Customer Loyalty and Devotion
Part III of this post, from The Ken Blanchard Companies, on leadership, productivity and profitablity , discusses further research findings on the impact of leadership on a company focusing this time on customer loyalty and devotion.
Earlier research has shown that there is a Service-Profit Chain, a Value-Profit Chain, and an Employee-Customer-Profit Chain. Blanchard® research indicates that there is also a Leadership- Profit Chain. The data clearly shows that strategic leadership as well as organizational leadership capacity are critical to overall organizational success. In addition, leadership impacts customer loyalty and devotion as well as employee engagement and passion. We found throughout the literature that, often, leaders attempt to influence organizational vitality through overhead control and fiscal measures, which has been proven to be ineffective over the long term. Many leaders believe that they can impact organizational vitality by tinkering with the process and policies directly governing the use of economic resources rather than educating, empowering, and supporting employees’ wise use of resources. Thus we determined that the key variable that drives long-term sustainability and organization profitability is a combination of strategic and operational leadership actions that drive employee passion and customer devotion.
Strategic leadership is a critical building block for setting the tone and direction for a service-quality culture. Operational practices, cascading down, reflect and reinforce the implementation of this culture. Our research indicates that fundamentally effective leadership is linked to the integrity of the triangle (i.e., to both strategic and operational leadership) as this is the area of primary importance. Employees who perceive that leadership practices emphasize quality, customer service, and employee development tend to be more satisfied with their jobs and the organization overall. As a result, customers are more satisfied and will maintain a long-term relationship with the company. Whether employees are supported and enabled to manifest value for the customer ultimately depends on leadership.
Our findings support several connections and the overall framework of the model that we developed to illustrate these connections. Our theory is that the employee-customer relationship is dependant on the strategic and operational leadership demonstrated within the organization. As a result, leadership is the crux of the Leadership-Profit Chain. The integrity and effectiveness of leadership and management practices is an indirect driver of organizational success. The maximum impact on an organization’s bottom line can be expected when both strategic leadership and organizational management practices are aligned, thus supporting a purpose that is visible to both customers and employees alike.
Thanks again for joining us on this fascinating look at the Leadership Profit Chain. And make sure you check back next week, for the final installment of this four-part post. We will be taking a look at how the connections in the leadership-profit chain are made.
The Ken Blanchard Companies® is a global leader in workplace learning, productivity, and leadership effectiveness that is best known for its Situational Leadership® II program—the most widely taught leadership model in the world. Because of its ability to help people excel as self-leaders and as leaders of others, SLII® is embraced by Fortune 500 companies as well as mid-to small-size businesses, governments, and educational and nonprofit organizations.
Erez Almogi, Blanchard Israel CEO
Israeli Site – www.blanchard.co.il
Corporate Site – www.kenblanchard.com