How Does Employee Experience Affect Customer Experience?

Anyone who’s been to a store, restaurant or really any type of business knows that the employee you interact with can make or break the experience. When you exchange smiles and have a pleasant conversation with the cashier, you’ll probably want to return to the business or recommend it to friends. If the interaction is more bumpy or strained, or if you don’t feel taken care of, you probably won’t add it to your list of favorite places. 

This demonstrates how employee experience affects customer experience. Whether it’s as temporary as having a bad day or something that goes deeper (such as feeling unfulfilled by the role or not having the resources to do the job well), a poor employee experience can unfortunately have negative consequences for the customer. On the flip side, a positive employee experience can take the customer’s experience to the next level – and pay off big-time for a company. 

What is employee experience? 

Before we discuss how employee experience impacts customer experience, let’s go over exactly what it entails. Employee experience, also called “EX,” refers to everything that makes up how a team member feels about their time at an organization. Everything they see, hear and feel during every step of their journey at the company makes up the employee lifecycle – from being hired to eventually leaving the role – and goes into employee experience. 

Maintaining a positive employee experience is important for several reasons: employee retention, turnover reduction and cultivating a productive, happy and strong workforce where people truly enjoy being a part of the team. Employee experience has effects on productivity and performance, as well as company culture and reputation. It also plays a huge role in customer satisfaction, a finding backed by both comprehensive research and anecdotal evidence. 

An employee-first approach 

As the old adage goes, “The customer is always right.” This leads companies to prioritize buyers (and potential buyers) above all else. While customer service is immensely important for building a good reputation and maintaining long-term customers, a lot of companies might not realize that focusing first on employee satisfaction might be the key. 

The effects of a happy, productive, satisfied workforce – from leadership down – reverberate throughout an organization and trickle down to customers. Making sure employees have the tools they need to do their jobs well, encouraging innovation and creativity, and showing appreciation for all they do are all ways to prioritize a great employee experience and let them know that they matter. In fact, recognition is a key element of employee experience

Many organizations might feel that they have to pick between customer experience and employee experience, and when they do, customer experience often comes out on top. But the two are not mutually exclusive. In fact, they have a direct relationship that has impacts for all involved – including the company and its success. Employee experience management should be a priority for any organization. 

Employee experience impacts revenue 

To establish the link between employee experience and customer service, Harvard Business Review conducted research of a large global retail brand, looking at financial data (such as monthly revenue and profit statements) and HR-focused metrics of employee experience (such as longevity). They found that the composition of customer-facing employees had a substantial impact on revenue, and even noted that the impact might be even greater than what is shown in the research due to factors of employee experience that can’t be measured, such as personal wellbeing, team diversity and use of communication tools. The difference isn’t a drop in the bucket either: The research found that a typical store improving on the four metrics of employee experience that the study measured would increase revenue by 50%. 

Demonstrating a clear link between employee experience and revenue indicates that customers are more likely to invest their time and money in brands with happy employees. Employees are often viewed as the face of a brand, and they often have more direct interaction with customers than managers or executives. Customer-facing employees have a deep impact on the company’s bottom line, and the proof is in the numbers. 

Happy employees = happy customers 

Another study from Harvard Business Review examined employee satisfaction (as reported in Glassdoor reviews of companies across 13 industries) and customer satisfaction (indicated by ratings from the American Customer Satisfaction Index). Researchers found that employee satisfaction had a statistically significant impact on customer satisfaction. These findings demonstrate that if a company wants to prioritize the customer, they must first invest in the employee. Building morale among employees creates an environment better suited to serve customer needs. 

While correlation doesn’t equal causation (it’s possible that happy customers make employees happier, rather than the other way around), the study notes examples from their data that show employee satisfaction rising or falling before the customer satisfaction rating changes – indicating that the employee experience is the variable here. Research such as this demonstrates the tangible importance of investing in employee experience. 

Focusing on the right things 

When employees are bogged down by inefficient processes or poor wellbeing, they can’t focus on the main aspects of their role, their goals and personal growth within the role, and the greater vision of the company. For example, if employees are struggling to understand the technology needed for the job, how can they be prepared to excel and perform to the best of their ability?

