INSPIRING EMPLOYEE PASSION TO DRIVE CUSTOMER RETENTION By Sarah Brennan, Principal Advisor, Accelir

SARAH BRENNANSarah Brennan is the founder and Principal Advisor

at Accelir – a Strategic Growth Advisory Firm which

works with companies and technologies wanting to

accelerate growth through innovative talent acquisi-

tion, technology and market strategies. Prior to

launching her firm, she served in leadership roles in

corporate recruiting, business strategy consulting

and as a C-Level Executive at a SaaS technology.

With more than a decade dedicated to research-

ing, developing and executing strategies related to

growth and hiring, Sarah is a sought-after writer,

speaker, trainer and consultant. She has been

featured in national media such as Huffington

Post, Fast Company, NBC News, US World Report,

Bloomberg, Wall Street Journal, USA Today, FOX,

ABC and has spoken globally at events like SXSW,

Mashable, HR Tech Conference, HR Tech Europe,

iRecruit Global, SHRM, TRU, etc on brand strategies,

technology trends and talent-related topics.

Sarah Brennan is founder of HRTechBlog, co-founder

of the WomenofHR blog, a GigaOm.com contributing

analyst and advisor to a number of start ups.

Have you ever considered how much stronger your business would be if all of your employees enjoyed coming to work each day? Would your customers notice the difference?

For a small handful of companies, this is reality. For most, however, it’s an almost-laughable concept. After all, it can be hard to focus on employee engagement and morale when customers are departing or sales are falling.

But that’s the most important time to do so.

Companies that recognize the intersection between employee engagement and customer retention can shift their approach to inspiring passion in their workforce and achieving a level of engagement that directly impacts customer retention—and the bottom line.

Before we discuss how to increase employee engagement and, in turn, customer retention, let’s look at passion from its core.

What Makes People Passionate?Think about the last time you felt passionate. When our researchers at Accelir asked three, diverse sample groups of HR leaders what they’re passionate about, answers varied from their children and pets to hobbies and professional sports teams.

Only one person mentioned a job.

There’s an all-too-apparent disconnect between where we spend most of our waking hours (work) and what we feel most passionate about (everything else). Low engagement in the workplace is a global problem—only 13% of workers across 142 countries are engaged at work1. Meanwhile, companies spend significant time and money on employee engagement programs and practices. And when employee passion fails to surface, companies keep spending. Some even try motivating employees by way of financial means.

But more money in doesn’t always equal more passion out.

In fact, few passions that were mentioned throughout the groups we surveyed actually involved any type of monetary compensation or reward for completion. That’s because the roots of passion go much deeper than just money.

Consider the popular Motivation Theory, first presented by Abraham Maslow more than seven decades ago. This theory includes five levels of motivation, from basic needs to self-actualization, with each level of the virtual pyramid needing to be satisfied before moving onto the next. We are each impacted by the pyramid every day; yet, when companies look to motivate employees, they seem to skip right over it.

1. 2013 State of Global Workforce Research; http://www.gallup.com/services/178517/state-global-workplace.aspx

Society may have changed, but what motivates us hasn’t. Once our basic-level needs are met (compensation to cover living expenses, safety, job security, etc.), what really motivates us, according to Maslow, boils down to love/belonging, esteem, and self-actualization.

With less than 5% of the population ever reaching the pyramid’s top level (self-actualization), a company looking to nurture passionate employees should focus on the need to belong and the need for esteem2. Belonging is driven by an employee’s inclusion in a team or culture, as well as an understanding of how individual contributions impact the organization’s big picture. As employees are acknowledged or rewarded for their role in the company’s success, esteem increases. Think about how great sports fans feel after a winning team acknowledges the fans’ unyielding passion and support, or how wide you smile when your dog wags its tail feverishly in appreciation of your love and care.

Fostering Passion & Engagement in PracticeAlthough frequently discussed throughout most organizations, employee engagement has traditionally been siloed in talent management. However, companies with passionate workforces understand that employee engagement should be firmly ingrained in the company’s culture, permeating all facets of the organization.

RecruitingAny effective engagement strategy begins with the hiring process. Sourcing, recruiting, hiring, and onboarding people who will not only excel in their jobs, but will also bring positive energy and attitude to your company, is key to fostering passion in your workforce.

OnboardingEngaging employees throughout onboarding is crucial for long-term success. New research on today’s multigenerational workforce shows one third of new hires decide whether to stay or leave a company within the very first week—63% decide within the first month3. That means companies can’t just forget about employees after they arrive for their first day on the job. Engagement is an ongoing process.

Performance ManagementInstilling passion in your employees through performance management is two-pronged. First, employees need to know the organization’s goals (only 40% report understanding them4) in order to see how their day-to-day contributions fit the overall mission. Then, managers have to look past the stagnant, once-a-year evaluation and, instead, implement appropriate channels for dynamic, collaborative conversations about employee progress throughout the year.

As employees learn how their actions and accomplishments personally impact the company, their sense of belonging and feelings of esteem will grow. Not only will this newfound engagement benefit your employees, it will also help your bottom line.

2. This assumes you are compensating with a competitive wage and the employees need for food, shelter and safety are addressed first. 3. http://www.ultimatesoftware.com/Contact/hr-whitepaper-is-there-really-a-generational-divide-at-work4. http://www.bain.com/Images/BAIN_BRIEF_Who’s_responsible_for_employee_engagement.pdf

Business Impact of Passionate, Engaged WorkersCompanies spend an estimated $720 billion on employee engagement each year5, and for good reason. Highly engaged employees are 87% less likely to leave their companies than their disengaged counterparts6, while turnover costs companies as much as $11 billion a year in the U.S. market alone7. But engagement isn’t only about saving money. Companies that increase employee engagement stand to earn more money through greater customer retention.

