Do Happy Employees Really Lead to Happy Customers?

You've probably heard the platitude, "Happy employees lead to happy customers."

It's one of those sayings that just sounds right. Famous leaders have said it. Not-so-famous leaders have said it, too. It's all over the internet.

But is it true?

The things we believe have a mixed track record. Some things are supported by facts and analysis, while other beliefs are driven by anecdotal evidence. There are even a few oft-quoted statistics that are simply false, such as "55 percent of communication comes from body language." It does not.

So I decided to investigate the happy employees equal happy customers claim by reviewing Glassdoor ratings for the 20 companies with the best customer service. This list was compiled by Christopher Elliott using data from the American Customer Satisfaction Index (ACSI).

Here are the results.

A team of happy customer service employees exchanging high fives.

Employee Ratings at Top Service Organizations

The average Glassdoor rating for the top 20 customer service companies is 3.8 (out of 5), compared to the average rating of 3.4. 

Chart showing the Glassdoor employee ratings for the top 20 customer service companies.

The companies are listed on the chart in the order they appear on the top 20 list, so Chick-fil-A is number one while Mercedes-Benz is the twentieth company.

While the average ratings for this group are generally high, these aren't necessarily the elite companies in terms of employee ratings. Only seven companies from the list on are Glassdoor's 2018 Best Places to Work list.

  • Google (#5)
  • HEB (#20)
  • Wegmans Food Markets (#49)
  • Trader Joe's (#70)
  • Chick-fil-A (#72)
  • Toyota North America (#78)
  • Apple (#84)

Three companies on the top 20 list actually have employee ratings that are lower than the Glassdoor average:

  • Aldi (3.3)
  • Cracker Barrel (3.3)
  • LG Electronics (3.2)

Proving that there are outliers everywhere, customer service laggard United Airlines is ranked #55 on the Glassdoor Best Places to Work List, despite a dismal 2018 ACSI rating of 67.

 

Recommend to a Friend Ratings

Glassdoor has something akin to an eNPS rating where reviewers can indicate whether they would recommend working at their company to a friend. 

The average recommend to a friend percentage for the top 20 companies is 71 percent compared to the 49 percent Glassdoor average. The average is denoted with a large red X.

Chart showing the Glassdoor recommend to a friend percentages for the top 20 customer service companies.

Only one company on the list, Lexus, has a lower recommend percentage than the Glassdoor average, with just 48 percent of employees saying they would recommend the company to a friend.

One anecdotal note here is companies with elite service cultures can sometimes be very polarizing. The right employees love it while other employees are uncomfortable. 

Amazon provides a good example. The company has a 3.8 Glassdoor rating and a 74 percent recommend rating. One happy employee wrote, "An Amazing Place to Work" and rated the company five stars, while a two-star reviewer wrote, "Exciting work, abusive culture." A three-star reviewer summed it up with, "Can be amazing for some people, horrible for others."

There are certainly many explanations for variability in employee reviews, including their individual boss, job assignment, or location. On the whole is appears that the very best places to work aren't necessarily the customer service leaders.

 

CEO Ratings

Glassdoor also asks employees whether they approve of their company's CEO. The average rating for the top 20 customer service companies is 87 percent, compared to the 69 percent Glassdoor average.

Glassdoor CEO approval ratings for top 20 customer service companies.

Just one company (LG, 67%) had a lower CEO approval percentage than the Glassdoor average. 

Glassdoor publishes an annual list of the top-rated CEOs, and CEOs from seven of the top companies made the list:

  • Charles C. Butt, HEB (#7)
  • Colleen Wegman, Wegmans Food Markets (#9)
  • Akio Toyoda, Toyota North America (#24)
  • Sundar Pichai, Google (#45)
  • Dan T. Cathy, Chick-fil-A (#50)
  • Craig Jelinek, Costco Wholesale (#83)
  • Tim Cook, Apple (#96)

There's plenty of anecdotal evidence to support the reason for this correlation. Employees tend to blame company leadership for poor service, while leaders of customer-centric organizations are often studied, profiled, and copied due to their successful track record.

 

Conclusion

Granted, this data provides a limited snapshot. Yet that snapshot seems to show that happy employees are at least correlated with happy customers.

