Engaged Employees and Customer Loyalty
How does employee engagement relate to customer loyalty? Customer loyalty focuses on attracting customers to a business who continue to return to the business to buy more often and in larger quantities. Loyal customers also promote businesses to their friends and associates, which generates more revenue for the business. Because customer loyalty leads to increased revenues, it is a concept that is given the highest priority by businesses. In fact, many articles, books and training programs are geared toward teaching businesses how to increase customer loyalty. While many of these materials may focus on customer participation in the company or customer reward programs, employee engagement is just as important to creating a loyal customer base.
A positive experience with a company will cause a customer to return. However, a positive experience is not limited to competitive prices and product quality. Employees, the face of the company, play just as an important role in the customer experience. An engaged employee will spend more time determining and assessing a customer's needs and satisfying that customer. A satisfied customer is more likely to return to that business and to recommend that business to friends and family. In contrast, an actively disengaged employee may display a negative attitude toward the customer, disregard the customer's needs and create an overall negative experience for that customer. This negative experience may cause the customer to take his or her business elsewhere. The dissatisfied customer may also actively discourage others from doing business with that company, whether by word of mouth with family and friends or through social media.
Negative reviews by dissatisfied customers significantly affects a company's growth. Bain & Company conducted a survey that calculated the economics of Dell's relationship with its customers. The survey estimated that negative comments about Dell cost the company approximately $68 million in 2003. The survey also found that, on average, it took five positive comments about the company to neutralize one negative comment. While the sources of customer dissatisfaction and the negative comments are unclear, Dell may have saved money in 2003 if it had focused more on employee engagement.