The Financial Impact of Customer RetentionThe consumeristic approach to product selection has crossed almost all boundaries over the last decade, thanks to the rise in mobile technology. Never before have we had so much access to what we wanted, and from so many different sources. Although this shift means there’s much less brand loyalty among consumers, it also means greater opportunity for more companies. To put that in numbers: there’s $1.6 trillion in potential sales available, simply due to consumers switching brands—up 29% since 20108.

Fully engaged customers spend 23% more on average, while unhappy or disengaged customers actually have a -13% return, compared with your average customer9. This is primarily through unhappy customers’ negative reviews and referrals about their experience with the brand. Those same engaged customers are also six times more likely than a new customer to try a new service, product, or offering from your company as soon as it becomes available10.

Retaining happy customers has a clear impact on the bottom line. Nearly one third of corporate executives, however, admit they struggle with customer retention. Even after creating discount programs and reducing the prices of products11, organizations don’t see improvement. But, much like with developing passions, customer retention isn’t always about money.

The best way to retain your customers is to engage your employees.

The Intersection between Employee Engagement & Customer RetentionMore than three quarters (76%) of consumers view the customer experience as the “true test” of how much a brand values them12. Unresolved (or under-resolved) customer service failures result in losses of 65% of revenue from that customer over the coming year. Moreover, a “major” failure will cause the majority of consumers to not only stop buying, but also publicly discourage others from working with you or buying your product, simply by sharing their experiences via online channels13.

The truth is, an unhappy or disengaged employee interacting with a customer can often influence that very customer more than the company’s executives and marketing department combined. Fortunately, the revenues for companies with highly engaged workers are two-and-a-half times higher than their competitors with low engagement level14. Focusing on effective employee engagement and building passionate workers is more vital than ever.

5. https://hbr.org/2015/01/employee-engagement-depends-on-what-happens-outside-of-the-office6. https://www.kpmg.com/US/en/IssuesAndInsights/ArticlesPublications/Documents/real-value-of-engaged-employees.pdf7. http://www.bna.com/search/detail?q=turnover8. https://www.accenture.com/us-en/insight-digital-improve-customer-experience9. https://www.capgemini-consulting.com/reinventing-loyalty-programs10. http://www.rosetta.com/reports/customer-engagement-rosetta-consulting-study/customer-engagement-from-the-consumers-perspective/11. http://www.harrisinteractive.com/Products/ExecutiveOmnibus.aspx12. http://www.aspect.com/uk/company/news-and-events/press-releases/customer-serve-thy-self-new-study-reveals-millennials-desire-for-self- service-digital-interaction-to-change-customer-service-forever13. http://www.sdl.com/ilp/cxc/rules-of-customer-experience.html14. http://www.haygroup.com/fortune/downloads/2012-FORTUNE-Lighting-the-path-to-success.pdf

Five Steps to Creating a Culture for Customer & Employee EngagementWhat can you start doing right now to address engagement challenges within your organization? Here are five easy steps you can take to create a culture that encourages employee and customer engagement.

1. Broaden the definition of customer service. It’s easy for those not in an official “customer service” role to forget that any interaction they have with someone inside or outside the organization can impact that person’s view of the company. But all employees play a role, whether direct or indirect, in shaping customers’ and employees’ opinions of the company. It’s important for all employees to recognize how much their actions and attitudes matter.

2. Benchmark internally. Track your success off of your own growth with best practice goals in mind. Setting up measurable metrics will help you see the small increases and remind your employees about the wins as your organization works towards its strategic, long-term goals.

3. Have realistic expectations of your staff. Just as you aren’t expected to be perfect, recognize others will make mistakes, too. Emotions can run high when dealing with a frustrated customer, especially when times aren’t going well for an employee outside of the workplace (think back to Maslow’s basic need for security). Try to keep a balanced perspective and approach.

4. Take a look at leaders. Managers account for 70% of the variance in employee engagement scores across business units. If one area seems to be struggling with turnover, responsiveness, or customer support, look at that department’s manager/supervisor and take a top-down vs. bottom-up approach15. Almost 80% of senior managers lack passion in their work, and that gets passed onto their team.

5. Build a strategy. While 90% of leaders think an engagement strategy will have an impact on business, only 25% actually have a strategy16. Build out an effective plan by creating your baselines from which to measure improvement. Surveys, feedback, and performance scores are excellent starting points. Then create, implement, and communicate changes, remembering to start small.

Turning a Dream into a RealityDefining a brand, building a company, rewarding and recognizing employees, and making customers feel valued in the process are all tall orders for any company—but they’re all critical for achieving success.

Inspiring passion in your employees to drive customer retention doesn’t have to be a dream for your company. By engaging your employees in ways that show you truly care about their needs and esteem, instilling a sense of belonging throughout your organization, and following the points outlined in the preceding guide, you can turn an elusive notion into a rewarding reality.

15. http://www.gallup.com/businessjournal/182792/managers-account-variance-employee-engagement.aspx16. http://www.dalecarnegie.com/assets/1/7/Building_a_Culture-_The_Importance_of_Senior_Leadership.pdf

Licensed for distribution to Ultimate Software Accelir Copyright 2015