Employee Ambassadorship Profitably Linking Exec Brief

Profitably Linking Employee Behavior to
Customer Loyalty: Driving Customer
Commitment Through Employee Attitudes
and Actions
Abstract
Everyone knows the classic questions: Which came first, cowboys or saloons? Chickens or eggs? While these
may be ongoing questions in cultural anthropology or biology, the role of employees in impacting customer
loyalty behavior is far simpler to understand. In order to truly have customer commitment and advocacy
behavior, a company’s employees must understand their role as customer experience stakeholders and live
that role as value delivery agents and supplier ambassadors. Author
Just as with Customers, Employee The role of people...why they Michael Lowenstein, PhD, CMC
Satisfaction is Almost Irrelevant can be so critically important. Vice President and Senior Consultant
Harris Interactive Loyalty
Employees are key stakeholders in value delivery
Princeton, New Jersey
and brand/supplier success, and they frequently
represent the difference between positive experi-
ences or negative experiences and whether cus- ...of customer
...of customers brand percep-
tomers stay or go. leave because tion is deter-
of poor mined by expe-
While the extent of their role and impact needs employee riences with
attitude. people.
to be better understood, employee satisfaction ...of customers
are loyal
research isn’t the best way to do it. Why not? because of
Industrial psychologists and organizational good employee
attitude.
behaviorists have been studying employee satis-
faction for over 30 years, assuming that the level Source: Parkington and Source: MCA Brand Source: Ken Irons, Market
Buxton, Study of the US Ambassador Benchmark Leader
of staff satisfaction correlates with impact on per- Banking Sector, Journal
formance. However, as one study concluded: of Applied Psychology

“Researchers have been unable to confirm a rela-
UK retailer: 1% increase in employee
tionship between employee satisfaction and busi-
commitment = 9% increase in monthly
ness performance.” This is almost identical to the
sales. Enterprise IG
finding that the level of positive customer satis-
faction has relatively little bearing on loyalty Study findings such as this demonstrate that
behavior. (Conversely, transactional dissatisfac- employees are capable of directly contributing to
tion can – and often does – undermine customer both customer disappointment and customer
loyalty and advocacy.) delight. Beyond simply understanding employee
satisfaction and what employees value and desire
It has been found that employee commitment in their jobs, it is essential that companies have a
and advocacy behavior has a direct and profound method which definitively connects staff per-
relationship to the behavior of customers, and formance and engagement directly to customer
also to corporate sales and profitability. As exten- marketplace behavior. This allows them to hire,
sive academic and professional research into this train, recognize and reward employees appropri-
effect concludes with regularity, employee atti- ately based on their contributions to customer value.
tudes and actions can’t be separated from the
effective delivery of customer value.

www.harrisinteractive.com 877.919.4765 ©2008, Harris Interactive Inc. All rights reserved.
Other product and/or company names used herein are trademarks of their respective owners. EOE M/F/D/V 03.08

