The Importance of Internal Customers

If you ask most CEOs what makes their business different from their competition, the most common answer received is “service.” This makes particular sense in South Florida, where the majority of industry is comprised of hospitality, healthcare, and other businesses whose end product is service. I look at these organizations and wonder if they are a product of their product. To be truly successful, a business really has to serve at least two customer bases. The customer base most focused on is typically the one perceived as the revenue-generating one. However, considering cause and effect, the internal customer (the employee) should be on at least an equal footing with the external customer. This leads me to a question to those of you who lead or manage people:

If you considered the people that worked for you as your largest and most important customers, would you behave toward them or see them any differently than you do today?

Do All Employees Get Treated the Same Way?

I recently had a usual bi-weekly executive coaching call with the CEO of one of my clients that has multiple locations. He had been encouraged to go out in the field more to really connect one-on-one with his operations people. He was stunned to learn how many employees were considering leaving because they felt disconnected from his vision the rest of the organization, and, more importantly, felt mistreated by his headquarters team.

Through additional research and dialog with his headquarters team, he determined that they did not consider visiting the field important for decision-making. People at headquarters were not speaking to field people with the same respect they gave to headquarters colleagues. They were not serving people in the field the same way they served other headquarters people. It left him with the question, who exactly did the people at headquarters think they were serving? Did they understand why their positions existed in the first place?

Leaders Serve Employees, Not the Other Way Around!

For those who have a tendency to lean on authority to motivate their employees, let me give you something to think about. Reporting to you on a daily basis means that we have a customer relationship! I say this because if I do not keep you satisfied, you are going to help me move my career in a new direction. However, if I am not satisfied with you, I have two options. I can resign or go on silent strike. If I choose the latter, I will give you only the minimal performance to keep my job, but you are never going to be able to get spectacular results from me. While this is scary for any business, it can be devastating in a service business.

Internal Customer Relationships

Let us consider internal customers from three different perspectives: external customer, other internal customers, and bottom-line impact. From the external customer standpoint, they are going to be most comfortable dealing with familiar faces that know exactly what, when, where, and how they like to receive their service. Given that most of us are creatures of habit and routine, every time that routine is broken, I believe you put your customer relationship at risk.

From the “other internal customer” standpoint, things work the same way. The longer people work together, the more familiar and comfortable things get. We really can build a strong enduring team as long as we do not get complacent and employ proper leadership and management techniques. However, the rules change dramatically every time someone leaves or someone new is introduced to the team.

The Cost of Poor Internal Customer Service Can Be Huge

Let us not forget about the bottom-line impact of internal customers. I have read all kinds of statistics that range as high as 25-times-salary for turnover of a key management position. While I cannot validate that number, I can point out that you will potentially incur recruiting costs, lost sales, overtime pay, and other costs as a result of employee turnover. This has to add up to a minimum of 3-times-salary. On the upside, think about the results accomplished by your most highly motivated employees, particularly with regard to attracting, servicing, and keeping external and internal customers. Keeping these individuals gives your business a tremendous competitive advantage.

Want more tips on how to serve your internal customer better? Read my article: 7 Ways to Serve Your Internal Customer “The Employee” Better.

Review our website to understand how an executive coach or business coach can help you increase the success of your career and business, or contact Howard Shore at (305) 722-7213.

Business Coach, Business Coaching, Business Execution, Executive Coaching, Leadership, Management

About Howard M. Shore

Howard M. Shore is a Certified Gazelles Coach, Certified Public Accountant Certified Executive Coach, Certified Behavioral Analyst, Certified Values Analyst, and Certified Attributes Index Analyst. He has earned Bachelor and MBA degrees from Florida International University, and completed advanced executive programs at Harvard Law School and the University of Chicago.