Can an Employee Recognition Program Build Customer Loyalty?

Can an Employee Recognition Program Build Customer Loyalty?

I

n today’s slowly recovering economy, employees are being asked to work longer hours, take on

more responsibilities and, in some cases, work at a

reduced rate. At the same time, managers are diligently searching for ways to increase the efficiency and effectiveness of their employees as they

continue to reduce the number of employees,

their benefits, and reduce or eliminate employee

incentives and rewards. However, there is a grow-

ing body of evidence that suggests reducing incen-

tives and rewards may be a big mistake. A number of

studies have been conducted by long-time respected

organizations that point to a direct connection between

employee satisfaction and customer satisfaction and loyalty.

One such organization, The Forum: Business Results

Through People, affiliated with Northwestern University, has

programs in place. It cited T-Mobile USA’s rewards and

organizational performance. One recent Forum white paper

win top ranking in the J.D. Power and Associates “Wireless

long researched the link between motivated employees and reported, “Today, the body of research proving the economic

benefits of making this connection has become too compelling for even the most cynical executive to ignore. Many different

organizations, coming at the issue in many different ways, have found concrete connections between employee engage-

ment and customer satisfaction.” These connections have been

researched and verified in a variety of Forum studies of the

“The company implemented a well conceived incentive pro-

gram, with rewards and recognition the employees care about,” the MII report noted. Key to success: T-Mobile took the time to conduct extensive up-front research with its employees to determine the best rewards and program structure.

To attract, retain and — best of all — delight customers,

companies now more than ever need employees to work as a

James Oakley, assistant professor of management at the

way to reward and recognize employees, the shift must be from

Krannert School of Management at Purdue University and a

Forum researcher, studied nearly 100 U.S. companies repre-

team in a collaborative effort. Therefore, when considering a individuals to the collective whole.

Incentives are a way of life. Parents use incentives to moti-

senting nearly 5,000 employees and found a clear connection

vate their children. Companies use incentives to reward CEOs.

linkage,” he said, “is through employees’ impact on customers.

retention and loyalty. And employers can use incentives to cre-

between employee satisfaction and financial performance. “The

There is a relationship between attitude and profitability…that relationship is bridged by satisfied customers. There is a direct

Retailers use incentives to boost sales and generate customer ate a collaborative and efficient workplace environment.

With shrinking budgets, however, how can employers suc-

link between employee satisfaction and customer satisfaction,

cessfully reward their work teams? An employee recognition

financial performance.”

collaboration, the focus must shift from individual recognition

and subsequently between customer satisfaction and improved Another

Fall 2011

Customer Care Performance Study” three years in a row.

healthcare, banking and insurance industries, as well as other business segments.

research

group, Marketing

Innovators

International (MII), noted that today’s best-performing companies have strong employee reward and recognition

8

recognition program, which helped the wireless provider

program’s goal is to modify a person’s behavior. To promote

to team recognition. For an incentive or reward to have the desired effect, it must offer high value and be universal for

all team members. Employees will not try to earn something

Customer Care News

grocery stores, pharmacies and convenience stores. They can also be pur-

chased online directly from merchants, in small quantities and in bulk. Many

major retailers and gift card suppliers offer companies a discount off the face

value of the cards for large purchases, thus offering companies an added sav-

ings. Additionally, gift cards are easily inventoried and fit securely in a small safe or desk drawer.

When considering a gift card pro-

gram, employers should be aware of

several new trends, some of which are

now available and others that will be

evolving during the coming years. There are new personalization and customization options with which a company can

that has no value to them, which in turn may affect their work

custom design a gift card with its corporate logo, team logo

Employers must select a reward that motivates and

beginning to emerge (but expected to grow in popularity dur-

within the larger team.

encourages the desired behavior of the entire team, but the reward does not have to be expensive to be effective. In fact, a

small, inexpensive reward given to each of the team members on a frequent, regular basis reinforces and recognizes the team’s

desired behavior more effectively. Furthermore, the reward should provide instant gratification, and avoid disconnect between the action and the reward.

A tangible gift is often perceived to have a higher value

or other personalized messages. Several new technologies just ing the next several years) include flexible options that will enhance the rewards delivery process. These include print-ondemand gift cards and gift card rewards via e-mail and mobile

phone delivery. The key to incentives is to tie the reward as

closely to the positive performance as possible. So, the sooner a team is recognized for positive performance, the more their actions are reinforced.

An employee reward program does not have to be

than its actual cost. A gift card is a solution that is relatively

expensive, difficult to plan and manage, or time consuming

instantly to team members as a reward for collaborative efforts.

sophisticated points-based system, or as simple as predeter-

inexpensive, has a perceived higher value and can be given

A $5 to $10 gift card redeemable at the local coffee shop, for a sandwich at a favorite lunch spot, or a movie ticket, gives employees immediate recognition. A gift card also serves as a long-term reminder of the accomplishment.

to be effective. Your program can be complex with a

mined team goals and reward criteria supported by a supply of assorted inexpensive gift cards to hand out when goals have been met.

Whether you go with a sophisticated all-encompassing

Gift cards continue to be a top choice among companies

program or a simple project-based program, the benefits to

than 170 Advertising Specialty Institute (ASI) distributors,

employee reward program can essentially pay for itself through

for their employee recognition programs. In 2010, more

including sales and marketing representatives, business

owners, and corporate executives from the promotional prod-

ucts industry, cited recognizing employee/team performance (20 percent), boosting employee/team morale (12 percent) and

your company will outweigh the costs. And best of all, an cost savings in increased team productivity and output. And, higher performance will be a reward in itself with a bigger and broader base of happy, loyal customers. CCN

building employee/team loyalty (11 percent) as three of the top

Joan Travelstead is senior vice president of program develop-

Launching an employee recognition program using gift

com) in Crystal Lake, Ill. Travelstead can be reached at info@

cards is relatively easy. Gift cards are readily available in local

www.customercarenews.com

ment at National Gift Card Corporation (www.ngc-group.

Fall 2011

five primary objectives to offer gift cards as incentives.

ngc-group.com.

9