The Positive Effect of Generosity on the Bottomline
Words like “generosity” are increasingly making their way into business, because there is increasing evidence of its high ROI.
However, a lot of organizations dismiss the principle of generosity, but it offers invaluable insight. Multi-million dollar companies are being built because someone cared enough to generously introduce key partners and/or investors to each other. Small start-ups grow into multi-billion dollar businesses because employees generously care about customers and even go an extra mile for them, and, by doing so, build long-lasting advocacy for the brand.
In this newsletter, we will review precisely how generosity effects the bottom-line through retention, guest loyalty, and brand reputation.
Generosity Increases Employee Retention
Generosity in leadership inspires engagement and loyalty within employees. It creates this benefit because generous actions come unexpected, yet they reflect the character of their leader and the organization of which they work.
This engagement and loyalty then transpires into the way employees care for the guests, which then creates customer loyalty and retention.
Moreover, retention created through generosity saves companies millions of dollars in turnover and new hire costs. For instance, Rustic Crust, a pizza-making company in Pittsfield, New Hampshire, experienced a devastating fire to its only production plant.
Brad Sterl, CEO of the Rustic Crust--the town's second-largest employer--announced he would have a temporary production facility up and running within a month. However, he continued to pay employees who were able to report to work each day to help do cleanup work or get food-safety and product training, for a total of about 10 to 12 hours of work a week, while getting paid for 40.
"It was really about making them feel comfortable because they have bills to pay," Sterl says. The cost to re-train and recruit new people that were as good at doing a job as the original employees, would have been much more expensive than simply paying the current employees full-time. Therefore, Sterl’s generous gesture ended up saving the company much money in the long run.
Generosity Increase Guest Loyalty
A prime example of the effect of generosity on guest loyalty is Nordstorm. Forrester Research VP and Principal Analyst Kate Leggett said the company’s legendary customer service efforts boil down to a great business strategy. “They treat it as a way to influence the top line. It helps with the repurchase rates and recommendations.”
Zappos is another example of a company that has differentiated itself through superior customer service rooted in generosity, and became amazingly profitable in doing so.
Zappo’s CEO reflects, “we realized that the biggest vision would be to build the Zappos brand to be about the very best customer service,” which led to the creation of their #1 core value, “Deliver WOW Through Service.”
Money other companies would have spent in advertising has been invested instead into customer experience at Zappos.
There are a myriad of companies that have become successful based on a model of generosity that goes above and beyond in customer service. A culture of giving to customers, employees, and communities philanthropically correlates to success for a number of companies including Ritz-Carlton, Starbucks, Southwest Airlines, Coca-Cola, and Johnson & Johnson.
Generosity Builds a Better Reputation
It is encouraged for all organizations to routinely check their generosity pulse. In this day and age of social media, stories of great service travel quickly.
In contrast, stories of a scarcity mindset can quickly ruin a brand or image, even personal ones (the scarcity mentality is the view that there’s not enough to go around and that it’s better to be selfish rather than generous).
Being know as a generous company will attract talented like-minded employees, guests, and build business relationships.
5 Quick Tips to Foster Generosity in Business:
Assume positive Intent
Share power and authority
Share information
Freely give credit, praise, and reward
Provide the resources necessary to succeed
Overall, it may be a novel and uncomfortable thought that we can add revenue and support organizational success through generosity, but don’t fear. There is a high ROI to generosity, however, getting that return should not be our first priority. People are smart. They can sense authenticity and detect manipulation. Be genuinely generous, and it will certainly be rewarded, both internally and externally.
Source: https://www.inc.com/christina-desmarais/why-generosity-is-good-for-business.html
