Do happy employees really lead to happy customers?

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Data from the American Customer satisfaction Index proves whether the adage 'happy staff leads to happy customers' is true or false. 

You've probably heard the platitude, "Happy employees lead to happy customers."

It's one of those sayings that just sounds right. Famous leaders have said it. Not-so-famous leaders have said it, too. It's all over the internet.

But is it true?

The things we believe have a mixed track record. Some things are supported by facts and analysis, while other beliefs are driven by anecdotal evidence. There are even a few oft-quoted statistics that are simply false, such as "55% of communication comes from body language." It does not.

So I decided to investigate the happy employees equal happy customers claim by reviewing Glassdoor ratings for the 20 companies with the best customer service. This list was compiled by Christopher Elliott using data from the American Customer Satisfaction Index (ACSI).

Here are the results.

Employee ratings at top service organisations

The average Glassdoor rating for the top 20 customer service companies is 3.8 (out of 5), compared to the average rating of 3.4. 

Toister employee engagement

The companies are listed on the chart in the order they appear on the top 20 list, so Chick-fil-A is number one while Mercedes-Benz is the twentieth company.

While the average ratings for this group are generally high, these aren't necessarily the elite companies in terms of employee ratings. Only seven companies from the list on are Glassdoor's 2018 Best Places to Work list.

  • Google (#5)
  • HEB (#20)
  • Wegmans Food Markets (#49)
  • Trader Joe's (#70)
  • Chick-fil-A (#72)
  • Toyota North America (#78)
  • Apple (#84)

Three companies on the top 20 list actually have employee ratings that are lower than the Glassdoor average:

  • Aldi (3.3)
  • Cracker Barrel (3.3)
  • LG Electronics (3.2)

Proving that there are outliers everywhere, customer service laggard United Airlines is ranked #55 on the Glassdoor Best Places to Work List, despite a dismal 2018 ACSI rating of 67.

Recommend to a friend ratings

Glassdoor has something akin to an eNPS rating where reviewers can indicate whether they would recommend working at their company to a friend. 

The average recommend to a friend percentage for the top 20 companies is 71% compared to the 49% Glassdoor average. The average is denoted with a large red X.

Toister employee engagement

Only one company on the list, Lexus, has a lower recommend percentage than the Glassdoor average, with just 48% of employees saying they would recommend the company to a friend.

One anecdotal note here is companies with elite service cultures can sometimes be very polarizing. The right employees love it while other employees are uncomfortable. 

Amazon provides a good example. The company has a 3.8 Glassdoor rating and a 74% recommend rating. One happy employee wrote, "An Amazing Place to Work" and rated the company five stars, while a two-star reviewer wrote, "Exciting work, abusive culture." A three-star reviewer summed it up with, "Can be amazing for some people, horrible for others."

There are certainly many explanations for variability in employee reviews, including their individual boss, job assignment, or location. On the whole is appears that the very best places to work aren't necessarily the customer service leaders.

CEO ratings

Glassdoor also asks employees whether they approve of their company's CEO. The average rating for the top 20 customer service companies is 87 percent, compared to the 69 percent Glassdoor average.

Toister employee engagement

Just one company (LG, 67%) had a lower CEO approval percentage than the Glassdoor average. 

Glassdoor publishes an annual list of the top-rated CEOs, and CEOs from seven of the top companies made the list:

  • Charles C. Butt, HEB (#7)
  • Colleen Wegman, Wegmans Food Markets (#9)
  • Akio Toyoda, Toyota North America (#24)
  • Sundar Pichai, Google (#45)
  • Dan T. Cathy, Chick-fil-A (#50)
  • Craig Jelinek, Costco Wholesale (#83)
  • Tim Cook, Apple (#96)

There's plenty of anecdotal evidence to support the reason for this correlation. Employees tend to blame company leadership for poor service, while leaders of customer-centric organizations are often studied, profiled, and copied due to their successful track record.

Conclusion

Granted, this data provides a limited snapshot. Yet that snapshot seems to show that happy employees are at least correlated with happy customers.

That doesn't mean that making employees happy automatically leads to happy customers. United Airlines is #55 on Glassdoor's 2018 list of best places to work even though the airline has one of the lowest customer service ratings in the airline industry.

What has been your experience?

About Jeff Toister

Jeff Toister

Jeff is the author of The Service Culture Handbook: A Step-by-Step Guide to Getting Your Employees Obsessed with Service and Service Failure: The Real Reasons Employees Struggle with Customer Service and What You Can Do About It.

More than 140,000 people from six continents have taken one of his video-based training courses on LinkedIn Learning (a.k.a. Lynda.com).

He is a nationally recognized employee training expert and a sought after speaker with more than 20 years of experience. 

 

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10th Sep 2018 12:52

Very trendy post. Interesting, thanks!

Thanks (0)
11th Sep 2018 08:51

Jeff, I have done a full study of the subject covering over 300 companies. I did it first in 2017 and repeated it earlier this year. You can find my article on it at the address below, and that includes access to the data set. In short, there is no relationship between the two for industries where employees have little or no direct customer contact, and quite a high relationship for industries like hotels where there is a lot of direct customer contact.

https://customerstrategy.net/employee-customer-satisfaction-2/

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to mtfitzgerald
14th Sep 2018 00:49

Interesting research, Maurice!

I must admit, I usually yawn and lose interest when someone pulls out a regression analysis, but your study is really compelling. Thanks for sharing!

Thanks (0)
to mtfitzgerald
17th Oct 2018 18:01

Hi Maurice,
I re-read your post recently, and couldn't reconcile some of the math. I think your ultimate conclusion may be true, and I'm the first to admit that basic stats sometime elude me, so maybe you can clear this up:

If the R2 for Glassdoor vs. ACSI rating for the full group of 345 companies is .0438, how can the R2 for two subsets of that group be .0963 and .0514 if those two subsets comprise the entire group?

Full group: 345 companies (R2=.0438)
Subset 1 (high-touch): 125 companies (R2=.0963)
Subset 2 (low-touch): 220 companies (R2=.0514)

Thanks (0)
to Jeff Toister
18th Oct 2018 13:36

Well, that's the nature of R2 Jeff. It is a measure of variation. It is to be expected that if you take two relatively homogenous subsets, the combination of the two will have more variation than each individual subset. More variation means a lower R2 number.

A random example occurs to me, and I have not checked it for validity. Lets suppose you have an R2 number for the relationship between iron levels in carrots for each month of the year, and another R2 number for the relationship between iron levels in broccoli and the months of the year. The R2 number would probably be relatively high for each, meaning low variation in numbers. Combine the two with similar scores for other vegetables to have a set of scores for 'vegetables' overall, and there will be far more variation, so a lower R2 number.

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