The connection between employee satisfaction and CSAT

There are two big reasons why customer satisfaction leaders invest in understanding how happy their staff are:

  1. It creates a positive, purposeful, and productive work culture.
  2. Employee satisfaction has a big impact on customer satisfaction.

In short, the happier employees are, the longer they stay, and the better they are at their job. That means customers interact with experts who solve their problems quickly and empathetically, which increases how satisfied and loyal those customers are.

Let’s take a look at how this works in practice—starting with the service-profit chain.

1

What is the service-profit chain?

The service-profit chain is a business model that formalizes the link between growth/profitability, customer satisfaction, and employee satisfaction. It was established in the 1990s, but it’s still highly relevant.

Here are the key components:

service profit chain graph

Most businesses know customer satisfaction creates a loyal customer base, which likely increases profitability. Customer experience can be the difference between category winners and losers—which is why the principles in the green boxes above are business priorities we all instantly recognize. Where the service-profit chain holds most relevance today, is the impact of the principles in the yellow boxes.

In the service-profit chain, the value of your customer experience relies on the skills, training, and experience of the employees delivering it. That makes retention and productivity key success factors. To maximize employee retention, you need to measure and improve employee satisfaction. And to do that, you need to address internal service quality.

Facets of internal service quality include:

  • The tools your employees use to serve customers
  • The company culture you create
  • How well you define roles and responsibilities
  • Your reward, compensation, and perk programs

2

Getting the service-profit chain to work

Successfully implementing the service-profit chain model requires businesses to center their mindset around frontline service staff. In this model, your staff aren’t simply the public-facing side of your business—they’re your gateway to developing positive customer feedback loops.

These feedback loops allow you to continuously capture and act on customer sentiment to improve your product or service. The reason your frontline employees are so important to this process is that they not only have the most contact time with customers, but they’re also crucial interpreters of customer feedback.

Customers are notoriously bad at expressing what it is they feel businesses can improve. That makes it vital that the employees who have the most contact with your customers, have the experience and training to translate customer feedback into something that is actionable.

This requires a total paradigm shift from transactional interactions with customers, to building lasting customer relationships. To do that, you need to be confident your frontline employees have the chops to develop a level of customer intimacy that can inform operational improvements.

To that end, employee satisfaction and retention needs to move beyond your leadership team. With considered investment, you can maximize the utility of every human touchpoint on the customer journey and nurture relationships that build loyalty and profit.

So how can we stay on top of this and keep our employees motivated and satisfied?

3

Measuring employee satisfaction and engagement

The first thing to clarify here, is that while satisfaction and engagement are often used interchangeably, there is a subtle difference between them.

Employee satisfaction covers an employee’s overall contentment with their place of work and their experience of working there day to day. Employee engagement is more aligned with employees’ sense of enthusiasm, belonging and purpose—all of which positively or negatively impact their productivity and effectiveness.

What are the benefits of measuring employee satisfaction and engagement?

We know that happier employees stay longer, deliver better customer service, and increase customer satisfaction. But there are other benefits, including:

  • Increased brand reputation
  • Less money spent on recruitment and onboarding
  • A more resilient work culture
  • Increased productivity

Metrics that measure employee engagement and satisfaction

1.

The first metric you need to be aware of is Employee Churn Rate. This measures how many employees left your company over a given period. Happier employees stay at organizations longer—if your company has a revolving door when it comes to staff, it’s a strong indicator that you have low employee satisfaction.

Source: Internal systems.

Calculation: Total number of employees lost in a given period, divided by the total number of employees at the beginning of that period. Then multiply the result by 100 to get the percentage. For example, if you lost eight employees over a year, and had 60 at the beginning, your churn rate would be 16%.

2.

Next up is Employee Net Promoter Score (eNPS). Much like NPS, which focuses on customer satisfaction, eNPS measures how likely your employees are to recommend your business to prospective job candidates, typically on a 1-10 scale. This is a great indicator of employee engagement as it not only measures how content your employees are, but whether or not they will actively promote your company to friends, family, or peers.

Source: Survey.