2
HARRIS INTERACTIVE EXECUTIVE BRIEF Linking Employee Behavior to Customer Loyalty

Linkages Between Employee Attitudes & Actions and express their commitment to a supplier can range from strongly
Customer Behavior positive (advocates) to strongly negative (saboteurs). Employees
As shown above there is a powerful relationship between employee can significantly impact customer commitment behavior toward
commitment – to the company, to the brand value proposition, to their employer through a range of attitudes and actions on behalf of
the customer – and their employers’ actual business performance the brand, company and customer. As it is with customers, these
metrics. Northwestern University, for instance, conducted a hotel attitudes and actions range from highly positive to highly negative.
chain study which showed that, for ‘The extent to which employees
try to satisfy customers,’ a 10% increase in this factor resulted in a Our research framework for identifying this is Employee
22% increase in customer spending per hotel visit. In the 1990s, Ambassadorship. Its intent is to define the most active level of
Sears conducted a study in 800 stores which showed that a 5 per- employee commitment to the company’s value promise, to the
cent documented improvement in employee attitudes toward their company itself, and to optimizing the customer experience. It is
jobs and commitment to the company directly resulted in a 1.3% linked to – but distinctive from – the productivity and empower-
increase in customer perceptions toward the retailer and, in turn, a ment elements of employee satisfaction, engagement, and align-
.5% increase year-over-year in revenue. Research by the Royal Bank ment research. With ambassadorship the emphasis is on strengthen-
of Canada determined that the level of employee commitment ing bonds with customers, and creating positive transactional and
accounts for 60% to 80% of bank customer satisfaction, and that long-term customer experience through employee interaction.
40% of the difference in how customers view RBC’s services can be
We most typically concentrate on what drives active, positive, vocal
linked directly to their relationship with bank staff.
commitment – in other words, ambassadorship. However, it is at
Yet when considering and measuring the pivotal elements of staff least equally important to identify where employee indifference and
performance and productivity, most companies are primarily negativism – potentially leading to sabotage attitudes and actions –
focused on employee attitudes around satisfaction, company loyalty, exist, why they exist, and how they can be mitigated or eliminated.
alignment with goals and objectives (such as corporate citizenship),
“Branches” of employee research, now including Employee
and levels of engagement. These are important, to be sure (and, in
Ambassadorship, can be illustrated as follows:
fact, Harris Interactive conducts a great deal of this type of employ-
ee research); but historically they only superficially and incidentally Employee Research Techniques
correlate what employees think and do to customer behavior.
Employee
Employee Ambassadorship: Measuring the Effect of Attitudes and
Employee Beliefs and Behavior on Customer Behaviors
Research
Experience and Commitment
Employee commitment and advocacy has become a major focus of
many organizations, as they have come to realize the financial and
cultural consequences of a workforce that is committed to the over-
arching goal of optimizing customer loyalty and advocacy behavior. Employee Employee Employee
Satisfaction, Engagement Commitment and
Most employee research has traditionally been conducted as a Values, and and Ambassadorship
means of identifying levels of staff satisfaction and performance, Loyalty Alignment (Advocacy)
perceived values, and engagement with company missions and cul-
ture. But there is also growing recognition of the need to relate
Like commitment for customers, advocacy is a fairly new term in
and link employee perceptions, beliefs and behaviors to company
understanding employee behavior, and there’s not a great deal of
missions and strategies. Until recently, very little employee research
academic literature on it (and none from professional employee
(qualitative or quantitative) has been conducted in these areas – nor
research sources). But it's quickly becoming more actively used.
had a proven technique been created.
The Employee Ambassadorship solution has been built to be con-
Harris Interactive Loyalty has developed a highly effective suite of sistent with the Harris Interactive Commitment Model, a revolu-
research techniques for understanding stakeholder behavior and tionary research technique that allows Harris Interactive to accu-
decision-making dynamics. For example, customers who actively rately predict loyal customer behavior. The solution also introduces

www.harrisinteractive.com 877.919.4765 ©2008, Harris Interactive Inc. All rights reserved. 03.08

