Human resources’ impact on consumer loyalty
The consumer end of a business can feel quite far removed from the behind-the-scenes HR activities that take place in any organisation.
To work as an HR professional in retail, it’s important to love retail itself. HR leaders in the sector say this gives you the commercial focus to thrive in an industry that is fast-paced and relentless, but also fun and passionate. It also gives you an edge, as you are able to view the business through the eyes of the consumer.
Retail HR leaders are faced with the challenge of aligning the people strategy with the business strategy. They need to ensure that the best possible employee initiatives are aligned to the overall goals of the organisation and ultimately enhance consumer satisfaction, brand reputation and, therefore, profitability.
Linking employee and customer engagement goes without saying and is one of the ways HR is able to make a real bottom line impact.
Richard Branson famously said “Take care of your employees, and they’ll take care of your business.”
But do ‘front line’ employees really recognise the importance of HR and the people initiatives on the overall consumer reaction?
What do HR leaders think?
In a Retail HR Insights survey, we asked HR leaders – in their opinion what proportion of their operational employees recognise the importance of HR on the overall business performance, and on consumer experience? The responses showed, that on average only 57% of operational employees connected with HR purpose when it comes to consumers.
But does it really matter if employees recognise the role of HR or not? Isn’t it more about recognising their own role and seeing the impact that they have on the consumer? Maybe, but if they are not engaged with the role of HR, they are less likely to embrace key messages and initiatives that are intended to help them in their role. Therefore, tying it all together sends out a message of unity that the whole organisation is driving forward for success.
Closing the gap
Digging a little deeper, we wanted to understand what retail HR leaders are doing to close that gap between the consumer end of the business and the ‘back office’ HR function.
Louise Dobbs, UK HR Director for The Body Shop, says, “It’s critical that our stores’ teams feel they can have a view, give opinions, and that we listen and try and make changes where we can. We constantly do this, which is why we have a 78% engagement score in retail.”
Paula Byrne, People Director at One Stop Stores, adds, “Aligning our plans to the business’s core purpose and strategy is a given; it is then translating what that actually means practically for our colleagues which is the important part”.
An important one indeed – but also a tough one. Paula says of One Stop, “We have moved a long way from the days whereby colleagues’ views of HR is that we are here to pay people and resolve their disputes; our language is much more about commerciality and impacts – giving practical solutions that support the essence of our business culture and drive good OD principles aligned to the long-term strategy.”
Employee engagement vs customer engagement
HR leaders must be able to prove the relationship between employee engagement and customer experience. There’s no end of research that evidences that happy, loyal employees lead to happy, loyal customers – which ultimately leads to better profit and business growth.
Many organisations gauge employee engagement and consumer experience via surveys, but don’t always align the two. Over the years, companies have developed many different methods for gauging the attitudes and behaviours of their customers. One of the recognised models is the Net Promoter Score (NPS), which is a measure of how happy customers are with a business. NPS is based on two core ideas:
• The most reliable way to measure customer satisfaction is to is to ask how likely a customer is to recommend your business to a friend or colleague.
Customers fall into three broad groups – Detractors, Passives, and Promoters:
Detractors – Unhappy customers trapped in a bad relationship by contract, lack of alternatives, inertia, need to buy from low bidder, or other reason
Passives – Satisfied but less enthusiastic customers who can be easily wooed by the competition
Promoters – Loyal enthusiasts who keep buying from a company and urge their friends to do the same
But very few companies can sustain high customer loyalty without loyal, engaged employees. And, as employees will also fall into the three categories above it is important for HR and leaders to understand which camp their staff sit in. Promotors will ooze enthusiasm about their work and their employer, and this enthusiasm is contagious. Not only does this rub off on other employees, it is also directly impacts on the customer experience through effective service.
Traditional Net Promoter Score systems have now been developed to include the Employee satisfaction gauge (eNPS).
Official practitioners will systematically search out those forms of employee engagement that have the biggest potential impact on customer loyalty. They identify and strive to improve workplace characteristics that support high customer loyalty. They will explicitly tie together their customer system and their employee Net Promoter System.
How internal communications affect the external customer
It’s old news that effective employee communications drive employee engagement, and despite what is decided in the management ivory tower, employees are on the front line, interacting with customers. They are the face and the voice of the company, and there is no command and control over what each individual employee says or does. Whether your internal comms team sit with HR or with your marketing team, consistent and clear communications to employees are critical.
Louise Dobbs at the Body Shop explains, “We ensure full transparency on the retail people objectives and how this links to the ultimate business objectives by having clear and regular communication strategies, via updates at bi-annual staff conferences, regular monthly people updates to all of our store colleagues, employee forum meetings with key representatives spreading the message and our engagement survey”.
HR or Communication professionals should consider the following building blocks when aligning internal messages with service:
1. Have a common service language
A common organisational vocabulary will focus attention and desired behavioural traits. Help embed your desired language by using it consistently via a variety of communication channels.
2. Adopt a clear service vision
Organisations with a clear vision achieve better customer satisfaction. Establish yours with clear, consistent communication.
3. Internal movements and new hires
Unexpected change makes people resistant, and therefore less engaged, so announce and explain new appointments.
4. New staff onboarding
Don’t just give people a welcome pack. Find exciting ways of communicating your culture, values and goals at the beginning.
5. Recognition and rewards
Celebrate employees’ successes in newsletters, emails, noticeboards and team meetings to inspire and motivate your team. Push these out via social media to reach your external customers.
6. Feedback from the customer
Don’t just capture customer feedback. Share it! Relay negative comments as well as positive ones, but be diplomatic in your approach. Provide examples of what ‘good’ looks like and incentivise people to set a good example to others. But, also empower people to recover from bad service delivery by sharing advice and anecdotes on bouncing back.
7. Measures and metrics
People need to know their work is achieving something. Make sure the people on the front line know how their division is performing, and how they are contributing to this performance.
HR need to accept that we’re in a ‘consumer culture’ era, where loyalty is key – which is why employee loyalty should be a top priority.
