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January 2010 individual

Staff Satisfaction - The Key to Customer Attraction and Retention

by Clive Hickman, European Insight Manager at SmartWorld

The Institute of Customer Service estimates that in 2009 some 30% of organisations cut back on their investment in customer service training. Perhaps more worrying was their finding that around 20% had actually gone as far as laying off some customer facing staff.

Under the current circumstances this may not be entirely surprising, but the question of whether this is a wise business decision is a tough one.

Certainly the money saved will be welcomed by accountants, and in the short term little 'damage' to the business is likely to visible. Income is unlikely to plummet and any short term declines can easily be put down to the strain of tough times.

However, there is growing evidence that where a business has a 'satisfied' staff they are far more likely to have 'satisfied' customers, who are generally accepted to be at the heart of any successful business. They will tend to spend more each time they visit, they will be more loyal, returning more frequently and most importantly they are the only people likely to recommend your business to a friend. Having a positive word-of-mouth on the street is something no amount of advertising spend can buy, even if you still had the budget!

But how do you harness the power of your staff?

The answer to that is going to be more complex than space here allows, and will of course vary for each business. However, what is common is the start point of identifying the way forward.

Most clients conduct Customer Satisfaction research, often through Mystery Shopping, and will also conduct Staff Satisfaction surveys.

However, these two key surveys are rarely, if ever, linked. Customer Satisfaction will be run by either Marketing or Operations, while Staff Satisfaction will be run by Human Resources. The two surveys will typically exist under different ownership with few, if any, common themes or questions, are often conducted at different times and are then inevitably circulated to different audiences.

Take a few moments to consider the following chart: (Fig 1) which plots the results of a recent Customer Satisfaction (MS Total Score) against Staff Satisfaction (SS Total Score) for the same period of time, September - November 2009.

The results are shown for 25 Area Managers each of whom are responsible 20-30 outlets and multi-million dollar revenue streams.

Fig 1. The Importance of Satisfied Staff


The chart clearly demonstrates that where there are high Staff Satisfaction scores there are also high Customer Satisfaction scores. Where there are low Staff Satisfaction scores, customers are also more likely to be less satisfied.

Identifying which of these managers has better revenues and profits brings the information into perspective and creates an invaluable framework which you can use across the business to drive improvements.

For instance, one concern must be what will happen to the 6 Area Managers in the top left box? Will their customers become less satisfied over the next 6 months as poor Staff Satisfaction takes its toll? Or can their Staff Satisfaction levels be addressed in time?

What is it about the staff in the bottom left box that makes them less satisfied than their counterparts? And what can be done about it?

The importance of having 'Satisfied Customers' is well accepted and can be readily quantified as the following chart (Fig 2) shows. Here, we looked at the Sales Growth for sites which achieved different levels in Customer Satisfaction.

The comparison of those sites scoring 90-100% and achieving some +7% Sales Growth compared to an 8% decline for those Scoring less than 60% is quite stark.

This chart also suggests that a relatively modest increase of 10% in site scores could see more than a $16m increase in sales.

Fig 2. The Value of Satisfied Customers


Of course this chart could just as easily have been put together looking at Staff Satisfaction and the effect on Sales Revenue Growth. However, Human Resources don't often share Staff Satisfaction results with Marketing departments in this way.

But together these two charts help us to understand just how fundamental staff can be to your business' success. We all know keeping a happy customer is much more cost effective and profitable than having to find a new one, and your staff are the key to achieving this.

Based upon this evidence the logical thing to do is to bring together both the Staff and Customer Satisfaction surveys and to treat them as two sides of the much talked about and highly valued customer/business interface.

SmartWorld believes that there is much to be learned from looking closely at the relationship between Staff and Customer Satisfaction. We are working with clients to harmonise and integrate their Staff Satisfaction and Customer Satisfaction programmes. This way we hope to provide a more complete solution, providing Staff Satisfaction and Customer Satisfaction in a linked fashion to provide a holistic business perspective, giving deeper and broader insights and increasing the value of both studies.

The results are clear. When your budgets are being squeezed don't automatically cut back on staff training, incentive and morale programmes to reduce costs. Instead try looking at them as an investment that will pay back through increased Customer Satisfaction, leading to higher spending, improved loyalty, and stronger revenue growth.