- June 22nd, 2015
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Happy Worker, Happy Walmart? 3 Steps to Turn Employee Perks into Customer Loyalty
Can 2.2 million pairs of jeans make Walmart a happier place to shop? Perhaps we should ask the greeter.
Jeans, or at least a more comfortable dress code, are among the new employee perks Walmart is easing into its stores. The world’s largest private employer also is adjusting its air conditioning to be less chilly, changing up its piped-in music (good riddance, Celine Dion) and allowing workers to wear team jerseys during big sporting events.
These low-cost shifts follow Walmart’s announcement that it would increase the hourly wages of its managers, the second wage increase this year. The retailer also said it is looking into more flexible work schedules. These changes are being implemented with one big cost-savings in mind – reduced worker turnover. But will it translate to customer loyalty?
Like the old saying, “happy spouse, happy house,” Walmart appears to be betting that happy workers will translate to a happy Walmart, meaning higher sales and performance. Research shows publicly traded companies that are rated as best places to work realize annual share returns that are almost double those of the S&P 500.
The wrinkle for Walmart is not so much whether happy employees will stay longer, but whether its cost-conscious customers will be moved by such shifts. The answer may depend on whether Walmart’s efforts get new shoppers through the doors.
Taking stock of change
Past efforts by Walmart to be more customer-friendly did not deliver such smiley-faced results.
Recall back in 2009 when the retailer lost substantial sales after dramatically reducing or “rationalizing” its shelf stock. Walmart did this in part based on customer surveys that indicated its shoppers wanted cleaner stores (like its archrival, Target). However, while the aisles were less cluttered, they also were clean of specific items that Walmart shoppers, conditioned to navigate its sea of aisles like sharks honing in on household prey, came for. Walmart theorized its shoppers would just stay and switch brands; instead, they switched stores. Walmart added 11% of its product back.
Employee engagement is a far safer territory in which to experiment, fortunately, and research backs it up. A 2014 report by online software provider Cvent found that customer retention rates are 18% greater on average when employees are highly engaged. Further, one-third of the companies surveyed for the report recorded a significant improvement to profit margins when customers were engaged.
It brings to mind the “service-profit chain” model described by James Heskett, Harvard professor emeritus, and other business and academic leaders. The model establishes the relationship between profitability, customer loyalty and employee satisfaction as such: profit is fueled by customer loyalty; loyalty results from customer satisfaction; satisfaction is influenced by the value of the product or service; and product value is created by happy, loyal and productive employees.
Lastly, employee satisfaction results from support services and policies that enable workers to deliver results that foster pride.
At what price loyalty?
The challenge then, for Walmart, will be linking happy employees to the customer experience. This begs the question of whether Walmart’s best shoppers come to its stores for the experience, or simply for the low prices and convenience. The answer is important because it dictates Walmart’s capacity, as a low-priced competitor, to generate and foster genuine customer loyalty.
I recently read a statement from Warren Kornblum, chief strategy officer at Rooms to Go, that a brand can only capture a customer’s share of heart if it can get that shopper to like it, much as she would like another person. Can Walmart make that claim?
There is no question that people like low prices, but achieving the milestone of liking a company is accomplished through personalized, living-in-the-moment experiences. As long as Walmart’s prices are low, its regular shoppers will likely keep coming. Whether a happier greeter in a Cubs jersey will get her to spend more money is dubious, unless of course it inspires her to purchase some Cubs gear.
However, if happier workers result in better product knowledge, staffing levels and willingness to help out the customer (even when not asked), some regular shoppers could be pleasantly surprised, and spread the word. A few small efforts could help get that word out:
1. Endear with data: While Walmart does not have a traditional loyalty program, it employs many methods of compiling customer data, and one way is through its staff. Beyond simply asking shoppers if they found all they needed, workers can ask if there are any particular products or services they’d like to see, and then record those requests in a system. Employees who enter winning suggestions, or reach certain feedback milestones, can be rewarded.
2. Get literal likes: A number of social campaigns can encourage shoppers to give a shout-out to their favorite Walmart employees, or to simply recognize a kind act. However, one should be realistic – shoppers can turn such efforts into opportunities to vent frustrations. Twitter campaigns can be especially difficult to keep pace of.
3. Humanize: Employees prefer happy experiences as much as the rest of us, so why not share their mission and dedication? Air carrier JetBlue, for example, recently made headlines, and video social shares, by lightheartedly addressing unpleasant on-board activities, such as eating stinky food midflight. Enterprise Rent-A-Car’s “We Played” television ad campaign honors Enterprise employees who were once competitive NCAA college athletes. Walmart carries lots and lots of TVs in its stores; is this not an opportunity to air employee-made videos highlighting their own blunders, pie-eating contests and fundraising activities?
It is widely documented that Walmart founder Sam Walton asked questions of and listened to his employees at all levels. “The more they know, the more they’ll understand,” he reportedly said. “The more they understand, the more they’ll care. Once they care, there’s no stopping them.”
What he meant, essentially, is that success hinges on trust. Perhaps then the key to gaining customer loyalty is for Walmart’s happy employees to first gain their trust.
This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.