The human touch

John McKean has carried out extensive research in the loyalty area as executive director of the Center for Information Based Competition, sometime adviser to various US government organizations and author of a soon to be published book The Human Touch - Treating Customers as Human Beings. He agrees that the emotional element is key: 'The only way a company can engender customer loyalty is to treat customers as human beings. Seventy per cent of what determines customer loyalty is how human their interaction was with a firm, with only thirty per cent being the actual product attributes. The only way a company can consistently treat customers as human beings is to treat its employees as human beings. Correlations between customer and employee satisfaction to stakeholder value run very high."

McKean believes the area of human capital management is the critical link to treating customers as human beings, although it is an area that has been sorely neglected: 'The realization of its importance has lagged behind the realization of the importance of customer relationships. While human capital management has lagged, progress is being made. Recent work by behavioral sciences has shown that the happiness of employees is less related to money and more related to the feeling of competence in one's job as well as having satisfying interpersonal relationships at work"

"Understanding customer loyalty is still in its infancy. Most firms have barely scratched the surface in understanding what drives loyalty"

McKean also believes there is a definite link between customer loyalty and shareholder value: "To prove this, all you need to do is place the customer loyalty coefficient at 0% and observe what happens to share price. The one major factor in correlating the two is the time lag between share price fluctuations and when the customer loyalty factors shift. Many firms find a three to four month lag between customer loyalty / satisfaction and share price fluctuations."

Barely scratching the surface At the end of the day, what surprises McKean is that is has taken so long to come this far: "Understanding customer loyalty is still in its infancy. Most firms have barely scratched the surface in truly understanding what drives customer loyalty. This is why many firms have started recently hiring behavioral scientists to help them in this effort. The revelation that customers are human beings with real emotions and feelings seems as outlandish to some firms as employees with real emotions and feelings. Regardless, this recent revelation to many firms will soon be the next battleground to take us into the 21st century. A firm's greatest asset moving into the 21st century will be its potential to interact humanely with its customers and employees."

Steve Bell