The Keys to Employee and

Customer Retention

John Spence

The Van Tuyl Group Partners Meeting

A few of my clients:

What does this mean to me?

How can I use this idea?

What can I do right away?

I am NOT a guru…

T + C + ECF x DE = Success

Anne MulcahyCEO of Xerox and the third most powerful woman in the world!

1. Build a network of great relationships with people who want to see you succeed.

2. You don’t have all of the answers, so ask for help and advice from the smartest people you can find.

3. Learn to be a learner.

4. Listen intently to your employees and to your customers.

Some really great advice…

Talent

T = Talent

How do you define talent?

• Highly Competent• Impeccable Character• Excellent Communicator• Positive Attitude • Creative /Innovative• Risk Tolerant• Strong Drive • Solid Team Player

Job Description + Competency Model

WHAT WHO

Best Practices: Talent• Create a pipeline of talent into your

company.

• Hire for attitude – train for skills.

• Use team interviewing.

• Train people how to interview.

• Use a focused competency model.

• Use numerous types of testing.

• Do a thorough reference check.

• Make sure they really want to work for you.

• Hire slow – fire fast.Make “Hiring Right” a core competency!

C = Culture

Business Side• Innovation• Accountability• Execution• Customer Focus• Ownership Mentality

The Four Pieces of Paper…

The key elements of a winning culture: Employees

FunFamilyFriendsFair

FreedomPridePraiseMeaning

Accomplishment

1 -10

The level of highly satisfied and engaged EMPLOYEES in your business.

The number one factor in increasing the level of highly satisfied and engaged CUSTOMERS in your business is…

Key Drivers of Customer Satisfaction and Loyalty

Financial Performance

Quality P&S&

Customer Relationship

EmployeeSatisfaction

Empowerment High Standards

Long-termOrientation

Enthusiasm, Commitment,

Respect

Training &Development

Fair Compensatio

n

CR=104.12% Increase

CR= .404

CR=.334

CR=.277

CR=.275CR=.249

CR=.280 Coaching

CR=.285

CR=.371

CR=.365

CR=.191

CR=.247

TolerateNothing

Less

From: Practice What You Preach by Maister

Global study:16 countries529 companies15,589 respondents

Best Practices: Culture

Make hiring “right” a core competency

Manage the corporate culture as a key asset

Establish a clearly communicated vision for success

Focus on employee satisfaction and engagement as a strategic objective

Set high standards and hold people accountable to those standards

Refuse to tolerate mediocrity

Be a fanatic for training, coaching and mentoring across the organization

Empower your people to go out and “wow” the customer

Extreme Customer Focus

A few good quotes…

• “We are not in the coffee business serving people… we are in the people business serving coffee.” Howard Schultz, CEO – Starbucks

• “We took our eye off the ball and it damn near put us out of business. We forgot that the customer pays ALL the bills. We are here to serve them, help them, support them. Not keeping that at the front of our minds almost cost us everything.” Lou Gerstner, CEO - IBM

• “The very future of our company hinges on our ability to understand and serve our customers better than any other firm. It is all about customer service, the products are actually secondary.” Jeff Immelt, CEO – GE

• “The only critic whose opinion counts, is the customer” – Mark Twain

Let’s look at your market: The bad news…

• Strong competition

• Difficult to differentiate

• Highly informed consumers

• Exceedingly high expectations

• Cost of acquisition of a targeted customer is high

• Cost to satisfy is higher

• Cost to replace is 5x higher

Good News: Value of a delighted customer… priceless!

Customer Satisfaction Drives Customer Retention… and Customer Retention Drives Profitability

100%

90

80

70

60

50

40

30

20

Extremely Dissatisfie

d

SomewhatDissatisfie

d

SlightlyDissatisfie

dSatisfied

Very Satisfied

Zone of Defection

Zone of Indifferenc

e

Zone of Affection

Loyalt

y

Customer Satisfaction

Terrorist

Evangelist

A 5% increase in loyalty among your best customers…

Can produce a profit increase of 25% – 85%

I hate you

I don’t care about you

I love you

Fundamental Customer Expectations

• Reliability: The ability to provide what was promised, on time, dependably and accurately. (Honesty)

• Assurance: The knowledge and courtesy of employees, and their ability to convey trust and confidence. (Competence)

• Empathy: The degree of caring and individual attention provided to customers. (Concern)

• Responsiveness: The willingness to help customers and provide prompt service. (Attitude)

• Tangibles: The physical facilities, equipment, and appearance of the personnel. (Professionalism)

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How do the Best Companies Deliver Superior Customer Service?

• From a study of more than 3,000 companies — narrowed down to the top 101 companies that profit from customer care — here are the Top Six Factors that were the fundament tactics used to build and manage extraordinary levels of customer satisfaction and loyalty.

1 -10

They listen to, understand, and respond (often in unique and creative ways) to the evolving needs and constantly shifting expectations of their customers.

Own the VOC

1. Extreme Customer Focus

They establish a clear vision of what superior service is, communicate that vision to employees at all levels, and ensure that service quality is personally and positively important to everyone in the organization..

2. Shared Customer Service Credo

3. Process = Repeatable success

• They create systems, processes and protocols to ensure that service delivery is flawless… without stifling the creativity and initiative of their employees.

Moments of Truth

They establish concrete standards of service quality and regularly measure themselves against those standards, guarding against the “acceptable error” mindset by establishing as their goal 100% customer satisfaction performance.

4. Clear Standards + Accountability

Measure & Post Create A Dashboard of Key Indicators

MPS Margin Per Sale

Talent

Customer Service

Customer Retention

They hire the best people, train them carefully and extensively so they have the knowledge and skills to achieve the service standards, then empower them to work on behalf of the customers, whether inside or outside the organization.

5. Customer Focused Employees

They recognize and reward service accomplishments, sometimes individually, sometimes as a group effort, in particular celebrating the success of employees who go “one step beyond” for their customers.

Deal decisively with mediocrity

6. Reward and Celebrate Success

Zappos Sales in 1998 = 0 Sales in 2008 = 1.2 Billion

Looking back, a big reason we hit our goal early was that we decided to invest our time, money and resources into three key areas: customer service (which would build our brand and drive word-of-mouth), culture (which would lead to the formation of our core values), and employee training and development (which would eventually lead to the creation of our Pipeline Team).

Even today, our core belief is that our Brand, our Culture and our Pipeline are the only competitive advantages we will have in the long run. Everything else can and will be copied.

Tony Hsieh – CEO Zappos

Employee & Customer Retention SUMMARY

1. Create a talent pipeline

2. Intensive hiring process = Hire Right

3. Company culture managed as a strategic resource

4. Customer Service as a key strategic differentiator

5. Own the VOC

6. Set clear standards – establish key processes

7. Nail the “Moments of Truth”

8. Measure – post – track – reward/punish

THANK YOU

If you have any questions at all please do not hesitate to send a note or call. My email address is: john@johnspence.com

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