That doesn't mean that making employees happy automatically leads to happy customers. United Airlines is #55 on Glassdoor's 2018 list of best places to work even though the airline has one of the lowest customer service ratings in the airline industry.

What has been your experience?


ACSI Report Reveals Three Focus Areas for Retailers

There's good and bad news for retail customer service.

In February, the American Customer Satisfaction Index (ACSI) released its 2017 retail report that tracks customer service trends in several retail industries such as department stores, supermarkets, and health and personal care stores.

The good news is some retailers are providing excellent customer service. Publix, a company I profiled in The Service Culture Handbook, was the highest rated retailer overall.

The bad news is some major retailers are struggling with customer service, particularly in the specialty retail and department store categories.

Here's an analysis of what's driving those ratings along with a sample competitive analysis of three popular drug stores: Rite Aid, Walgreens, and CVS.

Exterior view of a CVS drugstore.

Driver #1: Location

I once asked the CEO of a credit union I was working with to describe the one thing he wanted to do to improve service. Without hesitation, he replied, "Add more locations."

Convenient locations are incredibly important to retail. Customers need to be able to visit your location with minimal effort. Convenience also includes how easy the store is to get in and out of, such as parking or accessible entrances.

In my drugstore comparison, I selected three competing drug stores that are all located with a half mile of each other in San Diego. 

Rite Aid: This store was situated in a large parking lot with plenty of spaces. The parking lot had multiple entrances from three streets.

Walgreens: Like Rite Aid, this location was easily accessible from a parking lot that had multiple entrances from two streets. There was plenty of parking, but it was a little less convenient due to one-way routing around multiple medians.

CVS: Easily accessible with a large parking lot and plenty of spaces. The parking lot has multiple entrances from two streets.

The locations for all three stores were virtually identical, so it's probably a tie in this case.

 

Driver #2: Cleanliness and Layout

The customer service vision at Publix is, "Where shopping is a pleasure." Visit a Publix supermarket and you can see the stores have been designed with this vision in mind. 

They stores clean and neatly organized. Aisles are wider than a typical supermarket, making it easier for shoppers to pass each other with loaded carts. There are even helpful signs in the produce section that provide advice on selecting and storing various fruits and vegetables.

In my drugstore comparison, I decided to look for the same list of toiletries: deodorant, suntan lotion, hair gel, and a travel toothbrush. This time, my experience was different from store to store.

Rite Aid was modern-looking and well-laid out with excellent signage. The different colored flooring created a neater look and the visual contrast also seemed to make it easier to find my way around the store. There was also a Thrifty Ice Cream counter, which brought back some fond childhood memories. (Note to self: must go back for a cone.)

There are a few negatives. Some items were piled too high on top of the aisles, which made it difficult to see parts of the store. And the deodorant was oddly locked in a case, which meant buying some required assistance from an associate. (More on that in a moment.)

Inside a Rite Aid drugstore.

Walgreens was clean, though the white linoleum floors looked out-of-date compared to the Rite Aid.

Inside a Walgreens drugstore

One odd piece was the signage did not match the product selection in several places, which made it more difficult to find what I was looking for. The men's hair care section was on a completely different aisle.

Men's hair care sign hung over the shaving section.

CVS had the largest store of the three. Despite it's size, an open layout and helpful signage made it easy to navigate throughout the store. One small tweak that stood out was the omni-directional aisle signs, so they were easy to see from multiple angles.

Inside a CVS drugstore.

Driver #3: Courtesy and Helpfulness of Staff

Employees can make or break a retail experience. The right people can create a positive customer service experience, which in turn drives sales.

Apple is consistently the retail leader in sales per square foot. One secret to the company's success is employees who help customers confidently select the right products. I've managed to get fast, friendly, and helpful service even on days when the store appeared to be packed with customers.

The flip side of this equation is also true. Having the wrong people, or too many, can cost a business money. This is why retailers should consistently evaluate staffing levels and hours of operation.

There were some contrasts in my drugstore comparison.

Rite Aid had one cashier on duty. I had to wait less than a minute for assistance. She was friendly, albeit transactional. I did not encounter any associates on the sales floor, which was too bad because I was having trouble finding hair gel and would have needed someone to unlock the deodorant. There was also no one who greeted me when I entered the store.

