Hudson Valley employees who stay with the company for a long time can build solid personal relationships with customers, have greater opportunities to learn more efficient ways of doing their work; and reduce the need for recruiting and training.

Many organizations pay little attention to customer and employee loyalty because they don’t know how much it is worth. A trucking company found they could increase profits by 50 percent simply by cutting turnover in half.

In the brokerage industry, half of the customers who switched firms do so because their brokers have moved on to a new company. To bring a new broker to profitability the up-front cost of hiring and training exceeds $100,000. It isn’t until the third year that new brokers will earn any real profit for the firm.

As brokers gain experience, they learn to target customers more effectively, and their customer retention and share of wallet increases. As more and more new customers come to them by referral, they spend less time prospecting. A.G. Edwards, with the highest broker retention rate in the industry is the leader in profitability.

Few industries track the profitability of individual employees in such detail as brokerage firms. For many Hudson Valley organizations it may not be simple to measure the value of employee and customer retention.

You may have to create new measurement systems and learn to analyze the results. What you will find is that you now invest significantly in hiring and training. You lose a startling amount of profits due to the exodus of customers caused by inexperienced employees. You can create a staggering increase in profits by increasing employee loyalty, which will lead to better customer retention.

To make sure you’re gaining the loyalty of customers and employees requires a system to measure productivity that makes sense for your business. Retail stores concentrate on sales per square foot. Nordstrom measures revenue per sales clerk and ranks each clerk’s performance on the employee bulletin board.

Insurance claims adjusters are measured on the average size of the claims they approve and are seldom promoted for being too generous. When they underpay, adjusters alienate customers who take their premiums to another company. The solution is to measure the retention rate of the customers who deal with each adjuster.

By combining each adjuster’s average claim amount with his or her retention rate, the company can see their real revenue and profits impact on the company and give out bonuses accordingly. When adjuster’s learn the value of high retention rates for certain customer segments, they will take customer loyalty into account when deciding how to settle each claim.

The most successful Hudson Valley organizations are not offering incentives to their longest term and highest paid employees to retire. They realize the value added and that customers do business with people, not organizations.

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