Employee vs customer satisfaction

Numerous empirical studies confirm the link between customer satisfaction and financial performance as well as the strong positive correlation between employee satisfaction and customer satisfaction at any point in time. For example, Sears Roebuck & Co showed that a 5-point improvement in employee satisfaction generated a 1.3-point rise in customer satisfaction, which generated a 0.5 increase in revenues.

In addition, Brooks (2000) found that according to the sector analyzed, between 40% and 80% of customer satisfaction and loyalty was due to a customer’s relationship with a company’s employees. Vilares and Cohelo (2000) also found that perceived employee satisfaction has an important impact on the perceived value of the products which is directly linked to customer satisfaction.

The relationship between employee and customer satisfaction is directly reflected in Alva’s reputation analysis. As analysed for the three-month period ending January 2011, a change in employee sentiment towards utilities (Alva: Corporate Culture reputation driver) is positively correlated with customer satisfaction (Alva: Products and Services Execution reputation driver) and also shareholder value (Alva: Financial Performance reputation driver).

This article was written by Nicholas Chrysanthou, energy consultant analyst at Alva and released in full on Energy Business Review.