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03/04/2015

Measuring Common Sense: The Relationship Between Employee Engagement, Customer Satisfaction and Your Bottom Line

There is great wisdom in the clichÉ that a happy employee makes a happy customer. But a metric for that sweet spot — the nexus at which an employee's enthusiasm affects a customer's attitude in a way that leads to positive outcomes — has remained generally elusive. While employee engagement and customer satisfaction have been closely, yet separately, surveyed for years, the variables by which one would measure these two factors in relationship to each other have not been so easily quantifiable ? until now.

Over the course of fall 2014, Answers Corporation concurrently fielded two studies, one focusing on employees and the other on consumers. The first study offered a comprehensive examination of the employment experience of thousands of American workers across roles, ranks and industries, a subset of which focused on the workplace engagement of 500 retail store employees. The second study reviewed the experiences of 40,000 retail customers across multiple touch points, including brick-and-mortar stores.

Taking both data sets, Answers™ applied its proprietary cause-and-effect methodology, one that generates quantifiable experience data that can accurately and reliably predict future behaviors, to discover if there is a way to measure that intersection between employee engagement and customer satisfaction.

It turns out that not only is there a way to measure that convergence, but also that companies can leverage this groundbreaking set of analytics to drive higher employee engagement, improve relationships with customers and ultimately, increases sales.

Closing the distance between consumer and employee
In the study, Answers derived the numerical impact of employee engagement on customer satisfaction, thus offering quantifiable proof that employee engagement has a direct, positive effect on customer satisfaction. The positive slope in the graph below illustrates that dynamic for 25 of the top global retail brands.

Satisfaction is scored on a 100-point scale; 80 is generally considered the threshold for excellence at which an organization meets and exceeds employee or customer expectations. The top-performing retailers, Advance Auto Parts, Ann Taylor, Apple, Barnes & Noble, Costco, OfficeMax and Victoria's Secret, are poised to reap the greatest benefits for high marks in both areas. But who are their customers, and what are these retailers doing right?

A more sophisticated consumer
It is no secret that the web has revolutionized the consumer experience, which continues to transform with the proliferation of mobile platforms. Shoppers are increasingly comfortable with accessing multiple channels on their path to purchase. They research on their mobile device while browsing products in-store. They add an item in a mobile cart but finish the transaction on their desktop.

However, evolving customer habits are also creating gaps in customer satisfaction with retail experiences. For instance, a customer shopping online might choose the option to pick up a product in-store and consider that a great experience. But he or she might encounter problems with the pick-up process on premises, leading to a terrible in-store experience. This unbalanced scenario can have dire consequences on the customer's perception of the retailer, and worse, diminish the likelihood of repeat purchases.

Empowering the employee
In order to combat the disappointment a customer can feel in a brand in this increasingly sophisticated marketplace, retailers would certainly do well to educate their employees on the entire spectrum of the customer experience, not just how to get them through checkout and move on to the next customer.

But traditional training techniques are no longer enough. Even at the store level, it is important to make a meaningful connection between the parent company and the front-line employee. In its study of the American workplace, Answers found that one of the best ways to inspire workers is to make sure that executive leadership keeps the entire workforce -- across all levels and functions -- in the know about the company's health and vision for the future. The study also revealed that keeping employees challenged in their positions leads to increased engagement.

The clear path to sales
Having established the numerical correlation between employee engagement and customer satisfaction, the impact on behaviors such as "future purchase" or "recommend the retailer to others" can subsequently be calculated using predictive modeling.

For example, a mid-sized specialty retailer with 300 stores, a $30 average order value and about one million transactions per month can generate an annual revenue increase of three percent by prioritizing improvements to store employee engagement. In this hypothetical scenario, the increase in annual revenue turns out to be $10,800,000.

The most successful companies today are reaping the rewards of investing in their team members. According to the study, Apple has the highest levels of employee engagement as well as customer satisfaction. How do they take that to the next level to facilitate sales? In many different ways, but take this example, as elegant in its simplicity as the sleek design of an iPhone 6.

When a customer enters an Apple store, the staff identifies the Apple device he or she might be carrying and dispatches a company-certified "genius" with that same device to create an instant connection. Moreover, the clever strategy creates another connection between the customer and Apple itself because the employee — the genius — is a personification of the overall brand experience.

It is obviously important to Apple to deliver a premium, personal and slick experience no matter the channel, whether it's within their mobile operating system or their retail stores. These highly produced, thoughtfully executed environments make it very, very easy to purchase Apple products and services. Products that, in the face of much cheaper competition, continue to command considerable share of hearts and wallets. Apple's deliberate decision to cultivate store employees is a critical component in their success.

Everyone's a winner
The ability to definitively quantify the relationship between employees and customers represents an important step in enabling a data-driven approach to creating effective multichannel experiences. With this new statistical baseline, initiatives meant to increase the engagement of client-facing workers can now be correlated to sales with greater clarity, and employee-customer convergence can be studied, at scale, and predicted with accuracy. Retailers can use these new metrics to increase satisfaction for all involved and grow their profits in the process: a win-win for companies and consumers alike.


Eric Feinberg is the senior director of product strategy at Answers, the parent company of top-10 Internet property Answers.com and a  provider of cloud-based voice of customer solutions. He is elected board member of the Digital Analytics Association (DAA) and an adjunct professor of mobile marketing at the University of California, Irvine Extension.