Poor Leadership Practices Cost You Customers

Last month one of my blog posts discussed the impact of poor leadership on revenues. Today I’ll discuss the impact of poor leadership on the customer experience.

Each year since 2006, MSN Money (with the help of polling house IBOPE|Zogby) conduct customer service surveys to identify the 10 worst service providers as well as the 10 best.

You will not be surprised at the top 10 best service providers – nor at the worst 10. All of us are consumers who experience great service periodically, terrible service periodically, and mediocre service far too frequently. We see disengaged employees “going through the motions” more often than not.

In the complete listing of company rankings, Zogby identified which aspects of customer service were most important to respondents. Aspects and the percentage of respondents that ranked it as “most important” were:

  • Knowledgeable staff (47.0%)
  • Friendly staff (14.7%)
  • Readily available staff (12.5%)
  • Service after a sale (12.4%)
  • Flexible return/exchange policies (8.0%)
  • None; the product is all that matters (2.6%)
  • Not sure (2.6%)

The top four responses all relate to customer interactions with staff (over 86% of responses!). This data supports our experience and our research: the customer experience is entirely driven by how employees treat customers.

Effective Leadership Creates Inspired Employees

The Ken Blanchard Companies has been studying the impact of leadership on customer service for many years. This research, titled “The Leadership-Profit Chain,” links leadership to three positive outcomes desired by all companies: employee work passion, customer loyalty, and financial success.

This research identified two types of required leadership: strategic and operational. Strategic leadership is clarity of vision, values, culture, and opportunities the company chooses to pursue. Operational leadership is how day-to-day activities support company strategy. It includes policies and procedures, leadership behaviors, and perceptions of fairness and justice within the organization’s operation.

Every leader throughout the organization must provide the appropriate mix of strategic and operational leadership. A frontline supervisor must be able to answer questions about the current strategy; a senior leader must be able to speak intelligently about the fairness of policies and procedures.

The appropriate application of strategic and operational leadership is shown to increase employee discretionary effort, proactive problem-solving, and demonstrated care about customers.

Inspired Employees Create Customer Loyalty

Customer loyalty is primarily impacted by their relationship with employees. Are employees knowledgable, friendly, available, and as responsive after the sale as before the sale? To a lesser extent, strategic and operational leadership can impact customer loyalty. If you have seamless, trusting return policies, loyalty grows. If you have unfair policies that demonstrate distrust of  customers and take too much time to exchange a product, loyalty erodes.

Leadership efforts alone do not create profits. Profits are the applause your company earns by creating inspired employees who “wow” their customers every day.

The research is clear. Inspire employees with the right mix of strategic and operational leadership. Those employees will create loyal customers that generate profits . . . which enable you to pay employees well, offer great benefits, celebrate employee efforts and accomplishment, etc. That’s a positive cycle every company desires.

What is your experience with the elements of the Leadership-Profit Chain? Add your thoughts in the comments section below.

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  • Chris,

    Nice post. Agree – that we must serve our employees, who serve our customers. It is the front-line employees who will create the great experiences – causing “Raving Fans”

    I just had a great experience at the hospital – of all places. It was a particularly chaotic night – with many patients being admitted at one time. I got talking to the one of the nursing aids – who was taking care of my father… As the conversation went on – she mentioned that she had clocked out an hour ago because the hospital does not allow overtime. She was so passionate about her job (and her mission of helping others) – that she stayed an extra hour – off the clock… Our goal as leaders should be to inspire 10% of the passion that this nursing aid has.

    Mike

    • Thanks for the kind words and for sharing your experience with the nursing aide. What tremendous dedication she’s demonstrating! Her commitment to great work has touched you and your family deeply – and you’ll tell the story far & wide. That word-of-mouth testimony does more for a business’ standing in their community than any ad campaign.

      Hope your dad recovers quickly.

      Cheers!

      C.

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