Calculation: Once you have your results, divide your participants into three camps:

  1. Promoters (employees who gave a score of 9+ out of 10). These are your biggest ambassadors. They’re engaged and enthusiastic.
  1. Passives (employees who gave a score of 7-8 out of 10). These employees are content with the workplace, but aren’t likely to rave about it to friends and colleagues.
  1. Detractors (employees who gave a score of 0-6 out of 10). These employees are at risk of leaving and will actively tell friends and colleagues not to seek employment with you based on their negative experience.

To get your score, take the percentage of Promoters and subtract the percentage of Detractors. Passives aren’t used in the formula.

For example, if 10% of respondents are Detractors, 20% are Passives and 70% are Promoters, your eNPS score would be 70-10 = 60.

3.

You should also look at Employee Satisfaction (ESAT) Score. This measures how satisfied your employees are—often on a scale of 1-3, 1-5 or 1-7.

Source: Survey.

Calculation: Total number of satisfied employees (for example, those who gave you a score of 4 or above on 1-5 scale), divided by the total number of participants. Multiply by 100 to get the percentage.

4

How to improve employee satisfaction and engagement

Assess company culture
Empower employees
Provide better tools
Hold 1-1 meetings and call-listening sessions

What’s it like to work at your business? How do things get done? Mckinsey and Company created a really useful definition of culture: “Culture is that unique set of behaviors, rituals, symbols, and experiences that collectively describes ‘how we run things.’”

The best way to assess culture is to draw up (or reexamine) the values you want your employees to hold themselves accountable to. You can then talk to employees about how they can embody them. From there, you can reinforce these values through what is celebrated and rewarded within the company (make sure you’re aligned with your senior leadership team, and that they lead from the front and stick to it). And does it make a difference? Yes!, “Companies with strong cultures achieve up to three-times higher total returns to shareholders than companies without them, according to McKinsey & Co.”

Empowering employees to embody your values is paramount to cultivating the culture you want. At Ubiquity for example, the best employee empowerment indicator is that our agents understand they’re entrusted with a product (and a brand’s reputation). We’ve observed that, through responsibility, and ownership, kind, caring, and efficient service manifests.

Start by assessing how much freedom you afford your employees. If you have a contact center, are you asking your teams to stick rigidly to a script? Or are you empowering them with the deep industry knowledge they need to take the shortest route to high-value outcomes? That’s where world-class CX begins.

Equipping your employees with the tools they need to do their jobs has two key components: technology and training.

Investing in the basics (telephony, computers and peripherals), through to more specialist tech solutions (such as remote working programmes) allows your teams to focus their energy on serving customers to the best of their ability. This goes for information accessibility too. All too often agents are asked to swivel-chair between programs while serving customers. This reduces satisfaction on both ends of the call.

But simply giving employees freedom without the training to back it up can lead to them feeling exposed and creates a quality assurance gap. Any employee empowerment initiatives need to be supported with equally strong training initiatives. This makes it vital that you assess the strength of your onboarding and training pathways and that you have a plan for how you’ll tackle staff development in the long term.

High turnover of contact center staff is all too common. This often leads to reluctance to invest in learning what makes those employees tick. But to boost employee satisfaction, it’s essential for businesses to reframe this transactional style of recruitment towards building longer-term working relationships. One-on-one meetings are especially important in the era of remote and hybrid work where employees can quickly feel isolated.

One-on-one meetings not only allow you to get to know your employees on a personal level, but they’re also a perfect forum to set goals, provide coaching, and address wellbeing concerns. They’re also a great way to get context-rich feedback that can help you improve individual and collective employee experiences.

For our customer experience teams, we also focus a lot on team-building inside and outside the office, as well as learning sessions in which we listen to calls together for collective training and coaching that also fuels our knowledge base updates and initial training. During these sessions, agents are active participants in deconstructing calls to help them problem-solve, collaborate with their peers and managers, and hone their skills in the process.

Ready to start?

The biggest winners will be the brands that prioritize employee satisfaction and use it to drive long-term customer loyalty. This in turn leads to a stronger brand reputation and, ultimately, greater profitability.

If you feel your agents could do more for customers and benefit from some of the tools we’ve spoken about, we’d love to help. As a place to start, our Return On Outsourcing eBook  gives you the full story (including case studies) on how to ensure your business process outsourcing partner empowers service agents with the tools and cultural cornerstones they need to maintain and develop CX excellence.