Satisfied Customers Are Not Enough: How to Build Real Loyalty
An Interview with Michael Lowenstein of Harris Interactive Loyalty. Originally published April 2008.
Michael Lowenstein, VP and senior consultant at Harris Interactive Loyalty, has made some groundbreaking discoveries concerning the links among customer experience, customer satisfaction, and customer loyalty, one of which is this: Positive customer experience with employees at your company has a far greater impact on loyalty than does satisfaction with a product or service. Indeed, he has shown that 70 percent of customer behavior is driven not by product quality or efficiency of delivery or advertising, but instead by interactions with your people.
Central to Lowenstein’s approach to improving customer loyalty behavior is his concept of “employee ambassadorship” aimed at promoting “customer advocacy.” If you don’t think loyalty matters, consider this: A 2 percent increase in loyalty can generate as much revenue as can a 10 percent decrease in product and service costs.
“You cannot create, or sustain, customer loyalty without committed employees,” says Lowenstein. More than commitment to the company or the brand, more than commitment to productivity or innovation or even the organization itself, he is talking about commitment to the customer. “The key is to focus on developing and supporting employees so that they, in turn, focus on the customer. Ideally, you want every employee to be an ambassador.”
What is “employee ambassadorship”? As Lowenstein describes it, “employee ambassadorship” is a framework for linking employee commitment to business results by emphasizing the need for the entire organization to “create unique, value-add customer experiences.” As he puts it, “Optimizing customer experience is everybody’s job.”
The focus on customer experience inherent to employee ambassadorship reflects Lowenstein’s thoughts on “value.” “Value has two components: a rational, functional side and an emotional, relationship side. Most companies focus on optimizing the functional side through quality management and process improvement.
“While things like that can be important when it comes to meeting customers’ basic expectations, they often aren’t particularly differentiating and they don’t drive long-term customer trust and customer loyalty. The latter are more frequently engendered by the emotional connection with the company, which in turn is fostered by the attitudes and actions of employees toward the customers.”
While “loyalty” is generally a term associated with marketing, organizational behavior and employee development are not. Accordingly, the impetus for change usually comes from outside marketing. “The move toward commitment and ambassadorship is generally driven by senior executives, though, of course, they can’t do it alone. A traditionally successful partnership will consist of senior leadership working in concert with market research and human resources.
“Market research provides the data and the insights. The biggest impact this has rests in demonstrating the difference between internal perception of value and external perception. Service managers and representatives, salespeople, and other employees are often out of sync with customers in terms of perceived value of services, products, and features.
“One way to uncover just how out of sync people are is to ‘mirror’ customer surveys. For example, ask representatives from the organization to answer questions posed to customers as they believe the customers themselves would answer them. Conducting this kind of research will quickly uncover the gaps in perception and help highlight the need for change.
“For their part, HR can help institutionalize and formalize; they can help cascade this out to the rest of the organization. You want and need their help, but you also need to make sure that you are building in redundancies and diagnostics so that they feel comfortable.
“Senior management needs to get everyone marching behind the banner of ‘optimizing the customer experience.’ They need to state and restate this again and again. Before they do that, of course, they have to accept that organizational focus is the problem. And that can be a real challenge.
“I’ve been sitting with managers during focus groups, and when they hear what the customers are saying about them, their employees, and their business, I’ve seen armed insurrection break out behind the glass. The managers refuse to believe what they are hearing, but the fact that they don’t get what the customer gets is the real lesson. They are in denial, and they are usually very much mistaken. They don’t get that what matters to the customer is the emotional, relationship side of the value association.”
Lowenstein asks, “Who in the organization doesn’t own the relationship with the customer, either directly or indirectly?” Recalling the work of W. Edwards Deming, he asserts that everyone in the organization is “either serving the customer or supporting someone who does.” This means that the ideal of ambassadorship needs to permeate the entire company.
Unfortunately, this is rarely the case. Instead, many companies find that about 10 percent of their staff exhibit ambassador qualities, 15 percent may be actively sabotaging the customer relationship, and the remaining 75 percent are neither saboteurs nor ambassadors. “You need to do some analysis to find out where there is overlap between the ambassadorial elite and the rank and file. What is dragging them down, and what are they already doing that just needs to be encouraged?
“At one client, we determined that about 10 to 15 percent of their staff fell into the saboteur category. They asked, ‘Should we fire them?’ Our answer was, ‘No.’ They had a systemic problem in terms of organizational focus that needed to be addressed. Unless you change what you care about, what you emphasize, the problem will just repeat itself.”
Says Lowenstein, “The real question is this: Do you want everyone to be like the ambassadors and are you willing to do what it takes to get them there?”