Stronger customer support for companies that care for their workers

This is according to a new US study by researchers at the University of Massachusetts in Amherst. The results are published in Cornell Hospitality Quarterly, a peer-reviewed academic journal. 

Melissa Baker, an Associate Professor, and her co-authors found that firms confronted with a crisis not of their own making – such as a natural disaster or global pandemic – can unlock significant goodwill and brand loyalty among more empathetic customers by supporting employees. 

Take for example, the Covid-19 pandemic. The study finds that hospitality companies that cut executive pay, rather than laid off or furloughed employees (a temporary cessation of paid employment) as an initial response to the pandemic were more likely to benefit from brand support, goodwill, positive word-of-mouth, and planned future purchases from customers with high ethical idealism. 

This helped to create a loyal and lucrative customer base for the long term, the researchers say. 

People will support brands they believe in 

“Customers are supporting brands that they believe in,” Baker states. “These customers can be the most loyal, which then equates to better positive word-of-mouth, more purchasing, and greater overall support for that brand.” 

The research indicates that more altruistic efforts by companies did not yield the same brand loyalty results among customers with lower ethical idealism.  

“Our findings provide a clear message that hospitality firms need to look at both the short-term and long-term consequences of their actions,” Baker observes.  

“You have to save the money so your business can stay afloat, but also understand that not taking care of your employees, particularly at the expense of keeping CEO pay high, may affect your long-term brand support.” 

The researchers note that their findings give credence to the old saying ‘heroes rise in tough times’, and that this appears to be a case of consumers evaluating corporate efforts to protect employees more highly because of the hardship that companies must also face. 

“It’s harder to quantify employee productivity and emotions, but hospitality is a team sport, and business is a team sport, so you have to have great employees and need to support your employees for your business to be successful,” Baker adds. 

You can find out more about the customer support study, titled ‘Heroes Rise in Tough Times: The Role of Ethical Idealism, Empathy, and Firm Responses to the Covid-19 Pandemic’, here.