Don't Underestimate the Link Between Customer and Employee Loyalty

A billion-dollar family business has been rocked by the voting out of the "enemy" relative loved by all employees. That's the story of Market Basket, the Tewksbury, MA–based grocery chain of 71 stores with some 25,000 employees throughout the Northeast.

A groundswell of rallies, strikes, and protests attended by thousands of loyal workers has followed the firing of Arthur T. Demoulas, Market Basket's former CEO. Demoulas was replaced in June by a board now controlled by his cousin Arthur S. Demoulas, a rival heir to the company built by their Greek immigrant grandparents, who opened their first store in 1916. Although the stores remain open, merchandise on shelves is sparse because warehouse drivers as well as outside vendors have refused to make deliveries. Customers have taken to social media to show their support for the employees trying to get their boss back. The company is losing millions of dollars a day.

The Market Basket situation has rocked corporate America and left many shocked and bewildered. How can employee loyalty backfire?

There are many critical takeaways from what is happening with Market Basket. Leadership should take notice and make sure that these lessons are reviewed and discussed in their next team meetings. Among those lessons are the following:

1. Keep your ear to the ground. Call it a "win for the Gipper" or their "Norma Rae moment"—people have a tendency to stand up for the underdog. And the crowd influence of social media can magnify that fight for injustice like nothing else. Companies need to understand just how quickly discontent can become a rallying cry that can impact performance and potentially damage the brand. Listen to your team's concerns early on. Clear and tangible strategies that drive employee satisfaction and engagement are critical, as are honest communication and a nimble response. Feeling valued and respected is key to true employee engagement. Cultivating employee loyalty starts at the individual level but is also critical in optimizing the group dynamic of your workforce.

2. Customer loyalty is directly correlated to employee loyalty. Most successful B2C organizations allocate significant budget to support customer loyalty and engagement programs. Many, however, don't appropriate a significant amount of resources to driving employee loyalty and engagement. Organizational cultures that don't focus on motivating, training, engaging, and rewarding their employees have little chance of achieving the optimal customer experience. All the customer loyalty initiatives in the world can't overcome a disgruntled, disengaged workforce. Coupons, price breaks, and corporate pleas didn't stop Market Basket customers from pushing their carts into the likes of its competitor, much less lining up behind the boycotting employees. How you treat your employees directly affects how your employees treat your customers.

3. Get back to basics—where everybody knows your name. We spend an inordinate amount of our lives at work, so the environment we work in matters. Employee satisfaction and loyalty aren't only driven by robust reward and recognition programs; the other essential elements are more basic and much less expensive. We saw this firsthand with the Market Basket situation. Employees were loyal to a CEO who knew their names, asked about sick family members, sent notes recognizing graduations and weddings, and gave employees a pat on the back and praise for a job well done. Not to dilute the value of equitable wages and well developed recognition programs, but the leadership was the driving force for these employees. They were willing to risk their livelihood for a leader who took the time to develop a personal relationship with them. Successful customer and employee loyalty programs today MUST include personalization—it is a fundamental element. We all want to feel special, that we are worth taking time to get to know, that we can make a difference. What we see with Market Basket is just how powerful this connection can be—for employees as well as customers.

C-suite executives everywhere should be convening emergency meetings to inventory their employee and customer loyalty strategies. If you are void of strategies or have words on paper that haven't translated to the fabric of your culture, consider reprioritizing efforts to avoid being the next Market Basket.

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Stevi McCoy and Kate Urekew are cofounders of Revel Experiences. They have been developing customer and employee loyalty solutions for Fortune 100 companies for 15 years.

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