How Much Does Employee Retention Impact Customer Satisfaction?

Retention v NPS long

Would you tend to treat employee retention and turnover as a customer experience issue?
The question might feel like it’s coming from left field. Common methods for managing customer experience — process improvements, technical training, closing the loop with customers — don’t seem to overlap much with the drivers of employee turnover.
Yet on a gut level, it does makes sense that a company able to deliver great experiences would also be able to hold on to employees. How much hard truth is there to this impression?
To find the answer, the Medallia Institute recently explored links between employee retention and customer experience performance at the level of individual stores and properties. Their work examined 800 locations in a transaction-based business. What they found: locations with the lowest turnover rates also tend to have the highest level of customer satisfaction.
Overall engagement vs NPS
So what could be the reason for this relationship?
One school of thought says that higher retention drives better performance. Experienced employees tend to be more technically skilled, and to have a deeper understanding of customer needs. Similarly, effective frontline teams develop operational rhythms together, which are disrupted when someone leaves.
But the opposite explanation also makes sense. Employees who deal with happy customers on a regular basis tend to find their job more satisfying – and will thus stick around for a longer time. There’s also satisfaction in being able to play a meaningful role in creating that happiness.
More likely, there’s truth in both perspectives. And ultimately, they lead to the same question: how can I make work more rewarding for my frontline?
There’s no simple answer, and many of the best strategies require you to re-think your approach to employee empowerment. But a great place to start is the activity your frontline spends most of its time on: serving customers. What can you do to empower employees to deliver great experiences more easily? What information would help employees understand customers better — so when someone does leave, their replacement has an easier time getting up to speed?
Employee turnover might not only be a customer experience problem. But approaching it through that mindset can reveal solutions you wouldn’t have otherwise expected.

Photo Credit: Alexis Gravel