Customer Loyalty Begins With Employee Loyalty

Customer loyalty is fast becoming a key strategic initiative for most businesses because loyal customers stay with your organization, and will continue to buy your products or services. Revenue and profitability are important business indicators, but too often they reflect decisions an organization made yesterday; whereas growing a loyal customer base is a key predictor of future success. When an organization is focusing both on profitability and loyal customers, they have the best chance of creating a sustainable business.

A key factor that many organizations miss is the fact that they cannot have loyal customers if they do not have loyal employees. Employee loyalty can be defined as employees being committed to the success of the organization and believing that working for the organization is their best option. It is not about employee tenure. It is about wanting to contribute to the success of the organization.

Finding good employees can be challenging and time consuming. However, once you find the right fit and nurture the employee relationship, it can be quite costly to see that relationship go by the wayside. Depending on what research you read the cost to replace a hourly employee can be anywhere from 35% to 50% of their salary, and for a professional staff person, the replacement cost can go as high as 125%.

How can your organization foster employee loyalty?

  1. Share your vision and strategic plan.
    Communicating what the organization stands for, where the organization is going, and how that impacts all stakeholders, particularly the employees, is key. Employees want and need to know what they are a part of and how their contribution will make a positive impact on the success of the organization. Give them a reason to be there!
  2. Encourage ideas and feedback.
    Create an organizational culture that is open to new ideas and fresh perspectives. Your employees are on the front lines and they can tell you what is working and what might work better. In a recent client engagement where we were working with a cross functional team, a woman who had the least to do with the process made one simple suggestion that ended up saving the organization hundreds of thousands of dollars. Loyal employees make positive contributions!
  3. Walk your talk.
    Everything you do and say needs to embody the values and culture of employee loyalty. Recognize and respect your employees. Let them know when they are exceeding goals and objectives, and praise accordingly. If there is a challenge, then give your employee the details straight up. Give employees open and honest feedback and they will reward you with loyalty.
  4. Measure Your Company’s Employee Loyalty.
    You cannot manage or improve what you are not measuring. Your organization cannot improve its employee loyalty factor unless you know your starting point. Do you have a system in place to capture that data? If not, create one or find one. Give your employees an opportunity to tell you what is going well and what needs to be improved. Based on the data you will be able to make strategic decisions that will continue to foster employee loyalty. Your people really are your greatest asset!


Creating a loyal customer base can be the measurable difference between you and your competitors. Enhance your ability to accomplish that strategic goal by creating and maintaining loyal employees. Your employees will always be the key!

Tammy A.S. Kohl is President of Resource Associates Corporation. For over 30 years, RAC has specialized in helping businesses assess, measure and improve their employee and customer loyalty. Learn how at or contact RAC directly at 800.799.6227.

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