Good employee contact with customers leads to greater profitability

Researchers have shown a direct connection between employee and customer behaviors in which employee attempts to improve customer satisfaction led to increased customer spending and therefore profitability.

Study shows good employee training and communication lead to more satisfied customers.

A study by North Western University in the United States found that good employee training and communication led to more satisfied customers who spent an average of 22% more than they would have otherwise.

Researchers conducted the study at six locations of a major hotel chain in three different cities. Customers were selected at random from a loyalty program database.

Before the study, employee behaviors towards customers varied widely in different locations.

For the study, the researchers examined the variables that contributed to the customer experience in the hotel chain and at a competitor’s chain. These variables were compared with behavior by the same 300 customers over the previous three years. The variables were:

  1. Fast and efficient check-in, eg adequate number of front desk staff for check-in, efficient check-in process.
  2. Tries to satisfy customers, eg front desk staff try proactively to satisfy customer.
  3. Options and amenities, eg pleasant manner on the phone and from check-in, restaurant staff etc.
  4. Strive for precision, eg accurate details of the customer’s reservation at check-in; front desk staff care about the customer.

Satisfying customers increases customer spending – and profitability

Of these four variables, the statistical analysis found that the key variable was “Tries to satisfy” the customer. A 10% increase in the score given by a customer for the statement “Tries to satisfy” generated a 23% increase in customer spending over three years.

Overall, the study found that employee behaviors have a direct and positive impact on how much money customers spend – and therefore on profitability.

The lesson – use employee communication to motivate employees to focus on satisfying customers proactively and the consequent increase in customer satisfaction will be accompanied by greater customer spending and therefore more profitability.

The study was conducted under the auspices of the Forum for People Performance Management and Measurement.

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