There are two dynamics in this that make those companies successful:
First, they've found a way to connect their offering to improving people's lives.
Second, and perhaps most important, they've communicated this connection up, down and sideways throughout their organization, so that every employee acts it out in their jobs, every single day. That's called engagement and alignment, and companies that have it are successful in a lot of ways.
Let's go back to the first point - finding a way to connect their offering to improving people's lives...
Some products lend themselves to this "connection" more easily than others. For example, a hospital, or pharmaceutical company have obvious and direct connections to improving people's lives. But what if your product doesn't fall neatly within the spectrum of health care? What if you sell auto parts, or snack food? There's still a connection - you just have to find it.
One of the ways to finding it is to look for the positive emotions that can be associated with the use your product. A couple famous examples come to find: The Michelin Tire Baby Ad, and the Pepsi Generation. Tires by themselves don't necessarily trigger the "improving lives" emotion. And as for cola, well, it's sugar water - the kind of stuff that your doctor probably tells you to stay away from.
But both Michelin and Pepsi successfully uncovered the raw human emotion that can be triggered by the use of their products, and suddenly, each became very much associated with improving people's lives.
So how about your product? How does, or how can it make better the lives of the people that use it?
And when you figure it out, share it with your employees. Help every one of your employees connect the dots between what they do in their jobs, to the use of your product, by the end customer.
When customer-facing employees are paid more, do customers receive a better experience?
According to McDonald's CEO, the answer is "Yes."
“We know that a motivated work force leads to better customer service, so we believe this initial step not only benefits our employees, it will improve McDonald’s restaurant experience,” said Steve Esterbrook, CEO of McDonald's, according to an article in the New York Times.
When employees are paid more, they're more likely invest more discretionary effort into their work; they're willing to go the extra mile. A 2013 study by human resources thought leader Aon reveals that pay is a key driver for employee engagement. For a customer-facing employee, this may mean working a little harder; trying a second time to satisfy a customer. The added discretionary effort can turn the corner for the customer from merely satisfied to delighted. And delight drives loyalty.
When employees are paid more, their attitudes improve. They're more positive, and this comes across in their demeanor with the customer. Higher pay reduces financial stress. While research indicates that a more positive attitude can reduce stress, the inverse is also true - reduced stress allows a better attitude to happen. A customer can smell a bad attitude from a mile away and a positive attitude from two miles. People tend to be drawn toward positive people, and away from negative ones. Positive employees attract more customers.
When employees are paid more, they stick around longer; they're less likely to move to another employer for incrementally higher pay. As a result, the work for as a whole becomes more experienced. And greater experience brings greater knowledge, more confidence in doing the work, and a reduction in training and hiring costs. As HBR points out, there are indeed high costs associated with low wages, and frequent turnover is just one of them.
There are plenty of systemically good reasons to invest more in front-line employees - those who most directly interface with the paying customer - but perhaps the most strategically sound reason of all is to improve the customer experience. Greater customer experiences lead to greater customer loyalty, an higher revenue and profits.
As customers, we're used to being asked to rate the companies we buy from.
But now, companies are beginning to rate the customers they sell to. Sure, lots of CRM-savvy companies have rated customers for loyalty-tracking, but they kept that information to themselves. What's different now is that companies like Uber, Airbnb, OpenTable are rating customers, and sharing those ratings with other service providers. And the service providers then use ratings to decide if they want to sell to those customers, or NOT.
According to a December 1 article in the New York Times, "The rating systems are allowing businesses to formalize a longstanding practice: focusing on their best customers.
"The worst customers “demand too much, complain too much and cost too much,” said Christopher Muller, professor of hospitality management at Boston University.
"Beyond that, he said, bad clients make employees unhappy. Companies, he said, do better by spending time on their best and most profitable patrons. “It sounds draconian, but not all customers are created equal,” he said."
In the past, if a restaurant received too many (legitimate) negative reviews about its menu, it would likely respond by making changes to the menu to delight more customers. Similarly, if a customer finds that he or she is being denied service, because they've been rude to other service providers, the customer is more likely clean up his act, and become a better customer. The result of these 2-way reviews is a greater population of good customers.
Here's where this can be a good thing for everyone:
If bad customers cost a company too much, then fewer bad customers can mean lower costs.
If bad clients make employees unhappy, then fewer bad clients mean happier employees.
According to Gallup's recent study, world-wide, employee engagement levels are dismal.
With all those big-time benefits, why don't more companies take more effort to improve employee engagement?
Here's the kicker: You don't necessarily need a big budget to improve Employee Engagement. This recent article published by The Conference Board presents six of the many ways that a business can begin to improve employee engagement:
Tap into the talents people want to use
Ask for input
Offer opportunities to learn and grow
Provide honest, meaningful feedback
Most of those methods don't necessarily require funding; they're more about consciously doing more of the things that we ought to be doing in the first place - things like transparency, showing appreciation, and genuinely appealing to the human side of employees.
With documented benefits of employee engagement so high, and the costs of making it happen so low, we're talking about an ROI that's off the charts. Why don't more companies take these low-cost steps to driver greater employee engagement?
We're good at measuring the results of employee engagement, but we're not very good at measurring actual engagementt.Companies have been measuring customer loyalty, revenue growth and profitability for a longtime. And since they know how to measure it, they know how to manage it.But it's a lot harder to measure engagement. The AQPC annual census is representative of how engagement is measured, but it only happens once a year. And that may be part of the problem:
We're living in an age of immediacy; the answer to any question is a Google-search away, so the idea of having to wait an entire year to know if your employee engagement initiatives are paying off is counter-intuitive to today's management mindset.
If there's a method to measure employee engagement on a more regular basis - something that offers a more "instant gratification," I suspect we'll see more engagement initiatives practiced with greater rigor and regularity, and world-wide employee engagement well-above today's 13% level.
Do you know of a immediate way to measure engagement?