Walgreens also had one cashier on duty. Like Rite Aid, this cashier was friendly and transactional. Also like Rite Aid, I didn't encounter any associates on the sales floor and nobody greeted me as I entered the store.

CVS stood out in three ways. First, the cashier gave me a friendly greeting as I entered the store, despite being busy with customers. Second, an associate greeted me while I was browsing and offered me assistance. And third, I witnessed the single cashier patiently help an elderly customer remove her purchase from the package after she mentioned she had trouble with it. I appreciated this extra kindness, even though it meant I had to wait an extra minute.

 

Conclusion

CVS is the clear winner in my mini-comparison. 

The locations are all similar, so these companies will compete on other factors. The store design at CVS made it easiest to find the items on my shopping list. Friendly employees made me feel welcome and were also available to help me find something if necessary.

Notice price isn't mentioned in this comparison. The prices at each store were similar and the reality is I could get better prices for everything online without having to drive to a store.

These physical retail stores need to offer something beyond good prices to attract and keep customers. In today's world, a generic, transactional retail experience won't cut it.


New Report: Banks Post Big Customer Service Gains

Finally, some good news in customer service!

The American Customer Satisfaction Index (ACSI) Finance and Insurance report has just been released and banks have posted a big 5.3 percent increase in customer satisfaction. 

National banks have improved even more, claiming a 6.9 percent satisfaction gain. This is despite Wells Fargo's inclusion in this group, the same infamous Wells Fargo that made national headlines in September for a phony account scandal.

You can view the full report here or keep reading to learn the top drivers, some areas for improvement, and one big opportunity. Plus, I have a question for you at the end.

Top Satisfaction Drivers

Here are the most highly-rated customer satisfaction drivers in ACSI's report. Each score is reported on a 100-point scale.

  1. Courtesy and helpfulness of staff (88 points)
  2. Website satisfaction (85 points)
  3. Speed of branch transactions (85 points)

The top driver isn't too surprising. It's well known that investing in employees with customer service training and developing a customer-focused culture can lead to happy customers. 

It also may be a sign of the times that banking issues requiring an employee's assistance are increasingly complex. This has proven to be true in other industries, like contact centers, where customers have a bevy of options for simple transactions but need a friendly, capable person for difficult or confusing tasks. 

 

Areas for Improvement

Here are the lowest-rated customer satisfaction drivers in ACSI's report:

  1. Location and number of branches (72 points)
  2. Competitiveness of interest rates (73 points)
  3. Location and number of ATMs (74 points)

What's interesting, but also not surprising, is that smaller banks fared poorly in these areas compared to national banks like Citi and Chase. That's the challenge of being small.

Smaller banks still have higher overall satisfaction levels than national banks because they consistently outperform the larger banks in other categories, especially Courtesy and Helpfulness of Staff (the top driver).

The Home Mortgage Opportunity

ACSI's report didn't dive into loans, particular home mortgages. 

Information compiled from a few other sources indicates this is a major opportunity for banks to set themselves apart from the competition.

The consumer research company J.D. Power produces an annual ranking of home mortgage originators. This allows us to compare ACSI's overall ratings with J.D. Power mortgage ratings for several large national banks. Keep in mind the two ratings systems aren't apples-to-apples, and I modified J.D. Power's 1,000 point scale to 100 for this graph:

But, dive deeper into the report and you'll learn that 21 percent of home mortgage customers regret their choice of lender. It's not uncommon to hear horror stories like this one from customer service expert Michael Lowenstein. 

A 2015 report from the consulting firm PwC revealed that home mortgages may be damaging consumer relationships with their existing banks. The nearly 2,000 loan customers surveyed ranked having an existing banking relationship as the most important factor when choosing a home lender. Yet this factor had the third lowest satisfaction rating.

This suggests that banks need to find a way to make it easier for their current customers to apply for a home loan.

 

What do you think?

Have you had a recent banking experience that stands out? Please leave a comment and let me know.


Why Retail Customer Satisfaction Continues to Drop

There's good news and bad news in the world of retail.

