1. D. Randall Brandt, Ph.D. Vice President Customer Experience & Loyalty The Customer Experience Trust Factor Do You Know How Well Your Employees Are Delivering on Your Brand Promise...and What You Are Going to Do About It?

2. Background “In the mid-1980’s, when my colleagues and I began helping clients improve customer retention, …we found that we could not progress beyond a superficial treatment of customer loyalty without delving into employee loyalty…that it was nearly impossible to maintain a loyal customer base without a base of loyal employees, and that the best employees prefer to work for companies that deliver the kind of superior service that builds customer loyalty.” Frederick Reichheld The Loyalty Effect

3. The Service-Profit Chain Employee Operating Strategy and Service Delivery System Internal Service Quality Internal Service Quality Revenue Growth Revenue Growth Customer Satisfaction & Loyalty Customer Satisfaction & Loyalty Profitability Service Delivery External Service Quality External Service Quality Customer Satisfaction Capability Productivity Loyalty Value

4. Customers Defect Because of Poor Experiences with Employees Reasons for Customer Defection Other Service (43%) Nature of Service Failure Employee Attitude and/or Behavior (77%) Other Source: 2006 Maritz Poll

5. Linking the Employee Experience to the Customer Experience: Findings from Previous Research Customer service orientation Performance feedback Adequate resources to serve customers Clear performance goals Co-worker capabilities Training for current job Role conflict Reward and recognition Fair treatment Job satisfaction Management support UNDERSTANDING & FOCUS ENABLEMENT MOTIVATION ALIGNMENT

6. Antecedents of Poor Service Quality Don’t know what customers want or expect Failure or decision not to address these wants and expectations Poor performance and/or quality assurance problems Overpromising and mis- communication UNDERSTANDING & FOCUS ENABLEMENT ALIGNMENT

7. The Research Questions To what extent is overall employee engagement linked to service quality delivery? Are the key drivers of employee engagement also the key drivers of service quality delivery? Do the type of people and/or the type of organization actually account for differences in service quality?

8. The Survey Financial services (retail banking) tellers, customer service representatives, and branch managers On-line survey method Survey content: - Overall engagement - Perceived customer service quality delivery - Specific elements of the employee experience - Demographics - Firmographics

9. Our Employee Measurement Framework Overall Employee Engagement Business Results Conventional Employee Surveys Customer Satisfaction & Loyalty Performance Climate My Job & My Place In This Organization Leadership & Management Customer Orientation & Focus

10. Index of Overall Employee Engagement “I am completely satisfied with my job” “I would recommend my company as a great place to work” “I would be very happy to spend the rest of my career at my present company”

11. Service Quality Delivery “Our customers would rate the service we deliver as excellent.” Completely Disagree Slightly Disagree Neither Agree Nor Disagree Slightly Agree Completely Agree

12. Key Findings

13. Do employee engagement and service quality delivery go hand in hand? Employee Engagement Service Quality Employee Engagement Service Quality

14. Employee engagement and service quality delivery are only moderately correlated Employee Engagement Service Quality (14%)

15. Key drivers of overall employee engagement do not include customer-focused issues HigherLower I look forward to coming to work every day My company is a fun place to work My job gives me a strong feeling of personal accomplishment I am provided with the resources I need to perform my job Pay I receive is fair for the work I perform My company has effective training programs I am recognized for my work in ways that are important to me Open and honest dialogue is encouraged at my company Work expectations at my company are realistic and fair Company genuinely listens to and cares about employees My work and personal life are well-balanced Senior management’s actions are consistent with their words All employees have an equal opportunity for advancement We are all on the same team working for the same goals I have opportunities to develop the skills needed to do my job Top Fifteen Drivers of Engagement Impact on Engagement

16. Key drivers of service quality include multiple customer-focused issues HigherLower Company has the necessary capabilities to satisfy customers Work expectations at my company are realistic and fair We are all on the same team working for the same goals Company has formal programs/processes to ensure service quality Company’s leaders are ethical and honest Company commits the resources required to meet customer needs Open and honest dialogue is encouraged in my company Company sets specific goals for improving customer service My company is a fun place to work I have authority needed to respond to customer problems/requests I have opportunities to develop the skills needed to do my job I look forward to coming to work every day My company has effective training programs Company genuinely listens to and cares about employees I enjoy my interactions with customers Top Fifteen Drivers of Service * Items in red are customer-focused elements of the employee experience. Impact on Service Quality

17. Demographics and Firmographics Not Linked to Service Quality Age Education Full-Time vs. Part-Time Gender Income Job Title Tenure Type of Institution No Demographic or Firmographic Significant Difference?

18. Conclusions & Implications

19. Summary & Conclusions Employee engagement is linked to customer service, but not as strongly as expected. Employee engagement is part of the larger employee experience – it is primarily driven by factors that are internally-focused. The employee experience also has a customer- focused aspect that centers on employee perceptions of their and/or the organization’s capacity to deliver excellent service quality.

20. Summary & Conclusions The demographic and firmographic characteristics of employees and organizations delivering high levels of service quality are not significantly different from those of employees/organizations that deliver lower levels of service quality. Explicit customer focus, readiness, and empowerment appear to differentiate firms delivering high service quality from those that deliver lower levels of service quality.

21. Managerial Implications Improving employee engagement may not automatically lead to improved customer experience. Managers seeking to leverage the employee experience in order to improve customer service and satisfaction need to address issues not typically included in conventional employee surveys. - Readiness - Empowerment - Explicit Customer Focus