Note: This post was originally listed at Annette Franz’s blog at http://cxjourney.blogspot.com/. If you aren’t subscribed to her blog, you really should consider it!
You’ve gathered your customer insights and made the changes. Your website is streamlined and easy to use. Your add-on services are perfectly aligned with customer needs. You have invested in the finest training for your employees. Your IT upgrades ensure that your staff has up-to the-second information at their fingertips.
But somehow nothing is changing. Your sales are flat, and your customer experience scores are static. What’s wrong?
Tell me, how good are your line managers?
The employee-customer interaction is where the magic happens in almost any service-based business. Whether renting a car, shopping for groceries or eating out, the customer-facing associate makes the difference between a ho-hum experience and one that brings you back for more.
Gallup’s research found that the top two drivers of customer engagement in the fast food industry were “Being Treated as a Valued Customer” and “the Warmth of the Greeting,” both dependent on the customer-facing employees. Similarly, Great Clips discovered that the stylist’s smile had a huge impact on repeat customers. But the impact of an engaged employee goes way beyond this immediate connection.
Have you ever visited a store with carts strewn around the lot, or visited a restaurant with signs promoting an event that happened several days ago? These clues have a strong indirect impact on the customer experience – and never occur where employees are engaged. Engaged employees clear the parking lot, maintain signage, and even clean the bathrooms.
The trouble? Front-line employees in the service sector turn over regularly, making it harder to engage them from a corporate location. How do you ensure engaged employees without breaking the bank?
Chick-fil-A has found the answer. Have you ever visited one of their restaurants? If not, go out of your way to order a sandwich (make sure to go inside) to learn how to run an effective services location – even if it isn’t a restaurant. Their employees greet you with a smile, and go out of their way to make you at home, even bringing your food to your seat.
I met a manager at Pizza Hut’s corporate office who spoke lovingly about Chick-fil-A. She told me how a nearby Jimmy John’s offered $1 sandwiches for their grand opening. But the line at the Chick-fil-A next door was longer – even without a promotion! The company does not have Minnesota locations, so I had to wait until visiting St. Louis to give them a try. Sure enough, the experience was exactly as promised – smiling, friendly employees greeted me, and went out of their way to make certain I had a great experience.
How do they do it? It’s certainly not about their food. It’s good, but nothing spectacular. While Taco Bell tries to create revenue by creating new – yet surprisingly similar – food items, and Subway discounts their sandwiches to $5, Chick-fil-A puts its efforts into hiring the right management teams for its restaurants. It’s a long-term bet, but a good one. They know that the right line manager makes the right experience, so they invest their time and money here. Training is important – and they do train their managers well. But the company knows that you cannot train for management skills where no capability exists. So they focus on discovering the right talent in their hiring process.
Great service companies recognize that their investment needs to be on people before product. For a contrary example, witness the fall of Circuit City, which fired 3,400 of its most expensive salespeople to save on labor costs. They ended up with less-effective employees, their sales spiraled, and the formerly good-to-great company never recovered. Great, engaged employees pay for themselves – but the relationship is not always directly visible.
Best Buy serves as another cautionary example. When Apple began their rise as a consumer electronics retail juggernaut, Best Buy responded by cutting labor and training to compete on price. Not Apple. As reported in the Wall Street Journal, Apple’s sales philosophy is “not to sell, but rather to help customers solve problems.” This focus on hiring enthusiasts has resulted in Apple seeing the highest sales per square foot of any national retailer – $6,000. Meanwhile, Best Buy cuts labor and management while teaching its staff to push service plans, and their numbers are 1/7 of Apple’s, and declining.
Hiring the right manager is your most critical step in creating the right customer experience. Great managers impact your employees by creating an environment where they feel valued and trusted. That feeling is then transferred to customers. It takes time for the financial impact of a manager to be felt. Reduced attrition saves money over time. Similarly, while a terrific employee may make more sales today, their greatest effect is when your customer comes back six months later or refers a friend to your store.
Cutting back on staff always looks good in the short run. Thirty days after the cuts, your sales are flat but your costs are down – a win! But it will catch up with you. Best Buy found that for every 0.1 increase in employee engagement (on a 5-point scale), each store increased profits by $100,000 a year. After a change in leadership the company stopped investing in its employee engagement program, and now sales are dropping through the floor.
Learn from Best Buy, Circuit City and (most importantly) Chick-fil-A. Take the long-term view. If your sales and customer scores are flat, look first to your managers, and then to your staff. Then invest in them for long-term success.