Say the word “happiness” and half the room will cringe and glaze over at the prospect of another mumbo-jumbo self-help talk. The fact is “happiness” just doesn’t cut it for many business people, especially when times are tough and the focus is well and truly on the bottom line.
But what if I told you that happiness is the greatest source of competitive advantage in our experience economy? What if I told you that most businesses have their paradigm of success the wrong way around? That the common belief of “if we work harder, we’ll be more successful and that will make us happier” is false and upside down?
Far from being an intangible hippy concept, happiness is your company’s key to success, return on investment and maximising profit. So show me the tangible proof you say? Well, read on and prepare to be astounded by the pound signs hanging from happiness . . .
Happiness creates loyal and highly profitable customers
The first key insight is that we are physiologically wired to repeat what makes us happy. Avoiding pain and approaching pleasure has governed the evolution of our species and is the overarching, organising principle of our brains. These threat and reward cues are processed within a fifth of a second, providing you with on-going unconscious intuition of what’s meaningful to you.
The feeling of happiness is a reward for actions that improve our chances of survival and flourishing as a species by motivating us to repeat them. The feeling of happiness is triggered by the release of feel good chemicals in our bodies. For example, when you give your customers a gift, be it a welcome drink or a corporate gift, you trigger the release of neurochemicals that not only make us feel good but also make us more trusting. This act goes back to the principle of reciprocity – the altruistic individual will later receive benefits for kind actions.
To understand what makes people happy, we need to delve into evolutionary psychology and identify our happiness triggers. (I’ll be exploring the science of happiness more in future blog posts.)
Now, back to loyal customers. Loyal customers are the holy grail of marketing because they are most likely to:
Repurchase – Loyal customers come back, reducing business risk and sales fluctuations.
Recommend – Emotionally engaged customers are three times more likely to recommend you according to a Mori study in 2010. And, given that word of mouth recommendations are estimated to account for 30-55% of all purchase decisions, this has a huge value.
Pay higher prices – Loyal customers are less price sensitive. The same study by Mori showed that one in three emotionally engaged customers said they would need a discount of over 20% before they would defect.
Spend more – Happy customers spend up to twice as much as unhappy customers.
Save you money – It costs six to seven times more to gain a new customer than retain an existing customer and there are additional savings with lower transaction costs (e.g. contract negotiation and order processing).
Happiness builds stronger brands
Emotions forge stronger memories because they create big markers in our brains. When we experience an emotion, a cocktail of hormones floods our brain and makes stronger connections between our neurons, allowing us to recall memories faster and more vividly. This is critical not only for brand recall and advocacy but also for creating enduring happy memories. Positive emotions are key to future purchases because decisions are based on memories – both past and anticipated.
Happy workers are more efficient, productive and cost effective
It’s no big surprise that our brain works significantly better when it’s positive than when it’s neutral or negative. By being happy, we all naturally work harder and become more successful at what we do.
Compared to unhappy employees, happy employees are more:
- Motivated – spending twice as long doing the work they’re paid to do
- Reliable – with 19% fewer sick days per annum
- Productive – getting between 12 and 31% more work done
- Creative – up to three times more!
- Accurate – 19% fewer mistakes
- Persuasive – sales success increases by 37%
- Cooperative – for better team players
- Loyal – stay five times as long with a single employer
All this comes back to the bottom line again. The Happiness at Work Survey team has calculated that a company with 10 employees could save £5,685 per annum and a company with 200 employees could save £113,693!
And, if you still need convincing
How about the fact that being happy will help you to live longer? In one particular study the increase in life expectancy from being happy was deemed comparable to that of smoking or not and could lengthen life by between 7.5 and 10 years! After all, there’s no point in making money if you’re not around to enjoy it . . .
* Data taken from three key sources: iOpener Institute for People and Performance, Gallup study, 2008 (testing the difference between employees scoring high and low on life satisfaction), Shawn Achor’s findings based on his “sweeping meta analysis of 225 academic studies”.
As a business owner, what are your thoughts regarding ‘Happiness’? – I would love to hear in the comments below!