About Frost & Sullivan

For the past 60 years, Frost & Sullivan has partnered with corporations, cities, governments, and the investor communities to identify, prioritize, and execute on new business opportunities powering clients toward a future shaped by growth.

Companies face many challenges on a daily basis. One of the most prominent is adhering to customer’s demands and tendencies in order to yield favorable customer satisfaction rates. Companies make many strides to increase customer satisfaction to include improving service quality, offering competitive pricing, developing effective communicational channels and platforms, and modifying operations to fit the needs of the customer.

Proactively tending to these customer dictations is beneficial for a company in order to increase their customer satisfaction rate. However, in doing so, one factor commonly overlooked is employee retention rate. A company’s employee retention rate might not be a factor people associate with customer satisfaction, but it has as much of an impact as any other factor does, such as pricing and service quality. A company’s retention rate has a direct correlation to the satisfaction of its customer because employees, in many ways, have more accessibility to a company’s customer base.

Employee retention rate is defined as the ability of a company to keep the individuals they hire, usually represented by a percentage. Different industries have different employee retention rates. Recent data reflects that one of the industries with the best employee retention rate is federal government. The lowest retention rate, according to the data, is experienced in the fast food industry. This is according to an article published by Dailypay. While it is only natural for a company to experience some turnover, it is in the company’s best interest to make efforts to maintain healthy employee retention rates, especially in regards to customer satisfaction. The same article referenced beforehand determines that an average of 90% in employee retention rate qualifies as healthy for a company.

To do so, a company can begin by recognizing that employees are, obviously, human beings, therefore, they are complex beings. A company simply cannot enhance customer satisfaction by exhausting their employees, neglecting employee needs, or creating negative working environments. Essentially, employees are not machines.

As previously stated, employees have much more accessibility and interaction with a company’s customer base than higher management does. Therefore, vicariously, a company’s CEO or president connects with the company’s customers through its employees. Customer satisfaction is then contingent to employee satisfaction. Adhering to employee’s needs, both physical and emotional, should be of importance for a company.

By investing as much in bolstering employee satisfaction-and, consequently, employee retention rate-as much as it does in customer satisfaction, a company is capitalizing on both profitability and longevity. Thinking about a company who does not have a storefront, brick and mortar business approach, such as internet providers and online retailers. Typically, these companies establish a contact center for customer services. Contact center agents frequently encounter irate customers. By creating undesirable work situations for agents, a company is only asking for trouble. An aggravated agent will only make the irate customer even more irate, thus creating a negative customer interaction, resulting in negative brand recognition and devalued brand loyalty.

This concept is applicable throughout almost every industry. To counteract this, a company can invest in methods to increase employee satisfaction and, simultaneously, their employee retention rate. One way of doing so is by placing value on the employees themselves. It is obvious that employees work for money, but they perform for recognition and appreciation. Incentives, awards and acknowledgements, as well as internal promotions are ways a company could show appreciation for their efforts, all of which empower the employee and enable them to perform at optimal levels.

Additionally, companies and their management teams can allow employees to contribute substantially to the creation of the work environment. They way that employees interact with each other will directly impact the way they interact with customers. Employees who positively engage with one another will transfer over the enthusiastic energy to the interaction with customers. Because contented customers are a byproduct of contented employees, establishing a work environment that enables that will benefit a company.

In today’s era of accessible information, customer’s inquire about a company’s treatment of employees before deciding who to obtain service from. Having a negative approach to employee satisfaction will not only affect customer satisfaction, it can potentially deter customers altogether. If customers known that employees are leaving a company because of its unsatisfactory approach to their well-being while at work, they are prone to go with someone who does.

Ultimately, employee retention comes down to who you place in management positions, who are in charge of creating and implementing policies geared to improve employee satisfaction. Randstad US conducted a survey in which more than half of the participants felt companies prioritized profits and revenue over employee treatment. Furthermore, sixty percent left their positions because they didn’t like their supervisors.

What this means is that a company should address employee retention rate from the top to the bottom of their organization. Better management teams implement better policies and procedures, which produce better employees and better employee retention rates. This then helps create better services and better qualities for customers, resulting in better customer satisfaction rates.

About Frost & Sullivan

For the past 60 years, Frost & Sullivan has partnered with corporations, cities, governments, and the investor communities to identify, prioritize, and execute on new business opportunities powering clients toward a future shaped by growth.