Two vital business success drivers are employee retention and customer loyalty, thus consolidating team cohesion and sustainable sales revenue over the long term. We have already covered the overlap between CX and EX, showing how ambitious CX objectives can never emerge without establishing a corporate culture that favors exceptional employee engagement and a sense of belonging to a corporate community. Now we’ll dive into the employee engagement metrics you need to leverage in order to create an exceptional CX.
Employee engagement scores energize or detract from customer experiences based on their undeniable integration. Look to classify your results based on excellent, good, neutral, or troublesome scores to better understand the steps you need to take to improve your EX and your CX.
All the scores highlighted link to customer satisfaction and help with reducing both employee and customer churn. But first, to appreciate why customer and employee retention is critical to profitability, let’s dive into the consequences of employee and customer churn.
Why is excessive employee churn unacceptable?
Voluntary termination, firing, or sudden exits for any reason severely disrupt work harmony and project processes. A turnstile of employees in and out of the business signifies a faulty corporate culture, resulting in a defective resource pool. Constantly retraining recruits goes hand in hand with inevitable quality control and customer service deterioration.
Further, it demoralizes existing staff as they experience slowdowns and frenetic HR onboarding to replace lost peer contributions. Moreover, churn deflates a company’s reputation as a stable hirer – let alone the stunning cost escalation connected to rehiring, retraining, and integrating recruits with functional teams.
Probably the most challenging channel is creating employee cultural belonging that resonates with customers. Until that’s in place, human interactions with the marketplace are, at best, “iffy” and put a brake on customer engagement initiatives.
Customer churn is similarly ROI destructive. It costs an arm and a leg to replace a lost loyal customer. Did you know that for every $1 it costs you to retain a loyal customer, acquiring a new one can cost up to $25? The impact on profitability of such a metric is eye-popping.
The 2021/22 Great Resignation sent a resounding message that any company ignoring employee churn (with resulting customer base erosion) will face an uphill battle in meeting stakeholders’ balance sheet and P&L objectives.
Launching a win-win employee engagement program
So, the logistics behind the metrics are simple: Achieve employee engagement KPIs, and you automatically boost customer retention. In other words, invest in employee morale and satisfaction to make more money through the marketplace. I’ve identified 5 EX metrics that go straight to the jugular of your workforce to see if it’s working in the company’s favor (especially from a customer retention standpoint). Benchmarks, measured by KPIs, are like a pilot’s instrument panel, providing critical readings to move smoothly between two time points.
5 employee engagement benchmarks you need to look out for
1. Employee NPS (eNPS)
According to Fred Reichheld in his book, The Ultimate Question, one question opens the gates to an employee’s degree of satisfaction and engagement – better known as an eNPS survey. So what’s the question? “Would you recommend a friend or family member apply for a position in your company?” – on a scale of 1 (Under no circumstances) to 10 (Definitely). From there:
- Divide the survey participants into “Promoters” (9 & 10s), “Neutrals” (7 & 8s), and “Detractors” (0 – 6).
- Finally, calculate Promoters and Detractors as a percentage of the total responses and deduct the Detractors % from the Promoters %.
Here’s how to evaluate the emerging percentages:
- A negative net total = Predominantly disengaged employees (where the worst possible metric on the negative scale is -100).
- Conversely, a positive net total can go as high as +100.
- 10 to 30 signifies engagement is okay but has room for significant improvement.
- 31 – 49 = encouraging employee engagement and job contentment.
- 50 – 79 = strong corporate culture and credible employee belonging.
- 80+ = Extraordinary team engagement and satisfaction (HR excellence).
Repeat the eNPS ideally every three months but no less than twice annually. Keep in mind: It’s what you do with the results between surveys that counts. Pay heed to the ratings and invite recommendations to address engagement weaknesses and maximize the strengths working in your favor.
2. Customer NPS (NPS)
This is the sister insight benchmark of eNPS, delving into customer satisfaction with a single question, as follows: “Would you recommend a friend or family member buy your company’s brands?” with ratings 1 to 10, as indicated above. From there:
- Categorize into Promoters, Detractors, and Neutrals and calculate along the indicated eNPS lines.
- Again, you want to know where you stand on the -100 to +100 scale, as explained for eNPS.
You should expect to see alignment on these two NPS tests. Why? For all the reasons provided in our previous blog. In short, these two side by side should confirm that happy customers align closely with positively engaged employees (and vice versa).
As I see it, every business watches its top line as the beginning of an impressive bottom line; revenue and loyal customers are front and center of that. However, without engaged employees (as indicated by the eNPS), one’s expectations may be disappointed. How do we know this? Research suggests that:
- High NPS scores inevitably result in “22% higher profitability and 21% higher productivity” – a feather in the cap of sustained sales revenue.
