The Hiring Squeeze: How Rock-Bottom Unemployment Rates Crush the Customer Experience

Whose job is it to create member / customer loyalty for your organization?

Account managers? Customer service reps? Maybe YOURS?

You may even have a team in your organization dedicated to the client experience, like we do.

According to our VP of Client Success, Emily Hayes, EVERY SINGLE employee is an important player in the member retention and satisfaction game. From web designers to shipping clerks to payroll representatives, each employee should understand how their efforts contribute to happy members.

Because when organizations get it right, and members are loyal, the payoff can be huge. Research shows that 81% of emotionally connected consumers will not only promote the brand among their family and friends, but they will also spend more.

And we’re not talking pennies.

Repeat customers spend 67% more than new ones, according to one study.

So…member retention, engagement and loyalty are clearly a big deal.

But what about the employees at your organization… the ones expected to create engagement-invoking, loyalty-inducing experiences for your members?

What about THEIR retention, engagement and loyalty? Does THAT matter?

Human resource departments are typically tasked with keeping workers happy. And in the tightest labor market the U.S. has seen in 5 decades, HR professionals are learning that it absolutely matters.

A lot.

Engaged Employees Lead to Engaged Customers

Studies show that if you are looking to engage customers, the best place to start is with engaged employees. In fact, a study conducted at Cornell University linked companies on Fortune Magazine’s Best Companies to Work For with higher customer satisfaction scores.

The payoff comes in both retention and revenue. One report suggests companies with engaged employees see 233% greater customer loyalty and a 26% greater annual increase in revenue.

We’ve written before about how engaged employees = engaged customers, but it’s never been more evident than it is today.

The unemployment rate recently descended to 3.7% - the lowest it’s been since 1969 when millions of men were pulled out of the workforce by the Vietnam War Draft. The Fed considers the “natural” rate of unemployment to be between 4.5% and 5%. So at a rate this low, there are more open jobs than workers to fill them.

And, frankly, it’s impacting the customer experience.

Low Unemployment Dampens Customer Satisfaction

Studies by the American Customer Satisfaction Index show direct correlation between low unemployment and worse customer satisfaction scores.

HR professionals are doing their best to attract and retain top talent but it’s not as simple as it sounds.

One survey suggests 69% of employees are already open to or actively seeking opportunities outside their existing job. And why wouldn’t they?

Economists say job hopping is one of the quickest paths to a fatter paycheck – especially among millennials. And with millennials making up over a third of the workforce, turnover is at a decade high, leaving companies shorthanded and desperate to fill vacancies.

But due to shallow candidate pools, they’re often forced to hire under-qualified candidates, or risk leaving their employees without the reinforcements they need to deliver first-rate member service.

In addition, new employees frequently make more mistakes while they’re still learning the ropes, further contributing to meager satisfaction scores.

Some under-staffed organizations try to automate processes or outsource areas of their business. Unfortunately, the results often take away from the customer experience, which can be dangerous waters to tread. In fact, 50% of U.S. consumers said they switched companies they buy from last year because of a poor customer experience. And another study found it takes 12 positive customer experiences to negate the poor impression left behind from one unresolved, bad experience.

Too much rides on customer satisfaction to rely on unengaged employees to deliver the very best service to your members.

Customer Loyalty Teams and Employee Loyalty Teams Should Work Together

If organizations aren’t careful, this labor market could undermine the work of customer and member loyalty teams. Instead, professionals should look to connect the dots between employee loyalty and member loyalty before it’s too late.

Here are a few ideas:

1. Up your communication game

Cross-departmental communication can be key to employee engagement. Share specific customer success stories with individual employees who may have impacted the outcome. Employees want to feel like they’re part of something meaningful – that work is about more than just a paycheck.

Some positions see the front lines and talk to the customer on a regular basis. But many don’t. Find opportunities to involve everyone in ways that connect their particular job duties to the big picture.

2. Reassess your company's employee experience

Employees, like customers, appreciate a company who has their back. If you think the “customer experience” is critical, consider the significance of the “employee experience.” In most cases, it’s heavily impacted by company culture and perks. Supportive leadership, flexible work options and competitive wages are a great place to start. But that’s not enough.

According to research by Metlife, employees who are very satisfied with their company’s benefits are nearly 4 times more likely to be very satisfied with their jobs. The historically low unemployment rate is requiring employers to get creative with their perks in order to stand out and attract top performers. Generous PTO, travel benefits and employee discount programs are a few strategies employers use to make their benefits stand out.

3. Provide professional development opportunities

No one likes to feel stuck. In one study, 91% of high performers reported that working for an employer that offered development opportunities was important to them. Providing chances for learning and advancement within the organization will keep wandering eyes focused and increase retention.

In addition, knowing there is a path for growth will help attract top candidates that are being vied for by other suitors.

Engagement Isn't Just For Customers

Not surprisingly, Gallup says employee engagement is highly related to positive business outcomes.

Or in other words, happy employees make happy customers. 

Unfortunately for employers, only 34% of U.S. employees are engaged, according to a recent Gallup survey.

However, if there is a silver lining to be found, it’s that there is plenty of progress to be made – it may just require a shift in priorities. The customer can’t always come first… more often than not the employee should. After all, that’s who is behind the customer experience.

For more insight on the topic and strategies proven to increase engagement, check out How Customer Engagement Pros Can Impact Their Company’s Employee Engagement.