3 Ways to Use Employee Engagement to Increase Customer Retention

by Dora Wang on Jul 16, 2015 11:00:00 AM

3 Ways to Use Employee Engagement to Increase Customer Retention by TINYpulseThe value of high employee engagement can’t be overestimated. Engaged employees are more productive, happier, and lead to lower turnover rates — which drastically affects your bottom line. But new research shows that engaged employees also increase the engagement and retention of your customers too.

According to Demand Metric and Harvard Business School:

  • The majority of organizations that have over 50% engagement rates retain over 80% of their customers

  • Organizations that have over 50% engagement rates have a 39% higher rate of competitive advantage than companies with less than 50% engagement

  • A 5-point improvement in employee attitudes drove a 1.3-point improvement in customer satisfaction, which in turn drove a 0.5% improvement in revenue

The bottom line? Happy employees make happy customers. Engaged employees boost the level of customer service within a company, making customers not only more likely to stick around with you, but more likely to choose you over a competitor. But to get the full impact of these stats, you have to understand just how engaged employees lead to customer retention and how you can make that correlation work for you.

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Why Are Engaged Employees Making Loyal Customers?

Take a step back: engagement is when employees are committed to your company and its goals, leading to a boosted work ethic. So why are engaged employees so great at customer service?

To put it simply: they don’t have to lie.

Imagine for a second an employee doesn’t believe in your company goals and actually doesn’t think your company has the customer’s best intentions in mind. They’re in the job for the paycheck. When talking to a customer, in essence, they’re lying or at least embellishing the truth of how they feel. They don’t think the customer is making the right choice doing business with their company, but they have to pretend they do or they lose the customer.

On the other hand, engaged employees are company advocates. They’re happy to share their positive outlook with their customers, and the simple financial advantage of keeping a customer is not what motivates them. Instead, they’re driven by organizational goals and values, propelled into productivity by their belief in their work.

It’s not hard to see which employee a customer would rather work with.

How Can You Boost Customer Service?

That is as simple and as complex as this: boost employee engagement. There are three basic but crucial ways to turn your employees into customer service pros by making them believe in their work.

  1. Make the work matter: Stand for something as a company, and make those values clear. If an employee can simply state the values everything they do is geared toward, they have something to believe in and work toward. It makes their work mean something, and they’ll want to share that with customers they interact with.
  2. Tie recognition to those values: Let your employees know when they’re doing a good job. According to Bersin by Deloitte, customer service is 14% better in companies where recognition is built into the culture.
  3. Alleviate stress: Whether you offer flexible hours, a great vacation package, or stress-relief areas on site, such as yoga classes or even a bar, minimizing the stress placed on your hardworking employees will boost engagement — it shows you care about employees and helps clear their busy minds.

With customer service so closely tied to employee engagement, it’s clear you have to start with your employees first. Ensuring they’re happy, respected, and treated well will mean your customers are, too.



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This post was written by Dora Wang

Dora is an employee engagement researcher for TINYpulse and managing editor of TINYinstitute. Having grown up in Texas, she is now firmly settled in Seattle, where she spends her free time reading comic books, wrangling her three cats, and (of course) rooting for the Seahawks.

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