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How employee turnover also hurts customer satisfaction

David Bator
by David Bator on November 3, 2014

customer satisfactionWhen employee engagement and retention issues are brought up in the workplace, it is generally in the context of how to improve performance within the company and improve efficiency. Engaged employees are productive ones, or so many corporations across the globe believe. Additionally, high engagement levels often lead to less employee churn, which is pivotal in two ways. First, it helps reduce onboarding and training expenses, which in some lines of work may cost almost as much as a new hire's annual salary. Second, better retention helps avoid employment gaps that are not easily filled.

But retention is about more than just saving money and keeping hold of talented individuals. Rampant turnover can negatively affect other areas of operation, such as customer service. Like any healthy relationship, a business-customer relationship is built over years of interaction. Both parties get to know each other and build a sense of rapport. When employees understand the needs of their customers and the obstacles they face, the company will be in a much better position to serve them with relevant offerings and products.

The problem for many companies is that support staff frequently suffer from high turnover rates. Business 2 Community reported that approximately half of customer-facing support groups are made up of agents with less than one year of experience - that means firms are losing as many as three out of 10 customer service representatives they hire every year. If organizations could address these issues and reduce the number of agents with less than one year of experience, overall customer satisfaction is likely to improve by a significant margin, the news source added.

"It's important to understand the impact on the customer experience when thinking about your hiring and retention strategy," Business 2 Community contributor Asma Alyamani explained. "Employee retention matters, but what matters even more is keeping tabs on how the customer experience is affected."

Making the connection between customer and employee satisfaction

Every business understands the importance of customer satisfaction. For some, it is absolutely pivotal to success - for example, a restaurant or retail store cannot be successful if it is not delivering on the customer satisfaction end of things. For others, it is still important but not quite as vital. Internet and cable services providers are often known for poor customer service, but that does not mean these companies are not striving to improve this aspect.

One report from the International Journal of Hospitality Management made the importance of customer satisfaction obvious - it plays a significant role in businesses' financial performance. In other words, the better a company serves its customers, the better it will perform in terms of the bottom line. The study looked at a wide number of organizations and found the companies that thrived while others in the same sector struggled do so because they provide exceptional customer service. The inverse is true of businesses that see sudden drops in financial performance.

The International Journal of Hospitality Management report was quick to note that there is no strong correlation between employee satisfaction and financial performance. However, satisfied employees do tend to lead to satisfied customers and, as established, satisfied customers do improve financial performances.

"Findings of this study suggest that the relationship between employee satisfaction and financial performance is likely to be mediated by customer satisfaction. Satisfied employees are likely to be more motivated and work harder to provide a satisfactory service to customers than dissatisfied ones," the report's authors noted.

"If employees feel their company takes good care of them, they are, in return, likely to take time to provide better service to meet and/or exceed customers' expectations," the report added.

Buoying employee satisfaction (and alongside it, retention)

At the end of the day, businesses want to bolster customer satisfaction. This is best done by creating a workplace that is able to retain employees, which can be achieved through engagement and satisfaction initiatives. Experienced, longstanding employees understand the needs of clients and customers and thus will not only be motivated to serve them, but to do so efficiently and effectively.

So, what can companies do to bolster engagement and satisfaction to keep employees at their jobs for longer time frames? The simple answer is treating them as if they were customers themselves. It can be easy to forget that employees, even the most passionate ones, can become disengaged by any number of factors, ranging from poor policy implementations to lack of empowerment. By treating workers with the same regard as their customers, companies may be better able to bolster retention.

Surveys can be used as a tool to improve engagement and satisfaction by helping businesses understand their employees. Just as firms poll customers to discover their interests and pain points, a similar approach should be taken to gain more insight into the minds of their own employees.

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David Bator
Written by David Bator

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