A company reaching its full potential requires innovation, creativity, productivity and enthusiasm from all members of the team. A poor employee experience may mean the organization suffers opportunity costs, as team members don’t have the time or resources to come up with new ideas for improving a product or service or taking things to the next level. 

Maslow’s “hierarchy of needs” is a psychological concept explaining human motivation. It asserts that basic needs (food, shelter, sleep, safety) must be satisfied before an individual can focus on the more high-level needs, like cultivating self-esteem and reaching self-actualization. 

This is why it’s so important to invest in giving employees a good experience, which entails making sure that they have all the right tools to do their jobs, that processes and expectations and clear, and that they’re feeling valued and appreciated for their work. When these aspects of employee experience are taken care of, team members are equipped to go the extra mile, giving customers an experience above and beyond what they expect.  

Human connection 

In an increasingly tech-savvy world, so much has gone digital. With mobile ordering taking the place of talking to a cashier and iPads taking the place of a cash register, it’s possible to have an entire outing without speaking to another person. This makes human connection, and the interactions that a consumer has with customer-facing employees, even more crucial. Good employee experience helps create team members that will treat customers with the utmost respect, kindness and expertise. 

Happy employees may have:

  • More empathy for customers and their needs
  • Desire to go above and beyond expectations 
  • Increased efficiency for solving problems 
  • Strong moral compass and commitment to ethics

The better the experience that an employee has, the greater sense of identity and belonging they’ll feel with a company, inspiring them to be their best and be an advocate for the brand, which includes treating customers well and giving them the best experience possible. 

Everyone’s a piece of the puzzle

Some business interactions involve more contact than others. While customer service is always important no matter how the purchase is done, buying an item of clothing online or ordering a pizza with an app involves no face-to-face interaction. This differs from something like purchasing a car, which might involve hours with a dealership employee as they answer a customer’s questions, go over options, and ultimately strive to make a sale. Or it could be something even more involved: an ongoing business relationship with a client or customer that could span weeks, months or years.  

Regardless of the level of depth, one thing is clear: A single interaction can make or break a customer’s experience. You’re not likely to return to a restaurant where a waiter was outright rude to you or a retail store where an employee insulted you. But you might be highly likely to return to a business where an employee was friendly and went above and beyond to make sure you were taken care of. 

This make-or-break nature of it might sound daunting, but consider it extra incentive to work toward good employee experience. Every single team member is a part of the puzzle, each one an important ingredient to the “customer service” pie. No employee is more important than another. We all take part in how our organizations are perceived, and when one of us shines, all of us do. 

Steps you can take 

Employee experience is crucial for an organization’s success because it has a direct impact on customer experience. A company filled with team members having a negative experience isn’t likely to grow, innovate or live up to its full potential. So it’s worth it to invest in employee experience. 

Fortunately, there are ways to lay the groundwork for better employee experience so that the experience of customers is enhanced as well, leading to more happy clients, more happy employees and greater revenue. Establishing a methodology for measuring the key metrics employee experience is a great place to start. There are a few things you can consider when looking at factors affecting employee satisfaction. 

Employee experience factors

  • A sense of diversity, belonging and inclusion within the team
  • An individual’s health and wellbeing 
  • Opportunities for learning and growth
  • Engagement with the rest of the team 
  • Alignment with the values of the company 
  • Knowledge that employee feedback is taken into consideration
  • Feeling appreciated by management and colleagues 

Think about how these matters come into play at your own organization. Do employees seem overworked and stressed out, or are they excited to tackle new projects and pitch ideas? Is it a hostile environment, or does everyone feel like they have an equal chance to speak and share their ideas? Are there programs or development opportunities to help employees challenges themselves or expand their skills? 

These are great places to start when looking to improve employee experience at your organization, a worthwhile endeavor to ensure a happy and healthy workforce, as well as a happy and satisfied customer base. In a competitive market with many job-seekers hunting for just the right role, and consumers having an endless array of options for what brands to support, prioritizing employee experience is what sets a great company apart from a good one.

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