How do you retain customers? Common answers may include creating kickass products, having a strong brand, or having great data to help you beat the competition.
But there’s another key to retaining customers and that’s by retaining your employees. Your employees are the framework on which all of your company’s success is built, which is why a company with low turnover is far more likely to be successful than one with high turnover.
According to PayScale’s 2015 Compensation Best Practices Report, 63 percent of employers consider retention a top priority. Five years ago, only 20 percent of employers believed retention was as important. Retention of employees has become a major focus in recent years due to the need for strong talent to create an innovation ecosystem within companies. For that, employers need a loyal, engaged workforce.
The hidden costs of turnover
Everyone knows that turnover costs your company money. When the turnover is involuntary, employers may have to shell out for severance and unemployment. When the turnover is voluntary, recruiting, onboarding, and training costs are a given.
Employers also are becoming more sensitive to the human costs of turnover, such as the costs affiliated with overworked staff making up for the missing team member; lower overall productivity associated with burnout and too many competing priorities; and the impact on the morale of remaining employees, who, when they see their colleagues leaving—on their own accord or otherwise—may begin questioning their own job security and their company’s loyalty.
However, what most employers don’t understand is how turnover can cost customers.
How turnover drives away customers
Say you have a customer who deals with a specific representative or group of representatives within your organization on a regular basis. And say that customer starts to see multiple employees being funneled through that role or group. In other words, every time the customer contacts you, they’re dealing with a new person.
What does this say to your customer about your company? There are countless negative things that can be inferred from a high turnover rate. Those negative takeaways could result in the loss of your customers to another company perceived to better have its act together.
Ask any customer and they’ll tell you a revolving door of employee contacts is annoying at best and a deal breaker at worst. More and more businesses rely on relationships, and it’s much easier to maintain a strategic approach when you don’t have to brief a new person on your business goals once a month, or worse, backtrack on work that has already been done as a new employee is brought up to speed.
Losing customers versus losing employees
While losing customers equals a loss of income for your company, a high turnover rate has the capacity to be more far reaching and more damaging. That’s why a big part of your strategy to retain customers should include retaining the employees who serve your customers in some way, whether that’s by developing products your customers want and need or by fulfilling product orders.
In an improving job market, your talent has more options. If employees aren’t satisfied with their jobs, it’s way easier to find something better now than it was a few years ago. Back then, retaining employees didn’t seem like as big a deal because there weren’t a lot of places for employees to go. But as the job market continues to improve and more jobs are made available, smart employers will put a greater emphasis and retaining employees.
If you’re seeing a high turnover rate, get to the bottom of it. Find out why people are leaving your company and nip it in the bud. Be proactive. Formulate a solution at the beginning of the problem instead of waiting until folks are leaving. If you’re able to keep your employees around, it will be far more beneficial for you, them, and your customers.
Read more about the good, the bad, and the ugly of turnover in PayScale’s FREE whitepaper.