3

categories of employee commitment, similar to those used in the Leveraging Employee Positivism
Commitment Model to describe customer commitment. Polar employee positivism is the essence of ambassadorship – and it is
absolutely critical for companies striving to be optimally customer-
At the high end of commitment are employee ambassadors. centric. Customer experience management processes can be tightly
Ambassadors represent employees who are strongly committed to managed, but executing and sustaining them is virtually impossible
the company’s brand promise, the organization itself, and its cus- without the genuine and enthusiastic support of employees. These
tomers. They actively behave and communicate in a consistently experiences, and resulting levels of customer loyalty behavior, are
positive manner about the company, both internally (to co-workers greatly influenced by employee interactions. For example, many
and customers) and externally (to family, friends, and others). studies have determined that customers who complain to an organi-
zation and have their complaints satisfactorily resolved tell an average
At the low end of commitment are employee saboteurs. Saboteurs
of 5 other people about the good treatment they received. If they
are active and frequently vocal detractors about the organization
receive poor treatment? They tell at least 20 people. Many of these
itself, its culture and policies, and its products and services. These
studies were conducted pre-Internet era, so the potential for negative
individuals are negative advocates, communicating their low opin-
informal communication (blogs, forums, chat rooms, online commu-
ions and unfavorable perspectives both to peers inside the company
nities, rating sites, etc.) is even stronger in today’s connected world.
and to customers and others outside the company.
Service studies have also shown that, of the customers who register a
With the introduction of Harris Interactive Loyalty’s Employee
complaint, between 54% and 70% will do business with the organi-
Ambassadorship solution, we felt that it was important to conduct
zation again if their complaints are resolved. This figure goes up to
‘research on research’ to gain insight into the levels of and contribu-
95% if the customers feel the complaints are resolved professionally,
tors to employee positivism and negativism. Accordingly, we com-
quickly and proactively, depending upon positive employee attitudes
pleted a pilot study on these subjects.
and actions as well as the systems in place to manage complaints.
The Roots of Employee Negativism
A short series of questions for full-time employees, 18 and over, was So, it is both culturally desirable and financially rewarding for organi-
included in the September 11-18, 2007 national Harris Poll ®. zations to foster employee positivism. On the topic of word-of-
These questions were answered, through an online questionnaire, mouth about their employer, our respondents tended to express posi-
by a total of 1,165 individuals. tives frequently, which is a very good outcome (for employers and
customers) to this research. Overall, 34% of the respondents said
One of our first objectives with these questions was to identify they frequently tell others how good their company is, and 48%
employees’ overall commitment level, loyalty, and impression about sometimes communicated positive messages. Within this positivism
the company and its perceived ability to earn customers’ trust and however, it should be noted that the lowest percentage of frequent
loyalty. This was accomplished through a series of four simple positive communication was by 18-24 year olds (24%), while the
agree-disagree statements. On two of the questions – ‘commitment highest was among those 65+ (43%).
to the organization’s success’ and ‘ability to earn customer trust and
loyalty’ – there was fairly high positivism. The two statements Finally, we asked respondents if they tell others how good the prod-
which addressed overall impression and loyalty, however, showed ucts or services of the company they work for are. Encouragingly, a
significantly greater negativity: total of 88% said they do (38% frequently and 50% sometimes).
Employers should be gratified by the marked proclivity of employees
to be positive and vocal about their products and/or services, com-
Not pared to the likelihood of being negative and vocal. Principally
Yes No Sure through HR, they will want to identify those opinions, actions and
I am very committed to the success characteristics of employees which are most positive and train
of my employer organization. 78% 12% 9%
employees to emulate the positive drivers.
We consistently earn our cus- 76% 12% 12%
tomers’ trust and loyalty.
I feel very loyal to the organization 70% 20% 10%
I currently work for.
I have a very positive impression 68% 22% 10%
about the organization I work for.


4

Employee Mirroring: Reflections of Perceptual Reality and In the example below, retail service staff had significantly different
Unreality Relative to Customers perceptions of performance than customers of a specialty store
Years ago, quality guru W. Edwards Deming said that each person chain, especially in need anticipation and making the customer feel
in a company has one of two functions: They either serve the cus- special, both key components of relationship and bond creation.
tomer or serve someone who does. So it’s clear that understanding Employees felt they were doing an excellent job. The reality, based
where perceptual gaps between employees and customers exist on the customers’ perspective, was far different.
should be of prime importance, especially to key groups such as
Human Resources in their efforts to optimize the effectiveness of Note: Mirroring studies can be conducted as part of Employee
employees in terms of productivity and delivering value to customers. Ambassadorship – where they add an important dimension to the
understanding of ambassadorship and sabotage behavior – or inde-
We’ve frequently found that customers consider the emotional, rela- pendently, concurrent with research into customer perceptions of
tionship-based aspects of value delivery – trust, communication, value.
interactive/collaborative components of service, anticipation of
needs, brand equity, etc. – much more important, and more lever- In another example, mirroring questions were included in both the
aging of behavior, than the functional aspects. Customers tend to guest satisfaction (a study conducted on behalf of a major Las Vegas
see the functional aspects of delivery as more basic and expected, in Hotel/Casino in June 2006) and employee satisfaction question-
other words one-dimensional and non-differentiating. naires. Overall results – namely those showing employees consis-
tently giving higher ratings (top two box on seven point scale) to
For key interaction and touchpoints between customers and suppli- performance attributes than guests – was concentrated among
ers, the level of true focus and centricity can be identified quite eas- employee ambassadors and minimized among employee saboteurs.
ily. We have long advocated including at least one cell of supplier
staff – from Field Sales, Marketing, and especially Customer Service
– in every customer loyalty study done for our clients. The results
are frequently eye-opening. We simply ask staff respondents to
answer the same questions asked of customers, in the way they
believe customers will rate and evaluate them as a supplier.

