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How Customer Satisfaction Affects Employee Job Satisfaction

Dec. 1, 2017

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Alex R. Zablah, PhD, Brad D. Carlson, PhD, D. Todd Donavan, PhD, James G. Maxham, III, PhD, and Tom J. Brown, PhD

Firms often prioritize and invest substantial resources in frontline employee job satisfaction, hoping that satisfied employees will lead to satisfied customers. In the real estate agency context, this implies that improvements in agent satisfaction are expected to yield an increase in client satisfaction. However, our research suggests that agencies may be missing an opportunity to enhance both agent and client welfare by prioritizing investments in client satisfaction instead.

While academics and practitioners have long held that “happy employees make for happy customers,” we argue that the opposite is also true: “happy customers make for happy employees.” Our view is grounded in a concept known as the satisfaction mirror which suggests that a reciprocal relationship exists between frontline employee (e.g., agent) job satisfaction and customer (e.g., client) satisfaction. That is, the satisfaction mirror proposes that what is good for customers is also good for employees and vice-versa, and thus implies that two types of effects exist: an inside-out effect of agents on clients, and an outside-in effect of clients on agents.

Using the satisfaction mirror as our guide, our study clarifies both the magnitude and direction of the relationship between frontline employee job satisfaction and customer satisfaction. As has often been reported in prior research, we find that investments in frontline employee job satisfaction lead to improvements in customer satisfaction. More importantly, however, our findings also indicate that customer satisfaction has an impact on FLE job satisfaction that is substantially larger in magnitude than the effect of FLE job satisfaction on customer satisfaction. These findings imply then, that, to maximize both customer and frontline employee welfare, firms should prioritize incremental investments in customer satisfaction over those designed to directly improve frontline employee job satisfaction.

Our Study

For our investigation, we employed a cross-lagged panel design which involves collecting the same data from the same respondents at two different points in time and then estimating the relationship between variables of interest while controlling for each variable’s level at the first-time point. Cross-lagged panel designs are considered to offer the strongest indication of causality in the field because they involve temporal separation between the cause and effect and can exclude stable third variables as a rival explanation for the observed relationships. Our cross-lagged panel included satisfaction data provided at two time points (one year apart) by 49,242 customers and 1,470 frontline employees across 209 stores of the same multichannel retail chain. Within this retail chain, customers are assigned a primary frontline employee after their first store transaction, and each frontline employee manages their own set of customers, assisting them during store visits and with personal shopping services over time.

The 3X Effect of Customer Satisfaction

Our findings confirm that frontline employee job satisfaction and customer satisfaction exert a positive effect on each other. In addition, we find that the outside-in effect of customer satisfaction on frontline employee job satisfaction is three times as large as the inside-out effect of frontline employee job satisfaction on customer satisfaction. Finally, our findings indicate that the relative size of the outside-in versus inside-out effect becomes even larger as customers’ level of engagement with frontline employees increases, which is a common occurrence when repeated exchange between customers and employees is the norm.

Overall, our findings demonstrate that – in contexts where service relationships are used to facilitate exchange – the outside-in effect of customer satisfaction on frontline employee job satisfaction dominates, and, moreover, increasing customer engagement enhances the magnitude of this predominance. Additionally, our findings provide empirical evidence confirming the existence of a satisfaction mirror effect, which supports our contention that customers and frontline employees both impact one another.

Implications for Real Estate Professionals

While the satisfaction mirror effects revealed by our study were relatively small in magnitude, they have important implications for firm performance. Prior research concludes that very small changes in customer and employee satisfaction have substantial implications for firm performance and should thus be pursued. The ability to increase market share or reduce losses by just a few percentage points translates into a substantial sum of money.

Therefore, to maximize both client and agent welfare as well as profitability, agencies should prioritize incremental investments in client satisfaction (e.g., client satisfaction surveys, loyalty and referral rewards programs, enhancements in process of getting homes listed, improvements in communication channels between client and agent, integration of user-friendly technology and web resources, improving fit of agent/client pairings, quality and speed of follow-ups, and assistance with paperwork) over those designed to directly improve agent job satisfaction (e.g., higher commissions/bonuses, strengthening team spirit among agents, good supervisor and subordinate relationships, recognitions and awards for contributions, compensation and responsibilities matching, job security, informal praise, encouragement, and feedback from supervisors, work conditions and environment, fairness, opportunities for promotion, and compensation structure). This requires that managers view client satisfaction not only as an important outcome metric but also as a powerful “lever” for improving agent job outcomes. However, managers should proceed with caution when adopting this recommendation to ensure that such an approach does not hurt morale, and that agents don’t construe firm actions to improve client satisfaction as a signal that the firm cares more about clients and profits than about their agents.

Recommended Reading

Zablah, Alex R., Brad D. Carlson, D. Todd Donavan, James G. Maxham, III, and Tom J. Brown (2016), “A Cross-Lagged Test of the Association between Customer Satisfaction and Employee Job Satisfaction in a Relational Context,” Journal of Applied Psychology, 101(5), 743-55.

