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Employee Attitudes and Customer Retention

Employee Attitudes and Customer Retention

Motivation Minute

Employee attitudes have major impact on customer retention.

In “Employee Behavior, Feelings of Warmth and Customer Perception in Service Encounters,” (International Journal of Retail & Distribution Management, Vol. 30, No. 1, 2003), authors Joseph Lemmink and Jan Mattsson show how customer emotions and feelings are influenced by employee encounters. The researchers measured customer perceptions of both positive and negative aspects for simulated service providers. The results show that employee behavior has a substantial impact on customers' feeling of warmth, representing the degree to which the customer enjoyed the service experience. The researchers indicated that the level of warmth correlates with measures like likeability, perceived quality, and service loyalty. Their conclusion: Short-term emotional feelings lead to the long-term effect of customer retention. Service firms should train and motivate employees to exhibit high levels of warmth and friendly behaviors to achieve bottom line profitability.

Employees have major impact on customer trust.

Trust plays a major role in marketing environments where consumers and service personnel interact often, according to Deepak Sirdeshmukh, Jagdip Singh, and Barry Sobol, in “Consumer Trust, Value and Loyalty in Relational Exchanges,” Journal of Marketing, Vol. 66, January 2002. This study explored which employee behaviors create or destroy consumer trust. The authors developed a theory in which consumer loyalty is determined by two types of trust:
  • The trust a consumer has in management policies and procedures, and
  • The trust a consumer has in front-line service personnel.

They also suggested that the degree to which a consumer has either kind of trust in an organization depends on three key elements:

  • Operational competence of employees,
  • Their benevolence, and
  • Employees’ problem-solving orientation.

An important finding of this study is that companies should realize the important effects which managerial policies and front-line service personnel have on consumer trust. The fact that trust is such a strong determinant of consumer loyalty justifies organizational efforts to foster trust in consumer relationships. 

Four Factors that Drive Customer "Value"

(Study of the Forum for People Performance Management and Measurement: Northwestern University)
  1. Fast and efficient delivery of services
  2. The attempt to satisfy customers (Note: customer satisfaction not necessary)
  3. Open communication with customers on any and all specials, options, and amenities
  4. Precision (fulfilling the customer's expected service)

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