Measuring Specialty Retail Customer and Staff Alignment

Product, Service Interest in My Follow-Through on Responsiveness Makes Me Feel Part Anticipates My Inspires My Gets Answers
Knowledge Needs, Goals Problems of a Special Group Needs Trust Quickly
Based on % 6/7 performance ratings on a 7-point scale


5

The range of high scoring concentration was 71% to 84% of of new initiatives and changes on behalf of customers that may
employee ambassadors giving these scores, with only 5% to 15% of affect staff directly or indirectly.
employee saboteurs giving these scores. These results were consis-
tent across all attributes evaluated by both employees and guests. Studies have shown that customer support groups consider meeting
defined service levels their highest priority, while relatively few
Mirroring and Employee Ambassador Technique Beta identify generating revenue and optimizing customer retention as
Results – Example Commitment Diagnostics key goals. This often results in considerable disconnect within the
organization, especially when one group has a different set of cus-
tomer-related metrics, goals and objectives compared to another
Guests All Employees Ambassadors Saboteurs (e.g., Marketing vs. Customer Service).
90
When companies are innovative and inclusive with staff, all parties
80 benefit. The company gets more effective employees. Employees
70 like the participation and learning. Customers like the improved
60 processes and enhanced experience. Another key advantage of con-
50 ducting employee ‘mirror’ research is that, in all likelihood, com-
petitors don’t have this kind of insight. They’re hearing only from the
40
external constituent group – the customers – but not from the equally
30
important representatives and deliverers of value: Company employees.
20
10
The Net Effect of Employee Attitudes and Actions
Increasingly we are able to understand – and even predict – the
0
#1 #2 #3 #4 effect of employees as proactive company ambassadors and positive
agents (or also agents of supplier distrust and customer turnover, if
#1 Guests are committed to continuing their relationship with the hotel. the individual or longitudinal experiences have been poor) on cus-
#2 Guests would continue to stay at the hotel because of the fun and tomer commitment and advocacy behavior. This is a ‘holy grail’ for
fulfilling experience it provides. many organizations as they strive to leverage human capital to best effect.
#3 The hotel has the guests’ best interest at heart.
As Fortune magazine columnist Thomas Stewart said, “Human
#4 Guests feel they have a personal relationship with the hotel as
their LasVegas destination. beings want to pledge allegiance to something. The desire to belong
is a foundation value, underlying all others.” When that ‘some-
This suggests not only that employees had significantly different thing’ is the optimization of customer experience and loyalty
perceptions of performance compared to guests, but also that there behavior, coupled with the highest levels of employee participation
was a great deal of perceptual polarity among Las Vegas and investment in reaching that goal, everybody wins.
Hotel/Casino employees.

In case anyone should need more convincing of the benefits reaped
from interviewing staff to understand their perceptions of cus-
tomer-related performance, here are three key reasons why compa-
nies should want to make staff a part of every customer survey:

1. Including staff in customer loyalty research enables employees
to have a voice. This tells staff their opinions matter, which in
turn helps build trust between the company and staff.
2. Surveying staff enables management to learn about specific
process areas where there are disconnects between what staff
perceives and what customers perceive. These revelations can
open the door for needed process changes in how customers
are served.
3. Surveying staff helps pave the way for staff buy-in and support


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