References

Kabir, Mohammad Jonaed (2015), “Measuring Employee Job Satisfaction in Real Estate Business: A Study on Some Selected Companies in Bangladesh,” The International Journal of Social Sciences, 34(1), 18-30.

Mayfield, John D. (2007), “Survey Tactics: The Right Way to Ask for Feedback,” Realtor Magazine. http://realtormag.realtor.org/sales-and-marketing/sales-coach/article/2007/06/survey-tactics-right-way-ask-for-feedback.

Tracey, Melissa Dittman (2012), “7 Secrets to Winning Over More Buyers,” Realtor Magazine. http://realtormag.realtor.org/sales-and-marketing/feature/article/2012/03/7-secrets-winning-over-more-buyers

About the Authors

Alex R. Zablah, PhD
Associate Professor, University of Tennessee, Knoxville
Alex R. Zablah (PhD - Georgia State University) is currently an Associate Professor of Marketing at the University of Tennessee, Knoxville. Prior to his current appointment, he served on the faculties of Oklahoma State University and George Mason University. His research seeks to improve understanding of how frontline factors (organizational processes, employees, and technologies) influence the quality of customer-firm exchanges and, ultimately, firm performance. Alex’s research has been published in leading marketing, management, and information systems journals, including the Journal of Marketing, Journal of Applied Psychology, Information Systems Research, Journal of the Academy of Marketing Science, and International Journal of Research in Marketing. He currently serves on the editorial review board of six journals, including the Journal of Marketing, Journal of the Academy of Marketing Science, and International Journal of Research in Marketing. Over the years, Alex has received several awards in recognition for his research endeavors, performance in the classroom, and service as a reviewer.

Brad D. Carlson, PhD
Associate Professor of Marketing & Director of PhD Program, Saint Louis University
Brad D. Carlson (PhD - Oklahoma State University) is an Associate Professor of Marketing and Director of the PhD Program in the John Cook School of Business at Saint Louis University. His research focuses on enhancing consumer-brand relationships, with a particular emphasis on those that exist between consumers and branded products, among consumers of the same brand, and between consumers and front-line employees. His research has been published in the Journal of the Academy of Marketing Science, Journal of Applied Psychology, Psychology & Marketing, Journal of Business Research, and the International Journal of Advertising among others. Brad serves as an ad-hoc for reviewer for multiple top marketing journals and has been repeatedly recognized for excellence in his research, teaching, and service endeavors.

D. Todd Donavan, PhD
Associate Professor of Marketing, Colorado State University
D. Todd Donavan (PhD – Oklahoma State University) is associate professor of marketing at the College of Business, Colorado State University. His research focuses on two streams: branding and front-line employees. In the branding stream, Todd investigates brands, organizational and endorser identification. In the front-line employee stream, Todd focuses on customer orientation, service delays, and customer satisfaction. Todd has published in leading journals such as the Journal of Marketing, Journal of Marketing Research, Journal of Applied Psychology, Journal of Advertising, and the Journal of Environmental Psychology. Todd has won several teaching and a research award.

James G. Maxham, III, PhD
Associate Dean, McIntire School of Commerce, University of Virginia
James G. Maxham, III is Associate Dean for Graduate Programs and William Stamps Farish Entrepreneurial Research Professor at the McIntire School of Commerce, University of Virginia. Professor Maxham examines quantitative consumer models that help marketing scholars and retail managers better understand customer loyalty trends. Recent work investigates how human resource management practices, service policies, product return policies, retail concept extensions, and loyalty card programs influence customer attitudes, shopping behaviors, and store performance. Previously employed by the NCR Corporation and Russell Stover Candies, Professor Maxham currently teaches Customer Analytics & Brand Strategy at the University of Virginia. He also teaches global immersion courses that explore business, economics, and culture in China and Southeast Asia. His research has appeared in Marketing Science, Journal of Marketing, Journal of Applied Psychology, and Journal of Retailing, among others. He has served on the editorial review board of Journal of Marketing, and he currently serves on the editorial review boards of Journal of Retailing and Journal of Service Research. Professor Maxham also serves on the CMO Council’s Customer Experience Advisory Board.

Tom J. Brown, PhD
Noble Foundation Chair, Spears School of Business, Oklahoma State University
Tom J. Brown (Ph.D. – University of Wisconsin - Madison) is Noble Foundation Chair in Marketing Strategy and Professor of Marketing in the Spears School of Business at Oklahoma State University. In addition, he serves as Director of the Center for Customer Interface Excellence. His research interests primarily focus on factors that influence frontline employees and their effects on outcomes for the workers, their companies, and their customers. His research has been published in the Journal of Marketing Research, the Journal of Marketing, the Journal of Consumer Research, Journal of Applied Psychology, the Journal of the Academy of Marketing Science, and other scholarly journals. Tom has been active in the American Marketing Association, co-chairing numerous international conferences and serving a term as president of the Academic Council.

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