Does Recognition Work at the Registers?

March 18, 2013 Darcy Jacobsen

First, let me answer a question with a question: Is it possible to have a retail experience in which everything is perfect – great store, broad selection, good prices, super products—but  a bad interaction with the staff sours you so much you never set foot in the shop again?

That answer is a clear “Yes.” It’s happened to me. It’s probably happened to you. That’s because, in the retail environment, customer service is a crucial differentiator between a good experience and a bad one.  Retail companies put their brand, their sales and their success directly in the hands of their people at the registers.

When retail workers feel appreciated, and feel good about their company and their work, they will pay forward those good feelings to your customers–increasing satisfaction and loyalty. It’s a direct correlation. In fact, when Sears did a survey of customer service a while back, it found that every 5 point improvement in employee attitudes drove a 1.3 point improvement in customer satisfaction, which in turn drove a 0.5% improvement in revenue.

And, study after study since has confirmed those findings, proving that “a direct link between employee satisfaction and customer satisfaction, and between customer satisfaction and improved financial performance.”  Grumpy, dissatisfied employees equals grumpy, dissatisfied customers.

Or more to the point, no customers at all.

Okay, fair enough, you say. But retail workers are not the easiest group to engage. For one thing, they tend to have lower wages than the national average—so incentivizing through pay isn’t really a big help. For another, they don’t tend to have email or sit at computers as often as other workers, so they are harder to communicate with. (This last point is a reasonable one, but is easily solved in today’s wired and mobile world.) Perhaps most significantly, retail employees tend to have a shorter tenure than most other industries. That means that on average retail workers have less time invested in their work, and many see their work day more as logging hours at a job than investing effort in a long-term career.

Which brings me back to my initial question. Does recognition really work at the register? My answer, of course, is yes. Very much so. Here’s why:

Yes. Because it makes employees (and customers) happier: Studies, including our own, show that great recognition is a significant driver of employee satisfaction and encourages employees to stick around longer. That’s good news for retail. In fact, lack of recognition is a leading reason people leave jobs—not salary. Knowledgeable people sticking around your stores helps improve customer service, loyalty and satisfaction, and as we covered above, employee satisfaction correlates directly with customer satisfaction.

Yes. Because it encourages great behavior: Strategic recognition provides positive feedback for employees who are exhibiting behavior you want, and none for those who don’t. Plus, a full 31% of retail workers are millennials under age 24. (That’s significantly higher than in most industries.) Millennials are a generation that appreciates and craves constant positive feedback. What better way to let them know they are on track than a pat on the back?

Yes. Because it connects you with your employees: Retail employees tend be physically removed from the heart of your company. Many never ever see your corporate offices. But remote or not, it is still critical that they understand your company goals and culture. Recognition lets workers connect directly to your core values (service with a smile, honesty, safety, etc)  by actually practicing them every day. Nominating and receiving awards based on values keeps those tenets and the behavior they drive at the forefront of people’s minds—instead of just a plaque in the back room.

Yes. Because it is tangible and meaningful: An employee recognition program that includes even the most modest rewards can make a huge difference in making lower paid retail employees feel appreciated for their extra efforts. The double impact of public, social recognition and the reward redemption process means that that recognition moment is extended and reinforced and made all the more powerful.

Yes. Because everyone says so: Retail is a social, interactive job, and tends to be a team effort. Recognition that includes a social, peer-to-peer element—where co-workers can witness, nominate and congratulate one another is a winning one. In sharing one another’s successes and following the positive examples set by peers, everyone is encouraged to excel.

Yes. Because it has eyes and ears everywhere: Your employees see things you don’t see. Even the best of retail managers can’t be everywhere or notice everything—but coworkers usually see what is going on. A peer-to-peer recognition program lets everyone be inspired to notice and congratulate extra effort. In fact it is the best measure of what is really happening on the floor. And the data from those recognition moments can help even off-site managers to monitor the team and conduct performance reviews.

And the bottom line? Yes. Because it drives business results: Studies show that recognition drives engagement. And according to Gallup (among others), employee engagement has a significant positive boost across the board on statistics like customer loyalty, profitability and productivity. It also impacts stats like employee turnover, employee safety, absenteeism and shrinkage (theft and lost merchandise)—four stats of particular interest to retail businesses–that affect our business where it matters most.

The upshot? Recognition is great for the bottom line, it is great for employees, and it is great for retail.

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