The bad news is retail customer satisfaction dropped for the the second straight year in the American Customer Satisfaction Index (ACSI). It fell 2.6 percent between 2014 and 2015.

The good news is the current score of 74.8 is still slightly above retail's long-term average of 74.6.

This post highlights key findings from the ACSI's 2015 Retail Report. You can also download the complete report.

Report Overview

Here's a brief overview of the report before we dive into the findings.

ACSI generates their reports by interviewing approximately 70,000 customers in the United States. Scores are measured on a scale of 0 - 100, with 100 being highest.

The Retail Report looks at six retail sectors:

  • Department & Discount Stores (Nordstrom, Target, etc.)
  • Specialty Retail Stores (Costco, Bath & Body Works, etc.)
  • Supermarkets (Trader Joe's, Kroger, etc.)
  • Health & Personal Care Stores (CVS, Walgreens, etc.)
  • Internet Retail (Amazon, eBay, etc.)
  • Gas Stations (Chevron, Mobil, etc.)

The report also breaks out sector-specific data for all the sectors except for Gas Stations.

Interestingly, Gas Stations was the only retail sector to enjoy an increase in customer satisfaction, climbing 2.7 percent to 75. ACSI speculates that this increase is attributable to a decline in gas prices.

 

Top Findings

There are three areas that retailers should focus on if they'd like to improve their scores.

 

#1 Speed up the checkout

This was the lowest rated dimension for all of the physical retail categories. 

In some ways, this is a very real problem. Many retail stores are cutting hours, leaving their registers short-staffed. Getting customers checked out is also a logistical challenge that retailers have struggled with for years.

In other ways, speed of checkout is a perception issue. One study found that customers can overestimate the time they've spent waiting by an average of 36 percent. Companies would do well to follow a few tricks to improve their customers' perception of wait time.

 

#2 Fix the contact center

The contact center was another common gripe for retail customers. Among service dimensions, it was at or near the bottom for internet retail, supermarkets, specialty retail, and discount and department stores.

I was able to identify some external data that highlights some of the problems.

  • 86% of contact centers don't fully empower their employees (ICMI)
  • 55% of contact centers take one day or more to respond to email (TPS)
  • 67.2% of tweets are ignored by retailers (Socialbakers)

Here, retailers also face a perception problem. There are other companies that are absolutely nailing contact center service. 

For example, I recently detailed how Verizon does an awesome job with phone support and Alaska Airlines really gets social listening.

These outstanding service experiences set the bar higher for contact centers everywhere.

 

#3 Physical stores are an opportunity

Having a convenient location is one of the top customer satisfaction drivers.

Unfortunately, a lot of retailers struggle to get it right. In the 2015 UPS Pulse of the Online Shopper report, consumers rated their satisfaction with physical stores at 62 percent compared to 83 percent for online.

To make it worse, a lot of retailers closed stores in 2015. 

Wal-Mart, Sears, and Albertsons were just a few of the retailers that recently closed locations or announced store closures. In my neighborhood, for example, the closure of an Albertsons created two problems. First, it made grocery shopping less convenient for many people who lived near the store. Second, it made grocery shopping more of a hassle at other stores in the neighborhood that absorbed for Albertsons customers.

The challenge for retailers is paying escalating rent and salary costs while prices have remained relatively stagnant.

It's not completely hopeless. In her book, The Good Jobs Strategy, Zeynep Ton profiled retailers such as Costco, TraderJoe's, and Quick Trip that use outstanding customer service and operational excellence to wring consistently high profits out of their retail locations.

 

The Big Opportunity

When everybody zigs, it's time to zag. Retailers have to think differently to improve their service.

For checkout, think Apple Store where the associate who helps you also rings you up without you ever having to wait in line. 

For contact centers, think REI where you consistently interact with helpful representatives who are empowered to solve your problem on the first try.

For physical locations, keep an eye on Whole Foods, which is launching a new small-store concept that will allow them to put stores in more neighborhoods.

My biggest advice of all would be to focus on doing two things really, really well. 

First, empower and train your employees to making personal connections with customers whenever possible. Second, make sure your customer experience is remarkably consistent.

These two factors are why your local Starbucks has a line of people every morning who are willing to pay $2.00 for a basic cup of coffee.