Overview

The authors believe that employee morale is a very important determinant of customer satisfaction. Satisfied employees have such positive energy and willingness to give good service that customers at least perceive they are getting a better product or service, and in turn become much more satisfied and loyal to the company. 'There is considerable evidence demonstrating that customer loyalty is a leading predictor of financial results, and employee satisfaction is predictive of customer loyalty.' ^[1]

People are an integral part of CRM. However, unless the employee is trained and empowered to manage customers within an organizational structure that is customer focused and flexible, CRM implementation will suffer. Employees need to work at the levels of their abilities and have responsibilities commensurate with these if they are not to feel under-utilized, which can lead to dissatisfaction. 'Staff members who manage customers are usually capable of much more than they are asked to do. That is why policies that empower your staff to manage customers better work so well.' ^[2]

Satisfied employees tend to stay with the company longer and so give a higher return on the investment the company makes in them (for example via training and benefits). Employees with morale problems tend to be inwardly focused and more concerned with internal company processes and procedures (and issues) than the customer. This can lead to a vicious circle of reduced customer satisfaction and profits, further reducing morale amongst employees, as this leads to increased probability of redundancy. Fear of redundancy can by itself lead to higher employee attrition. Reichheld states that his studies 'show quite clearly that keeping good people longer can have a substantial economic impact on the firm', and 'a layoff rarely exhilarates employees. What it does do is stifle creativity, discourage risk-taking, and destroy loyalty. The fear that goes with a layoff soaks up energy and draws people's attention to their own safety and careers, away from the success of the enterprise.' ^[3]

Defining business vision (what the organization should look like in three to five years' time), and creating goals and critical success factors (the things the organization must do this year) that will help achieve the vision, are fundamental to developing loyalty. Capturing the voice of the customer is also critical. Unless these actions are done and communicated to employees, the organization will have an uphill struggle to retain loyal customers and employees. Many organizations have vision statements, but employees do not have a clue what they mean. No one has taken the trouble to explain the vision statement to them.

A solid approach to managing loyalty of staff and customers requires an understanding of:

• the need for a business vision with the voice of the customer aligned;

• who customers are;

• which are high and low-value customers;

• the target markets the organization wishes to serve;

• customers' basic requirements from the organization as a supplier;

• the things customers value;

• how that value can be made a reality (ideal value) that will keep them loyal;

• the things that the organization does well and the things it could do better;

• who does it better than the organization;

• how it could attract new customers.

If an organization does not know who its customers are or has done little in the way of segmentation, then it has little chance of finding out the basic requirements of its customers. If this work is done and customers are prioritized, then the organization can create the capabilities, processes and enabling infrastructure to ensure it delivers basic requirements for customers. Why is segmentation so important? Without segmentation, differences in customer needs might never be recognized. One runs the risk of guessing and getting it wrong.

Customer loyalty often results from how the customer is treated in a given situation, that is, 'moments of truth'. A simple rule is always to treat others as you would want to be treated yourself, or 'good manners'. It is through this principle that people who are empowered to act can generate customer loyalty and reinforce their own sense of being valued, as well as reinforcing their loyalty to their own organization. Each 'moment of truth' is an opportunity for a supplier to add value to the interaction between customer and supplier or to create a 'point of pain'. If that 'point of pain' relates to a basic need of the customer, then the chances are that he or she will leave and go elsewhere, which is why it is important to understand the 'moments of truth' between customer and supplier and then test these with the target customers to understand their wants and needs at that moment.

Many of those who work longer hours just to get through their workload are experiencing the breakdown of family life. Many of the workers are white collar/management, and also a growing percentage of women are among them. This trend is visible in many public sector organizations and call centres, which is ironic as CRM uses such call centres to get closer to the customer. According to one call centre worker, 'you take call, after call, after call for seven hours or more. You can get very tired at the end of a shift, uncomfortably tired.... It can be very stressful - dealing with customers who aren't very happy ... companies should spend as much as they can to make sure they have happy, productive call centre staff.' ^[4] Problems such as these are likely to have an adverse effect on the customers the staff are dealing with.

Employees need to be shown that their organization values them and their contribution to customer loyalty. If customer loyalty is important to an organization then it must be made important for employees. Some organizations are product-driven, measuring customer satisfaction once a year, offering no specific customer training to their employees, and then telling shareholders that they are 'customer driven'! Good customer-focused organizations motivate employees to offer good service, perhaps having a reward programme to recognize good service. They ensure that customer service and satisfaction are part of their appraisal system. Complaints will be seen as an opportunity to improve customer satisfaction and add value. Customer comments will be communicated to staff regularly. There will be a process to survey customers often and also to understand the wants and needs of customers. Education and training will focus on customer service.

Many organizations today employ third parties to handle their call centres, reception and security: the three most critical areas of entry into an organization by a customer or prospective customer. How many of these people are trained by the company they are contracted to about the organization's customer service needs? A service-level agreement is simply not good enough to ensure quality. When customers call or turn up at reception looking for someone, they expect professional assistance. They do not differentiate between the company they are calling and the third-party supplier of the telephonist or receptionist. As far as customers are concerned, they have basic needs. If these are not fulfilled, they will go elsewhere.

• Sears implemented a set of total performance indicators using the 'soft' measures of employee satisfaction and customer loyalty to create a linkage that makes it possible to estimate their impact on the company's financial performance and set targets for employee and customer satisfaction. 'Every five point increase in [employee] satisfaction is related to a 1.7 per cent increase in customer loyalty which in turn is associated with a 3.4 per cent increase in earnings'. ^[5]

• Southwest Airlines in the United States has carved a successful niche as a low-cost, no-frills airline, taking pride in giving customers what they want. Similarly it has a commitment to its employees as it 'believe[s] that relaxed and secure employees will act on their own to take good care of customers'. This resulted in the lowest employee turnover in the industry and a consistent return on investment of 15 per cent over 27 years. (These figures were issued before increased competition in the low cost airline industry and also the atrocities of 11 September 2001.) ^[6]