Pay More. It Costs Less.
Why does The Container Store pay its 6,000 employees an average of $48,000 a year, more than double the average for retail sales worker? According to CEO Kip Tindell’s recent book, Uncontainable, the company gets a huge return–highly satisfied employees that are three times more productive and a turnover rate of less than 10% compared to a whopping 75% industry average.
We all know that turnover is expensive. Hiring and training drain resources and lower productivity. Happier touchpoint employees give consistently great service. Customers who are delighted by happy and engaged employees will return and spend more money. Tindall is not alone in bucking the low-pay trend. CostCo, Whole Foods, and Trader Joe’s all pay higher wages and are rewarded with low turner and high customer satisfaction ratings.
On the other extreme is the poor service we experience when we are greeted by unhappy, indifferent employees who would clearly rather be somewhere else and who could care less about our experience. How can management put up with that behavior? Why does that person still have a job?
The simple answer may be that they get what they pay for. Every business should have customer service as the top priority. Ultimately, the tone for employee expectations and the resulting customer experience is set by management. If payroll is an expense item to be reduced, the result will be clear to the customer. Businesses that pay (and demand) more, get the best employees.
In the book, First, Break All the Rules, Marcus Buckingham and Curt Coffman show that the greatest managers focus their attention on their best performers. Top performers have the most potential for growth and will raise performance of everyone around them. Businesses that focus on the best performers through recognition, higher expectations and higher compensation see the desired performance repeated and imitated by other employees.
Business owners spend a lot of time and money marketing to establish a brand and get customers in the door. In reality, the brand will be established by customers, based on how they are treated, how well you listen to their feedback and resolve their issues. And most importantly, how your people make them feel.
Focus on your touchpoint employees. Loyal customers and your bottom line results will follow.
Originally published in the September Carmel Business Leader.
Categorized in: Blog, Customer Service, Retail
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