The evolution of customer and employee expectations is impacting business results for all retailers in a big way. In my BIG !deas sessions at the National Retail Federation’s (NRF) Big Show, I discussed how employee engagement influences the customer experience and how that experience drives business results.
My presentation focused on new research that pairs the results of the retail chain store portion of the ForeSee Experience Index (FXI): 2014 U.S. Retail Edition with employee engagement data from those same stores (collected as part of our research for The Answers™ American Employee Study) and quantitatively validates the causal relationship between retail store employee engagement and customer satisfaction.
The positive slope in the figure below illustrates that employee engagement has a direct, positive effect on customer satisfaction for two dozen of the top global retail brands:
Satisfaction is scored on a 100-point scale; 80 is generally considered the threshold for excellence at which an organization meets and exceeds employee or customer expectations. The top-performing retailers–Advance Auto Parts, Ann Taylor, Apple, Barnes & Noble, Costco, OfficeMax and Victoria’s Secret–are poised to reap the greatest benefits for high marks in both areas.
Employee Engagement: The Critical Link
In The Answers™ American Employee Study, the main factors impacting retail employee engagement are:
- Supervisor: employees who feel they receive praise and recognition from their supervisor are much more satisfied and engaged than those whose supervisors do not provide this sort of mentorship
- Leadership: Employees want to be informed and expect company leaders to effectively and frequently communicate company information and updates
Since employee engagement has a direct, positive effect on customer satisfaction, employers who take initiatives to increase the engagement of their client-facing workers are simultaneously taking steps to increase customer satisfaction.
In the ForeSee Experience Index (FXI): 2014 U.S. Retail Edition, the main elements that impact in-store customer satisfaction are:
- Merchandise: the appeal, variety and availability of products in stores
- Service: whether store employees are friendly and whether the services provided by employees are consistently performed
- Store Environment: the layout of the store, how well the products are organized and how appealing the store environment is
If your store employees are satisfied and engaged, they are more likely to move the needle on these factors, thus increasing shopper satisfaction and shopper likelihood to engage in desired future behaviors such as returning to your stores, purchasing from you in another channel and recommending your brand.
For example, a mid-sized specialty retailer with 300 stores, a $30 average order value and about one million transactions per month can generate an annual revenue increase of three percent by prioritizing improvements to store employee engagement.
Institutions have surveyed employee engagement and customer satisfaction separately for years, but our research proves the relationship between employee engagement and customer satisfaction exists, is positive and is significant.
About the Analysis
In Fall 2014, we fielded two studies, one focusing on employees and the other on consumers. The first, Answers™American Employee Study, offered a comprehensive examination of the employment experience of thousands of American workers across roles, ranks and industries. A subset of the study focused on the workplace engagement of 500 retail store employees. The second study, ForeSee Experience Index (FXI): 2014 U.S. Retail Edition, reviewed the experiences of 40,000 retail customers across multiple touch points, including brick-and-mortar stores. Both studies utilize ForeSee’s technology-driven experience analytics and proven experience measurement metholodogy. Learn more about how we can help you improve the retail employee experience and the retail customer experience.