How Much is Employee Advocacy Worth?
Everyone appreciates a good recommendation. Whether it’s a restaurant, a housekeeper or someone to help you with financing your home, we value a referral from a family member or friend. Advocacy, defined as support or recommendation for a certain cause, can be such a powerful tool: it can not only get the word out about your business, but can also boost the overall financial performance of your organization.
Advocacy starts with just one person and can spread exponentially. Customers are certainly great to have as advocates as they’ve experienced first-hand the value of your products or services, but what about your employees? Employees of your organization should be the best advocates for your organization: they are experts on your products and services and have the ability to deliver the appropriate message specifically tailored to the needs of the potential customer. Are your employees acting as advocates for your organization?
A financial institution’s brand is reflected through the sentiment from current customers, the market (non-customers), and employees. Whether you are a small organization with 20 employees or a large organization with hundreds or thousands of employees, how those employees feel and express sentiment about your organization is critical to your success and the strength of your brand. In terms of marketing efficiency, employee advocacy can really make a difference. Let’s do some simple math. Estimates suggest that acquiring a new customer costs $175*, and the average organization has 100 employees. If each employee were to recommend two customers to your organization and those two new customers each tell two more, and they tell two more each, that would be 14 new customers per employee. Acquiring those new customers through word of mouth would result in a cost savings of $245,000 and 1,400 new relationships. Seems easy enough, right?
Raddon measures the sentiment of employees working within financial services organizations through its Employee Viewpoint Survey program. We’ve recently uncovered some findings related to employee advocacy that will surly make you take notice and (hopefully) motivate you to engage with your management team and employees to make improvements for your organization.
1. The average NPS© for customers and employees is exactly the same.
We are all very familiar with the Net Promoter© system (NPS©), the score that provides an indicator of the efficiency of your marketing. A positive NPS© indicates that your Promoters are very much helping your marketing efforts. A negative score indicates that the Detractor base is working against your efforts and negatively effecting your brand. When comparing the NPS© for customers versus employees, wouldn’t you expect that employees would score higher?
Analyzing the question used to calculate the Net Promoter Score© is ‘How likely are you to recommend [Financial Institution] to your family and friends?’ reveals some interesting results. Raddon research indicates that 53% of customers of a financial services organization are extremely likely (highest rating on 11-pt scale) to recommend that organization to their family or friends for financial services. However, when we asked employees from financial services organizations the same question, only 32% indicate they are extremely likely to recommend the institution. Why the disparity? One hypothesis is that employees are privy to problems happening behind the scenes. When dining out, most of us probably wouldn’t eat the dinner that we purchased if we knew how the cooks made it. What employees need to understand is that every organization has issues; unless they are operating in a perfect environment, those issues plague every organization. Working to avoid these issues and resolving them quickly when they inevitably do arise is the employee’s responsibility to the customer and to the company. It is management’s responsibility to make clear to employees that it also has the best interests of the customer at heart.
2. High employee advocacy facilitates higher customer intimacy.
Customer loyalty is nearly 30% higher for organizations that demonstrate high levels of employee advocacy. Customers who are loyal are much more likely to advocate for the institution as well as bring their future business. Future business plus advocacy (loyalty) equals growth for the organization – nearly 18% more** on average. Loyal customers also tend to rate the employees more favorably on items such as skill and knowledge as well as on advocating for their financial welfare. Strong employee advocates are much more confident with their skills and are more passionate about the products and services that they are selling (60% of employee advocates report that they strongly agree that ‘our products and services create value’ for customers versus only 19% for other employees). This passion for delivering value translates to more sales for your organization.
3. Employee advocates feel a much stronger connection to the company they work for.
In Raddon’s Employee Viewpoint program, we measure various dimensions of the employee experience that drive engagement. One of the key drivers of engagement for any employee is their connection to the company and how they feel about their employer. Employee advocates are nearly three times more likely to tell others that they are proud to work for the company and almost twice as likely to understand the vision of the organization.
This passion and commitment to the organization is definitely what you want your brand to represent and what you want communicated to potential customers.
4. Organizations that demonstrate high employee advocacy demonstrate better financial performance.
But does employee advocacy yield financial success? We looked at 50 institutions which completed Employee Viewpoint surveys and also participated in Raddon’s Performance Analytics program. Organizations that scored 62% or better in terms of employee advocacy (% of employees choosing a 9 or 10 on question asking how ‘likely they are to recommend the institution’) were considered to have high employee advocacy. These represented half of the 50 institutions. Comparing high employee advocacy institutions to low employee advocacy institutions in terms of financial performance yields amazing results:
- Overall institution financial performance increase of 44%
- Household profitability increase of 11%
- Overall household growth (actual rating) more than doubles (3% on average to 7%)
- New household growth increase of 35%
- Cross-sold household growth increase of 45%
- ROA increase of 50%
Now that we know how important advocacy is to the performance of your organization, how can you improve it? Here’s a list of best practices for improving employee advocacy:
- Onboarding for new employees and re-boarding for tenured employees. Help employees understand your vision and how they contribute. Ongoing communication and/or review of the vision helps employees to feel more confident and connected to management and the overall company goals.
- Leadership/Management training to help develop coaching skills.
- Continual measurement to identify gaps in employee skills and overall disconnects with customers and/or organization. Participating in Raddon’s Employee Viewpoint Survey program provides this valuable information.
- Focus on additional training for employees to improve and/or reinforce their skills. Training also provides motivation for employees and leads to higher engagement.
- An employee referral program to encourage employees to refer new customers as well as new hires.
Leveraging your employees as advocates for your organization is a sure way to increase financial performance. Raddon helps financial services organizations understand their employees and what motivates them to perform better. For more information about our Employee Viewpoint Survey program, or any of Raddon’s survey programs, please visit our website or contact Julie Skuturna, email@example.com.
* Source: https://www.entrepreneur.com/article/225415
** Source: Raddon Viewpoint & Relationship Surveys, Raddon Performance Analytics, 2018. Average household growth for organizations ranking in top 25% is 7.2% versus 5.9 for bottom 25%.
NPS©, Net Promoter©, and Net Promoter Score© are a registered trademark of Fred Reichheld, Satmetrix and Bain & Company