“It is not the employer who pays the wages…. It is the customer who pays the wages.”
A lot has changed since Henry Ford first made this statement, but the idea that customers wield bottom-line power still holds true: Gaining a new customer is “anywhere from five to 25 times more expensive than retaining an existing one,” according to this HBR post, and happy customers can spread valuable recommendations, driving business growth that is difficult to achieve through push marketing campaigns alone.
With the customer experience increasingly becoming the preoccupation of savvy executives, and with US companies spending almost $14 billion annually on leadership development, a growing number of learning leaders will need to be prepared to answer the inevitable question: Are our leadership development programs leading to better customer satisfaction?
Answering this question can be tricky if you don’t have the right data in hand. It requires more than just reporting on learner satisfaction, enrolments, cost of training, and learner demographics–the type of metrics most readily available through an LMS.
Your workforce is a dynamic system, with leaders typically having an impact on business results through their team. This means that tracing the path from leadership development to customer satisfaction requires a more analytical approach, one that covers three key elements: the leaders, the teams, and the organization’s goals. Here is an overview of what to look for in each piece of the customer satisfaction puzzle:
1. The Leaders
If your managers and their teams interact directly with customers, and your organization tracks their customer satisfaction scores, you can start by asking whether trained leaders have better customer satisfaction ratings than those leaders who did not complete the training program.
It is also important to look at how development programs are impacting trained leaders overall. Ask questions such as:
- Do managers who take leadership courses have a lower turnover rate?
- Do trained leaders report higher engagement scores?
- Do trained leaders have better performance?
Answering these questions will help you determine if there is a disconnect between the program’s impact on the leader and customer satisfaction. For example, if leaders are more engaged as a result of training, but are not boosting customer satisfaction, then perhaps the training curriculum’s focus needs to be adjusted.
If you see that leaders who are developed in a certain way are more engaged and perform better in terms of customer satisfaction, it’s a good indication that the program is having a positive impact on the individual leaders. However, if you have only completed this part of the analysis, resist the temptation to make any assumptions about the program’s impact on business performance! That will come later.
If your leaders do not interact directly with customers, the engagement and performance data on its own can still function as an indicator that the development program is having a positive impact. But you will need to perform a team analysis before you can draw any conclusions about whether the development program is successful in terms of customer satisfaction.
2. The Teams
Whether the leader interfaces directly with customers or not, it is crucial to look at team performance and metrics to contextualize impact. A high performing team is greater than the sum of its parts, achieving goals that are not possible for individuals working in isolation to achieve.
When evaluating the impact of the trained leader on the team, ask specific questions such as:
- Do groups managed by managers who take leadership courses have a lower turnover rate?
- Do employees who report to trained leaders report higher engagement scores?
- Do employees who report to a trained leader have better performance?
Leaders are important to teams because of their opportunity to understand and support employees at an individual level. When provided with the right soft skills, leaders can contribute to increased employee engagement: Gallup has reported that “as much as 70% of the variance in the employee engagement of teams can be traced back to the influence of the manager.”
Many successful customer-centric businesses have recognized that an engaged workforce leads to productivity, which leads to happy customers. The link between engagement and customer satisfaction is identified in the “Service-Profit Chain” described in this HBR article.
Of course, leaders are not the only factor influencing employee engagement and performance. It is important to rule out any other factors; If you see that high employee turnover, for example, is a common trend among groups reporting to trained leaders and groups reporting to those who are not, then it indicates a broader talent management issue that needs to be addressed.
3. The Goals
Highly engaged teams and leaders may work hard, but this energy needs to be directed towards a goal that serves the organization’s purpose. This means it is important to evaluate the impact of the trained leader’s team within the context of a definable business KPI that reflects customer satisfaction, like call volume, number of customers served, units produced, or specific HCAHPS scores (in the case of healthcare) for work units .
If the team has higher engagement scores, and they aren’t hitting their goals, then perhaps the leader is not emphasizing the right results or the goals are not aligned with the team’s work.
Putting it All Together
Once you have analyzed the leader, the team, and their impact on results, it’s time to step back and look at the big picture. If trained leaders and their teams are generating poorer customer satisfaction even though they are more engaged, then perhaps it’s time to take a step back and rebuild the training program from the ground up. Conversely, if trained leaders and their teams are performing better, and boosting customer satisfaction, then it’s a good sign that the program in question is fulfilling the business objective.
The path to business outcomes is not always easy to see. But with the right learning analytics, you can understand the connections, or how one thing affects another. Then you will be able to see what is working and what is not — playing with those levers to focus on what really matters for the business.