satisfied customer, one who has the potential not only to continue spending money with your company but to refer friends and colleagues who will do the same.
Moderator’s Comment: Which companies have a culture that cultivates employee loyalty and are they outperforming competitors that don’t?
Our office just cancelled service with a large office supply company. The simple reason – a grumpy person answered the phone and was abrupt with our office
manager regarding an order. That office supply company has everything we need, offers convenient delivery and is competitively priced, but we’re no longer a customer.
Fewer and fewer shoppers and companies are willing to give business to firms whose employees make it clear that it would all be better if customers would
just go away. All the loyalty benefits, store improvements and product innovation in the world are wasted if the front treats customers like the enemy.
Have a friend shop anonymously. Call your help desk. Phone in a complaint. Write your company. And do it regularly. Your initiatives might be faltering
due to incidents of poor employee loyalty and not the merits of any program. If that’s the case, put those programs on hold and focus on improving your employee loyalty.
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John Hennessy – Moderator
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11 Comments on "Employee Loyalty Research"
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I’m confused! If one of your employees treats a customer rudely, that’s not a lack of “employee loyalty,” it’s just a poor job performance. That has little or nothing to do with employee loyalty.
Employee loyalty should be seen as a separate issue. It answers questions such as: How do your employees really see your firm’s products and services? Do they buy, use, and talk positively about your products/services when they’re not on the job?
The concepts might be connected — I have no problem believing that employees with high loyalty will tend to be better workers — but they are still distinct. Hidden shopper tactics, for instance, are a fine way to gauge performance, but they won’t reveal much about employee loyalty per se.
I think the term “loyalty” to describe customers or employees is inappropriate. In fact, the opposite may be true. Companies need to be loyal to their customers and employees. How? By delivering on their promises to these two groups. If companies are faithful to their promises, then customers will return and employees will perform as expected. If you are looking for loyalty in life, get a dog. People should be loyal to their family or their country. Loyalty to a brand or to a company makes no sense.
However, there are some companies doing a good job of training and involving their employees so they are better prepared to delight their customers. These include Ritz Carlton, USAA, FedEx, Starbucks, and Wegmans. The secret is to invest in your employees. Wishes alone won’t work. The above companies recognize that customer service can be a key differentiating factor and have invested accordingly.
I think Mark’s comment, above, nails the issue. Does a company pay more attention to the condition of its inventory than the state of its employees — or, worse yet, treat its employees as if they were inventory, just a collection of interchangeable parts?
More than ten years ago, a book was published with the title, “The Customer Comes Second,” making the point that if you treat your employees badly, how can you possibly expect employees to treat customers well?
Working in hospitality, I find that so many companies, albeit independents, illustrate the point. I especially find this interesting, since employees in foodservice e.g., have the most intimate contact with guests, and should be part of the feedback loop for continuous process improvement.
Seems like a no-brainer to me.