Posts Tagged ‘Customer Loyalty’

Do you remember the childhood game of chicken?  Ron Ashkenas, Harvard Business Review Blogger, points to an interesting connection between poor leadership skills and the childhood phenomenon in his recent post “Why Leaders Play Chicken.”

Noted is the common characteristics including a “…critical issue that must be resolved by a certain time limit; the principle players have strongly held but very different views about what needs to be done; and neither side wants to compromise.”

The result? “…instead of innovative solutions we end up with negotiated  bargains…and when a compromise is finally struck both sides usually feel their leader was too weak and should not have given up so much.”

Thinking of those times our firm has been called upon to address ineffective teams it seems most often there was a game of chicken going on, among other things. There is no fault or blame being placed rather a level of respect for the firm for addressing the situation. What happens when a firm doesn’t address it and allows it to continue?

Are your leaders playing chicken? Conflict resolved with this sort of power play rarely ends well for anyone involved, let alone the company reputation.  Leaders who engage in the chicken game risk:

  • a limited view and limited range of options
  • difficult communications
  •  a lack of collaboration
  • settling for less
  • delaying the inevitable collision
  • polarized teams and increased opposition
  • losing respect as a leader

Here are 3 things you can do to ensure your leaders are fostering innovative approaches and excellence in execution.

1.  Know what valued customer outcomes your firm fulfills. Profitability starts and ends with loyal customers.  The experience your customers value as part of doing business with your firm is the outcome they seek for you to fulfill.  Can you define your company’s valued customer outcome?  How can you truly satisfy your customers without knowing what it is that your customers truly want to experience by doing business with you? Think about this yourself for a minute.  Do you value the seat you sit on in the airplane you ride in?  Or do you value the experience of a comfortable, safe flight? Know what your customers value; what outcome they expect when doing business with you. The end game is customer loyalty and the profitability that comes with it.  Keep your leaders focused on your customers,  not the chicken game.

2.  Don’t overlook the link between employees and customer loyalty and profit. Technology is easily replicable; processes can be mirrored.  However, a highly skilled and committed workforce is difficult to imitate.  It’s people who design the processes.  It’s people who work with, and leverage, technology.  It’s people who make or break the delivery of your valued customer outcomes.  When leaders begin to think of employees as commodities employees will do the same with customers, whether they serve them directly or indirectly.

Consider this: We know customer loyalty is a leading indicator that predicts the ‘staying power’ of your customers.  Statistics prove 91% of unhappy customers will never buy from you again. We know the surest route to profit comes from customer loyalty; that customers will remain loyal only as long as they remain satisfied.  Research shows company’s build customer satisfaction by consistently delivering valuable services to its customers and that exceptional value is created by innovative, loyal and productive (engaged) employees. Good to Great by Jim Collins tells us to ensure you have the right people, in the right seat, on the right bus.  Folks like that don’t waste time playing chicken.

3.  Invest in your leaders.   Let’s look at this from a different angle.  What’s the single most important challenge to leaders in this economy?  It’s getting positive results.   Here’s a critical reality:  The magnitude of your teams contribution to your success will be directly proportional to how engaged they are with the organization and their jobs.  Towers Perrin surveyed nearly 90,000 employees in 18 countries and found companies with high employee engagement had a 19% increase in operating income.  Conversely, companies with low levels of engagement saw operating income drop more than 32%.  What drives employee engagement?  Job fit (see point #2) and leadership. We’ve all heard it before.  Employees don’t leave companies they leave bosses.  I suppose that is fine if it’s an unengaged, unproductive, profitable employee.  But what about the others who are engaged, who are satisfying your customers?  Fail to invest in your leader and you fail to invest in those who directly foster your customers loyalty and your profitability. If you needed financial justification for investing in your leaders the proof is in the research and it doesn’t involve playing chicken.

How do you avoid playing chicken?   I‘m interested in your thoughts.  Click on “Leave a Comment” below. 

Source:  Building Profit Through Building People Making Your Workforce the Strongest Link in the Value-Profit Chain by Ken Carrig and Patrick M. Wright.

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