- Employees who love their jobs reflect extraordinary brand potential to customers.
- Conversely, employee unhappiness will contaminate brand image, spreading dissatisfaction that overlaps into the marketplace. Why? Because disgruntled people complain to everybody.
3. Employee Absenteeism rate
Management expects some absenteeism. However, when reasonable stay-aways reach a tipping point to become excessive, one should be worried. Unfortunately, this benchmark metric often sneaks under the radar because it’s more gradual than sudden. Therefore, it’s easy to overlook.
Here’s the thing: unexplained excess absenteeism can creep into a company’s cultural framework as “ something easy to get away with.” Aside from this, employees who want to cut hours are decidedly unengaged.
According to Indeed, we can detect employee absenteeism via an easy-to-calculate percentage:
- Multiply the number of team members by the maximum number of days each could work over a fixed period (FP) to get X days.
- Multiply the number of team members by the absentee days each recorded over the FP (call it Y days).
- Divide Y by X and multiply by 100.
- 1.8% is average – a benchmark to attach to individual scores.
- Above 1.8% up – signals it needs looking into.
- 4%+ is a flashing red light.
Two qualifications attached to the above are:
- Public illness (like COVID-19) can spike the metrics, with little one can do to remedy the matter.
- Beware of Presenteeism – a metric significantly below 1.8%, indicating that the employee doesn’t take reasonable time off and fears staying away. There may be a darker side to this that’s worth investigating. Also, employees who turn up at work feeling ill, possibly spreading viruses, put their peers at risk.
4. Employee Retention Rate (ERR)
This one goes directly to examine if your business is retention – or churn-centric. In other words, this KPI tells you how effectively you can hold on to talent over any defined period. In universal terms, a 90% or higher retention rate signifies solid retention and creating a culture of belonging. Under the latter level, churn and unengaged staff are a severe obstruction.
However, this benchmark (for comparison purposes) is often industry or regionally related. For example, one can expect higher retention rates in government, finance, insurance, and education enterprises; lower rates in food, retail, and hospitality. We advise contracting with a company like Sogolytics – one of the leading global experience management companies – to leverage their vast experience across all industries.
Calculating the Employee Retention Rate for a period is not challenging: Add up the number of employees at the start of the period you’re measuring (call it A) and the number of employees at the end of it (call it B). ERR = B/A x 100.
5. Employee Learning and Development (L&D)
L&D is critical to inclusion and employee satisfaction. How do we know that? Employees leaving the company highlight their inability to advance and poor training on the job.
So, how effective is your L&D program? Is it there only in name, or are your employees engaging in it? Indeed, it’s the stakeholders’ responsibility to promote L&D from the early stages of recruitment and onboarding right through the entire employee lifecycle (and its accessibility). Moreover, your L&D resources must be relevant, dynamic, and motivating to the participants, not carry a reputation for the opposite of these benefits – out-of-date, stale & static, and full of holes.
Measuring L&D is not as cut and dried as the others above. My suggestions are as follows:
- Schedule three-monthly reviews of courses being used or not used.
- Look deeper by evaluating the completion of the learning material or bouncing before the end.
- For employees who participated in completed L&D options, measure changes in performance (i.e., a before and after analysis).
- Connect L&D findings to other benchmark categories (e.g., eNPI) to see the impact on their KPIs.
- Organize a reward system for employees earning certifications (where applicable).
- Pay careful attention to manager/supervisor reviews of employees participating in the program.
Again, Sogolytics is an ideal backstop to ensure your L&D program meets the standards of excellence that make your company a desirable place to work. Follow up on successful program completion with assessments, and gauge how employees are reacting to it with regular feedback surveys. This will help you constantly improve your L&D program and create an engaging strategy.
I have highlighted five of the most revealing benchmarks that throw light on employee and customer retention. There are dozens of others, like Glassdoor Rating (GDRs), where your employees provide reviews open to potential recruits wanting to reference your company (i.e., Glassdoor is the Yelp of the job marketplace). You want a rating of 4.01 to 5, whereas 1.51 to 2.5 is an HR wake-up call.
Then there are Employee Survey Participation, Satisfaction with Compensation, as well as Employee Engagement surveys. While measuring itself is not a solution, tracking and learning from a variety of different metrics can help you develop a meaningful perspective and develop strategies to align your EX and CX with stellar ratings.
Ready to get started? Sogolytics is your ticket to save time on trial-and-error, so you can get it right sooner and start making meaningful improvements.