Is Empathy Enough? How Companies Build More Authentic Relationships with Customers

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WHY THIS MATTERS

When customers are treated with empathy, they are more likely to be satisfied with their experiences and, ultimately, more loyal to the companies that serve them. But for frontline employees, being empathetic can be emo-tionally taxing, especially when customers are upset. Companies that train frontline employees to express greater empathy, but fail to provide the appropriate support, may see higher job stress and turnover among employees, which inevitably leads to higher costs.

KEY INSIGHTS

Companies can mitigate the stress and burnout that sometimes accompany em-pathy by empowering employees with the tools, resources, and autonomy needed to influence and improve the customer experi-ence. By giving employees the discretion to solve customer problems directly, without excessive oversight, or by involving them in broader improvement initiatives to avert ongoing problems, companies can transform empathy from a potential stressor into a potent solution.

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Customers want to feel appreciated, valued, and heard. As a result, many companies have begun to view empathy as an essential component of a positive customer service experience—the magic elixir to delighting and enchanting customers. But is empathy really enough?

Simply defined, empathy is the ability to understand and share someone else’s feelings. Acting with empathy means seeing the world from another person’s perspective, recognizing his or her emotions, and communicating that recognition, often by tapping into one’s own emotional experiences. Experts believe that empathy strengthens relationships by fueling personal connection.

At its most basic, empathy is strongly associated with positive behaviors like helping and sharing. Research in the customer experience context finds that when service employees display empathy to customers, their actions positively affect how customers evaluate the service encounter, which affects their purchase intentions. Companies trying to improve their customer experience—organizations like Comcast—are now educating their customer-facing employees and providing them with tools that help to create greater empathy with customers.

Employees are coached to listen actively, repeat back to the customer what they’ve heard, articulate the emotion that the customer is expressing, convey regret when appropriate, and take the time to speak naturally without a script. The goal is to develop a rapport with the customer. Some companies, like Airbnb and NetSpend, have employees spend a “day as the customer”—staying at an Airbnb property or hosting guests (Airbnb), or heading out into the city with nothing more than a prepaid debit card (NetSpend). “We amplify empathy by walking in our customers’ footsteps,” says NetSpend’s VP of Customer Experience, Lisa Henken-Ramirez.

But systematically exercising empathy can also be exhausting for employees. Decades ago, researchers coined the term “emotional labor” to describe jobs that demand substantial personal contributions from employees. Emotional labor requires employees to manage their feelings and expressions as part of their work. At its worst, it commodifies emotions and can, paradoxically, lead employees to feel estranged from their own feelings. A University of Wyoming study found that frontline employees who engaged in more empathetic behavior also reported significantly higher role conflict—essentially, stress on the job.

Simply equipping frontline employees with the tools to express empathy may improve customer satisfaction in the short term, but it can also drive high turnover among frontline employees in the longer term. Exercising empathy is emotionally exhausting and can lead to emotional fatigue—a common precursor to burnout and turnover in customer- and client-facing roles.

One antidote to these draining effects is empowerment: giving employees the tools, resources, and autonomy necessary to make good decisions and act, and then making them

Empathy combined with empowerment creates positive

relationships that last.

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responsible for subsequent results. For employees interacting with customers directly, this often means giving them information, direct customer feedback, and the freedom to resolve customer problems on their own. A Medallia study of frontline employees found that when employees felt more empowered, they were nearly twice as likely to be satisfied with their jobs, to recommend their company as a good place to work, and continue working there over the next six months (see Figure 1). Empowerment makes a difference.

For customer-facing employees, empowerment can be achieved in at least two ways. The first is by giving employees greater discretion to solve customer problems directly. Here, empowerment entails providing frontline employees the means to fix customer problems without a lot of managerial oversight. In this way, empowerment can protect against or diminish empathy fatigue.

A Montreal Business School study of call-center employees found that this first type of empowerment alleviated ambiguity and significantly reduced the stress and discomfort employees felt when having to manage conflicting demands or values. Alaska Airlines does this particularly well, issuing every employee an “empowerment toolkit”—a budget of incentives like miles, vouchers, and waivers that they can give to customers to resolve complaints or even enhance celebrations. They can dole these out at their own discretion. As president and COO Ben

Minicucci tells the airline’s employees, “Do what you think is right. We trust you. You’ll never get in trouble for making a decision. And we don’t want you to call the supervisor.”

The second way empowerment can protect against the draining effects of empathy is by involving employees in system-wide problem solving–that is, by giving them a voice and listening to their ideas for improving the customer experience. Unfortunately, many companies fail to take these steps. The Medallia study of frontline employees, for example, found that most companies fail to solicit employee feedback, even though their employees have lots of ideas to share. More than 50 percent of frontline employees had suggestions for improving customer satisfaction, but a full 31 percent reported that they were only surveyed by their company once a year or less. Even more surprising, 33 percent said that their companies never took action based on the feedback they provided.

When employees are empowered to make the customer experience better, they often make valuable suggestions for improving critical work processes or the company’s products more broadly. As a result, they don’t simply accumulate customers’ frustrations or try to fend them off; rather, they proactively propose solutions to the underlying problems that are causing those frustrations in the first place.

