The level of employee motivation has a direct, positive impact on how much customers spend at a company, according to a new research summary from The Forum: Business Results Through People. The summary, posted at The Forum’s website on October 4, reports that investing well in communication, recognition, and incentive programs can lead to revenue increases of nearly 23 percent.
The report, titled “Employee Behavior Increases Customer Spending” is the latest in a series of succinct research packages aimed at human resources leaders. It boils down the findings from a 2007 study conducted by authors Dr. Frank Mulhern of Northwestern University and researchers Don Schultz, Heidi Schultz, and Robert Passikoff, who studied the connection between employee behavior and increased customer spending at an international hotel chain.
“The study was kind of unique because they had three data sources — surveyed employees, surveyed consumers, and the data on the exact spending of the customers,” says Mulhern. “We found a relationship between the higher spending level to what customers were thinking about the employees.”
The research found that the key ways the hotel brand conveyed its value to customers was through efficient check-in, hotel options and amenities, precision in service, and employee efforts to satisfy customers. Looking specifically at this last point, the study found that a 10 percent increase in reports that employees “tried to satisfy” the needs of customers resulted in a 22.7 percent increase in customer spending.
“The incentive world can be insular, with the talk and discussion focused on what’s good for the employees,” says Mulhern. “But there’s also this downstream effect for the service industry. It lends itself to a greater appreciation of recognition and rewards — not only do they make for better employee performance, they have a tangible effect on the customer and their spending.”
The entire research summary is available at The Forum’s website, www.businessresultsthroughpeople.org