The Importance of People in Building Customer Relationships

1. Creating Customer Relationships: Is it the Person or the Brand? October 12, 2010 Beth Schelske, Vice President ITAGroup Keith Fenhaus, CEO/President Hallmark Business Connections

2. Research Center within Medill IMC graduate program at Northwestern University Our central objective is to develop and disseminate knowledge about communications, motivation and management We believe businesses can better design, implement and manage people-based initiatives - inside and outside an organization We bring like-minded individuals together during an annual “Think Tank” event

3. This research is based on the study, “The Employee or the Company: The Relative Importance of People Versus the Company Brand on Customer Experience” Dr. Frank Mulhern Academic Director for the Forum for People Performance Management and Measurement

4. 1601 N Bond Street, Suite 303 Naperville, IL 60563 P: 630.369-7780 F: 630.369-3773 www.performanceforum.org info@performanceforum.org

5. Research Question • What is the relative importance of a person versus a brand in a business relationship?

6. Key Findings • Customers build relationships with individual employees more than a corporate brand • When a company has a strong, positive brand reputation, it may have more to gain by investing in its employees than in investing more in the company’s reputation • Investments in employees could include training, incentives, rewards, career development, benefits, and improved compensation • The findings are central to many service industries including healthcare, financial services, and education

7. Case Study • Insurance Industry • Excellent industry for investigating the role of front line personnel in the customer experience • Major, high involvement purchase that results in long term customer-to-company relationship • Industry is struggling with whether to maintain networks of sales agents versus selling direct • Direct selling allows for lower premiums but eliminates the opportunity for personal relationships

8. Case Study • National Insurance Company • Portfolio = full range of retail insurance products including life, health, property and auto • Products are exclusively sold through company sales agents • Agents only sell products for one company

9. Case Study • Data • Customer Satisfaction Survey • Employee Engagement Survey • Employee Performance

10. Case Study • Results • Experiences with Agent vs Company • On average customer rate their agents higher than they rate the company with respect to their experience • 90% of the Agents scored higher on customer satisfaction with the agent than with the company. • Agent is the “public face” of the company

11. Case Study • Results • Agent Performance • Customer ratings of the agent closely tied to the performance of the agent • Agents in the top quartile of engagement and customer satisfaction had significantly higher levels of account growth and customer retention • Best performance achieved by having both highly engaged employees and satisfied customers

12. Case Study

13. Case Study

14. Insurance Case Study • Implications • Customers build relationships with individual employees more than a company brand • Insurance agents play a measurable role in the customer experience • That role translates into better performance for the agent and the company • The agent’s rating of the company has no effect on the performance of the agent. • This result suggests that companies have more to gain by investing in sales agents than in building the brand

15. Insurance Case Study • Implications • Investments in agents could include sales training, incentives, rewards, career development, extension of benefits and improved compensation • Agents perform better when they are more engaged • Agents in the top quartile for agent engagement and customer rating achieve over 4X the account growth of agents not in the top quartile for either measure.

17. Brand Value

18. Brand Value

19. Brand Value

20. “The earlier you make the emotional connection the better, because once consumers have decided they like a particular option, the more difficult it is for them to backpedal. Their thinking falls in line with their emotions.” • Raj Raghunathan, of McCombs School of Business

21. Equity

22. Social Connections

23. Experience • “Our ladies and gentlemen are our most important resource in our service commitment to our guests.” • Ritz Carlton

24. Energy

25. Brand Selection • The Fundamentals: • Price • Product Performance • Differentiation • The Ethereal: • Equity • Social Experience • Energy

27. Mission: To live and deliver WOW!

28. “We wanted a list of committable core values that we were willing to hire and fire on. If we weren’t willing to do that, then they weren’t really ‘values.’” • Tony Hsieh, founder of Zappos

29. Brand Value

30. Core of the Brand

31. Conclusion • Customers build relationships with individual employees more than a brand • Employees perform better when they are engaged • Employees perform better when their customers are satisfied • Focusing simultaneously on employee engagement and customer experiences drives brand value