Figure 1: Effect of empowerment on frontline employees

Source: Medallia Institute Frontline Survey, 2017. Differences significant at p<.05, based on logistic regression of responses from a survey of 1000 customer-facing employees working at US companies with 250 or more total employees (more than half worked at companies with >10,000 employees).

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Are you satisfied with your current job?

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Not Empowered Empowered

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For frontline employees, empowerment can transform empathy from a potential stressor into a potent solution. It enables employees to both connect with the customer and shepherd their issue through to completion, with minimal supervision. At the same time, it frees up leaders and managers to do the higher-value tasks of setting the vision, coaching, and otherwise guiding and enabling their teams.

Empathy without empowerment can be an emotional drain. Empowerment without empathy fosters corrections but not connections. Companies that combine empathy with empowerment create the conditions needed to satisfy customers in the short run and maintain enduring relationships in the long run.

Comcast is a prime example of an organization that has adopted this two-pronged approach. Two years ago, Comcast set out on a journey to transform its entire customer service operation by making customer experience its best product. The company made empathizing with and delighting customers its top priority. But it also recognized that to do this sustainably, merely training 130,000 employees to be empathetic would not be enough. The initiative would also need a strong dose of employee empowerment.

Comcast empowered employees by distributing feedback from customers to them in real time, and by enabling action at every level. Its sophisticated customer feedback system provided employees with the knowledge they needed to understand each customer’s background and prior interactions. Moreover, leaders gave employees at all levels more freedom to operate, more accountability for behavior, and more motivation to propose and make changes that would ultimately delight the customer. This part of the transformation also enabled supervisors to spend more time coaching frontline employees, and to use targeted coaching for individual employees based on specific customer feedback.

The result? Customer satisfaction scores have improved, and employee satisfaction scores have risen significantly. At Comcast, combining empathy with empowerment is creating both more satisfied customers and more satisfied employees. Of course, Comcast is still at the beginning of its journey and recognizes that it has a way to go before the customer experience is consistently at the level the company aspires to. But the early results present a compelling case for coupling empathy and empowerment. They demonstrate the significant benefits that can accrue from exercising the two together.

Customers want companies to care, and frontline employees are often the most visible sign of whether a company actually does. Companies that foster both empathy and empowerment establish a capacity to connect with customers that lasts far beyond a single interaction. They give frontline employees the skills and tools they need to provide an exceptional customer experience, which ultimately benefits the customer, employee, and company alike.

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Recommendations CX leaders who wish to gain the benefits of greater empathy for customers, without the costs of employee burnout, should:

• Empower employees with the tools, informa-tion, and other resources that allow them to pair empathy with action. When employees have the autonomy and ability to act in their customers’ interests, empathy quickly leads to exceptional customer experiences—often provided in new and better ways.

• Give employees voice and listen to their suggestions when designing broader system improvements. When employees feel em-powered to change ongoing problems, their commitment, perseverance, and resilience grow stronger, as does their impact on the overall customer experience. - Customer acquisition costs over time - Customer service costs over time

• Make the case to invest in those aspects of the customer experience that have the greatest impact on financial performance, using analyses from your own company reinforced by similar results from other companies

• Continuously track the effect of improvements (or declines) in customer experience on performance drivers and, ultimately, revenues and costs

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Emma Sopadjieva

Emma Sopadjieva is a Research & Analytics Manager in Medallia’s CX Strategy Research group. Prior to coming to Medallia, she was a consultant for over five years in Deloitte’s Financial Advisory practices in the US, the UK, and Spain. She has an MA in international economics and management from the School of Global Policy and Strategy at UCSD, and a BS in business administration and management from Bucknell University.

Carly Kontra

Carly Kontra is a Research & Analytics Senior Associate in Medallia's CX Strategy Research group. She completed her PhD in cognitive psychology at the University of Chicago while studying the impact of motor experience on perception, learning, and wisdom.

Bernadette Doerr

Bernadette Doerr is a Research & Analytics Manager in Medallia’s CX Strategy Research group. Prior to joining Medallia, she conducted research on organizational culture and leadership while in the PhD program at the Haas School of Business and spent a decade in strategy consulting. She also holds a BS (business) and MS (foreign service) from Georgetown University.

Beth Benjamin

Beth Benjamin is the senior director of Medallia’s CX Strategy Research group and has more than 25 years of experience conducting research on organizational strategy and practice. Prior to coming to Medallia, she held positions at the Stanford Graduate School of Business, the RAND Corporation, and three management consulting firms. She has a PhD in business from the Stanford Graduate School of Business.

About Medallia

Medallia, the leader in Experience Management cloud technology, ranked #15 in the most recent Forbes Cloud 100 list. Medallia’s

vision is simple: to create a world where companies are loved by customers and employees alike. Hundreds of the world’s largest

companies and organizations trust Medallia’s cloud platform to help them capture customer and employee feedback everywhere

they are, understand it in real-time, and deliver insights and action everywhere—from the C-suite to the frontline—to improve

business performance. Medallia has offices worldwide, including Silicon Valley, New York, Washington DC, Austin, London,

Buenos Aires, Paris, Sydney, and Tel Aviv. Learn more at www.medallia.com.

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