Experience Growth Chain

Experience Impact By Numbers

Even though I am not a strong supporter of Druker’s quote “you can't manage what you can't measure.” I will agree with it this time as to eliminate some doubts about the importance of customer experience. Here are some key facts to shed the light on the impact of customer experience on a company’s performance. According to Morgan (2019) 84% of companies that embrace customer experience as focal point make more revenue than their competitors. This is backed up by Kulbyté (2021) who says that those companies are able to double their revenues within 36 months!

Morgan (2019) affirms that 87% of customers who say they had a great experience will make a second purchase from the same company and 73% say that a good experience is a key to being loyal to the brand. This claim was supported by Kulbyté (2021) who explains that in-improving their customer experience companies will increase their customer retention rate by 33% and their customer satisfaction by 32%.

However, a good and memorable customer experience starts and goes hand in hand with happy employees (Donnelly, 2021; Yohn 2016).

The Evolution of Employee Experience (EX)

In his book published in 2017, Jacob Morgan maps the EX evolution four stages as follow:

1. Utility: this is the first stage. At this stage the employer-employee relation was about; what tools and equipment an organization should provide so the employees can do the work?
2. Productivity: at this second stage, a slight shift happened. The organizations started to ask what can we improve so our employees can work better and faster?
3. Engagement: this is when the organizations started searching for ways to make their employees happier. The common philosophy was that, happier employees perform better!
4. Employee Experience: this is when the organizations start to ask how can we create a company where our employees WANT to work and show-up rather than NEED to work and show-up?

Employee Experience Definition

EX is a broad and strategic umbrella that has evolved over the years. It is the total experience an employee has in an industry that surpasses his experience in a particular firm. It is a lifecycle/journey that includes all of the interactions within the employee-employers touch-points. However, I personally like the following definition by Bridger and Gannaway (2021):

“EX is all about enabling our people to have more good days at work”

Each organization might find a number of EX definitions as per its employees’ number. Yet, all definitions boil down to three core elements. Robert Grover defines these elements as employee’s perception, environemt factors and broadening HR functions.

To elaborate a little more:

1. Employee’s Perception is about what an employee thinks and what he expects. An employee’s perception is built from the previous experiences and interactions he had with previous companies. When it comes to a firm specific EX is shaped through the first interactions with his current employer.
2. Environment Factors, such as the tools and technologies provided for the employees. The physical surroundings such as workplace, housing, transportation means, offices. And cultural, e.g. organization culture.
3. Broadening HR functions by adopting from CX journey map and CX segmentation to develop both the employees journey map and the employee segmentation (based on knowledge and psychological factors not on titles)

Why Employee Experience Matters?

How can a company claim that it provides an excellent and memorable customer experience if it cannot provide an experience for its own employees? In Morgan 2019 report, three stats grasped my attention:

• Experience-centric companies have their employees engaged 1.5 times more than the less focused ones.
• 68% of customers assert that the front line employee is key to a positive experience.
• Companies with engaged employees outperform their competitors by 147%.

What does that mean?

It means that there is a reciprocal relation between EX and CX! In fact, Donnelly (2021) asserts that “customer experience and employee experience go hand in hand” and Pine II (2020) says “better employee experience leads to the creation of a better experience for customers, which feeds back to enabling a more engaging employee experience. Separate employee experiences from customer experiences and it will become increasingly hard to create the economic value desired by customers today.”

So, how does EX correlate to CX and to a company’s Growth?

The Experience Growth Chain

Inspired by the service-profit chain that was conceptualized by Heskett et al in 1998, I propose the following experience-growth chain. I would say that once an organization makes a paradigm shift and understands that it operates in an experience economy and once the management realizes the necessity to focus on providing an experience rather than a service or a product to its customers, a radical change to the components of the service profit-chain must occur. This change will help in brining the engagement element to the forefront (Pine II, 2020).

The starting point in the chain is broadening the HR function. The majority of organizations uses the traditional HR approach in managing their HR function. In this approach the HR crafts the policies, procedures and processes from inside out. This means that the priority is given to the organization and anything around it has a primary goal to shape the employee to fit in. However, in experience-centric paradigm, HR operates with people in the center. In essence, a people-centric?HR stresses?the?"human"?aspect?of?the Human Resources.?

It is important to understand that the organization policies, procedures and processes are not the only elements that shape the EX. Other elements like: the?way?leaders?act,?how?we form?the relationships,?and?how?we communicate?in?the?workplace?all?have?a?direct?impact on shaping EX.

