How does employee happiness improve customer retention?

Published on September 21, 2021 by Lyndsey McLaughlin

How can employee happiness and engagement help businesses retain their customers? HR expert Lyndsey McLaughlin explores how happy employees can boost customer retention.

Employee engagement began to decline throughout 2019 to 2020, following an increase that spanned 10 years. There is no underestimating the impact of a lack of employee engagement. When employees are disengaged, it can affect their productivity, happiness in the workplace, and the way they interact with customers. When employees feel happy in their job, they are more likely to go the extra mile for customers, which can, in turn, improve your ability to retain customers.

What is customer retention and why is it important?

Customer retention is your ability to provide a service that keeps customers coming back for more. It means they won’t go to competitors for the service. When you use a company that ticks all the boxes and provides the service you want, why would you go anywhere else?

When you focus on customer retention, you can boost your ROI, increase your loyalty, while also bringing in new customers through word of mouth. Customer retention is imperative and one of the most important ways to improve this is through the happiness of your employees.

5 ways employee happiness helps customer retention

4 ways employee happiness helps customer retention

Employers often fail to pick up on the mood of their employees until it is too late. It can be difficult for employers to monitor employees, especially in SMEs where time and resources are often not on your side. However, it is important to pay attention to your employees’ happiness, as this often goes hand in hand with customer retention.

Here are 5 key ways in which employee happiness can improve customer retention:

1. Happy employees build relationships with customers

Employees are at the heart of any business. If you have employees that are engaged with the company, they are more likely to offer a great service to customers. Happy employees lead to positive attitudes, and employees that want to build relationships with your customers. When you build a relationship with someone, you are more likely to want to stick with them, and this applies to business too. Loyalty results from a strong relationship and this is what you want to aim for with your employees and customers.

2. Engaged employees improve employer brand

Employer brand helps determine the success of a business; with a strong brand, you can increase your loyalty and your customer base. When employees are happy, they want to improve the reputation of the company. They want the company to do well. Your employees are an important way to strengthen your brand. After all, the service you offer is the main reason customers will want to stay or leave.

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3. Customers feel more valued

When employees are happy, they are more likely to see the value in each customer they deal with. They will give their attention to the customer and make them feel special. This is what customers are looking for - they want to feel that they are appreciated by the company. When this is achieved, they will be less likely to want to look for alternative options.

4. Engaged employees have fewer absences

Engaged employees tend to have fewer sickness absences. Sickness absence can be unpredictable and disruptive for everyday business operations, leading to issues with neglected and frustrated customers who may start looking elsewhere. So, ensuring employees are happy and engaged will help with their wellbeing and help out your customers too!

Record and monitor sickness absence, as well as all types of absence, within your organisation to better understand staffing and attendance patterns with our absence management software.

5. Greater employee retention means happier customers

It is not very enticing to deal with a company that has a revolving door of staff, especially when you have built a relationship with them. It makes them seem like they are not treating employees well. If you have happy employees, they are less likely to leave, and higher employee retention also impacts customer retention.

The key takeaway for customer retention?

If you are losing customers and you are not sure why, start with your employees and find out how they feel. Understanding the culture of your business can help you identify any weaknesses and allow you to make improvements to help with increasing your customer retention levels.

Read more from the myhrtoolkit blog

Employee engagement strategies: how to engage employees

Employee satisfaction: the benefits for employers

Picture of Lyndsey McLaughlin

Written by Lyndsey McLaughlin

Lyndsey McLaughlin is a CIPD qualified HR consultant and recruitment professional who specialises in HR advice and writing about a range of business and staff management topics for employers and managers.

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