When it comes to building and growing your business, a proper business strategy includes being able to obtain and maintain customers as well as making sure your employees are happy to work with your team.
The recession has made customers less brand loyal and less tolerant of poor customer service then before. Customers now expect companies to act on their feedback, and doing nothing increases customer churn at a time when customer retention is key to business success. In fact, it is estimated that 2% increase in customer retention has the same effect on profits as cutting costs by 10%. In markets with stagnant growth or worse, the focus on customer retention has never been sharper. In South Africa, major retailers like Pick ‘n Pay have announced that they expect full-year earnings to slide by about 40% because of tough business conditions, and this is an indication that all retailers must continue to strive to improve their customer experience as they seek to differentiate beyond price competition. Customers expect excellent service, and failure to capture customer insight and drive action will limit a business’s ability to grow and leave it open to significant risk.
Customer Retention With Loyalty Programs
Consumer loyalty programs have become a vital customer retention strategy for US retailers and businesses. Racking up reward points is supposed to lead to discounts on future purchases, but a new study has found that a large percentage of these reward points go unredeemed. According to the research, one-third of the nearly $48 billion worth of reward points and miles issued per year were not used by consumers, which totals approximately $16 billion in accumulated rewards per year left untouched. The study also found that the top three industries offering rewards were financial services, travel and hospitality, and retail. According to the findings, the average household has signed up for 18.4 rewards programs. One of the main reasons that reward points go unredeemed is that many programs require a minimum balance before those points can be redeemed, which is why these programs tend to benefit wealthy people the most.
Employee Appraisal Quotas
Most staff at big companies don’t enjoy the annual employee appraisal process very much, and many might even compare it to going to the dentist. The annual ritual can bring higher pay and promotion for some but reprimands or layoffs for those deemed below par. However, there is an element of the appraisal process at some large firms which critics say makes the experience even more traumatic, and this is the introduction of a quota system. Some companies set a quota for a pre-determined number of employees to automatically fail their appraisal, regardless of actual performance. This process causes a lot of anger which became very public last week, when an employee representative at HSBC used the annual shareholders’ meeting as an opportunity to vent his frustration. He accused the bank’s new CEO of basing the appraisal system on “outdated ideology” and urged the board to change it.
How To Make Employee Appraisal More Effective
As companies focus on their business growth, sometimes they lose focus on employee’s growth. The traditional employee appraisal systems neither inspire employees nor do they seem very aligned with achieving organizational goals. This results in appraisals that simply become a platform for fault-finding, political bickering and pay negotiations, rather than a dialogue based on mutual trust and respect which can foster performance excellence. A poor appraisal system can have a direct affect on employee morale and engagement. Dynamic and flexible appraisal systems are the answer, and companies can improve their systems by addressing the key issue of goal setting. Employees’ motivation can be tapped by including them in discussions about the team the the organization’s goals and business strategy. Additionally, companies should focus on the vital few goals that are aligned with the organization’s short and long-term objectives, and clarify how these goals are defined and measured.