The second stage is motivating the HR to see through different perspectives. For instance, to adopt and tailor from other disciplines, the HR could deploy from the customer experience, the segmentation process (marketing team can help the HR in that). When an organization looks at its employees as customers and starts to gather them in groups according to knowledge, culture, geography, gender, and psychological states (e.g. skeptics, risk takers, learners, introverts, etc…), the management will then be able to understand about the needs, wants and motivation of its employees. A full understanding of these details enables the management to better customize programs, remuneration, benefits, policies and processes as per the employee profile. For example, Meyers et al (2016) described how Starbucks used?"action?segmentation"?to?figure?out?what?attracted,?engaged,?and?retained?staff.?They?discovered?three?clusters?based?on?the?findings:?"skiers,"?who?work?primarily?to?support?other?interests;?"artists,"?who?seek?a?community-oriented?and?socially?responsible?firm;?and?"careerists,"?who?seek?long-term?growth?inside?the?organization. The results helped the managers to design different programs such as tuition assistance and adjusting the working schedules to fulfill their employee’s needs.

Another approach the HR can deploy from the customer experience is the journey mapping. The management should start to consider their employees as end-users. By looking through the lenses of the end-users the management designs EX backward. This eventually includes mapping and designing for EX during the interview process, the job offer, the onboarding, the induction program, the performance appraisal, the coaching, the annual leave and during the training and development programs are some examples. During the design process special attention should be given to the technological, physical and cultural environments (Morgan, 2017).

For the physical environment, for example, if a company values the hygiene, attention to details and cleanliness thus they should offer a similar EX in their work-spaces, their staff accomodation and transportation (if provided by the company).

From a cultural perspective, if an organization says it values the inputs and feedbacks of its customers, the company’s management should nurture a culture of openness and should shift from talking TO their employees to talking WITH them.

Based on the above actions and regardless of?where?a company?is?now,?focusing?on?and?improving?employee?experience?can?result?in?positive?employee?outcomes?such?as?engagement?and?retention (Godfrey).

From a happier employees and a higher employees engagement the third part of the experience-growth chain emerges to create a positive service encounter. This is when the employee-customer interaction takes place. Creating a positive-employee experience leads to a higher employee engagement. An engaged employee is more efficient, motivated and emotionally attached to his organization, than those who are not engaged. As happiness is contagious, a happy employee creates memorable, and enjoyable customer experience through the service encounter.

According to Lian (2020) service employee behavior positivelv influences relational energy and interaction cohesion which in turn affects customer service exploration behavior. In other words motivated and engaged employees will motivate the customer to be more engaged and loyal to the brand. In fact, Wijaithammarit and Taechamaneestit (2012) confirm that a better customer experience affects both the behavior and environment of the customers.

A more engaged customer will sure affect the profitability and growth of a company (Callcenter, Wijaithammarit & Taechamaneestit, 2012). How much of expenditure on employee experience and customer experience would be sufficient? According to KPMG the expenditure on enhancing customer experience has to be wisely calculated. They suggest the following steps to assess the feasibility of an experience centric organization: 1) using metrics, 2) recognize the true benefit potential, 3) have a clear idea on the cost and 4) organize the support teams and functions .

References

Callecenter, accessed date 10 Jan 2022. https://www.callcentrehelper.com/link-customer-experience-and-profitability-109158.htm

Donnelly A., 14 June 2021, Tech Journal https://www.insight.com/en_US/content-and-resources/tech-journal/summer-2021/customer-experience-and-employee-experience-go-hand-in-hand.html

Godfrey N., The Origin of Employee Experience, date accessed 8 Jan 2022, https://blog.stewartleadership.com/origins-employee-experience

KPMG, September 2016, Hiw much is customer experience worth? https://assets.kpmg/content/dam/kpmg/xx/pdf/2016/11/How-much-is-custerom-experience-worth.pdf

Morgan B., 50 stats that prove the value of customer experience, 24 Sept 2019, https://www.forbes.com/sites/blakemorgan/2019/09/24/50-stats-that-prove-the-value-of-customer-experience/?sh=262e02464ef2

Morgan B., Employee Experience Advantage, 2017, Wiley.

Pine II B. J., 2020, “Designing employee experiences to create customer experience value”, Strategy and Leadership, Vol 48, No 6.

Liang, H.-Y., Chu, C.-Y. and Lin, J.-S.C. (2020), "Engaging customers with employees in service encounters: Linking employee and customer service engagement behaviors through relational energy and interaction cohesion", Journal of Service Management, Vol. 31 No. 6.

Wijaithammarit, S., Taechamaneestit, T., “The impact of customer experience on customer loyalty of supercenter's shopper in Thailand”, International Journal of e-Education, e-Business, e-Management and e-Learning, Vol. 2, No. 6, December 2012.

Yohn D. L., 8 December 2016, HBR, https://hbr.org/amp/2016/12/design-your-employee-experience-as-thoughtfully-as-you-design-your-customer-experience