Retail's EX-Factor: The Impact of Employee Experience on Customer Satisfaction

Photo by amandazi photography on Unsplash

There's a common HR idiom, "Employees don't leave jobs; they leave managers." And this still rings true today. Without a supportive environment in the employee journey, staff lack the motivation to perform their best. This indifference not only hurts profitability but also customer experience and satisfaction.  

To build strong brand loyalty from customers, retailers must work from the ground up – starting with staff. They are the foundation that supports business growth on a daily basis. This interconnection between employee satisfaction and profitability is known as The Service-Profit Chain.  

The Service-Profit Chain

profit and growth are driven by customer loyalty

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customer loyalty is driven by customer satisfaction

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customer satisfaction is driven by customer experience

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customer experience is driven by service

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service is driven by employees

If any of the pieces are missing, the chain falls apart. This is why employee experience (EX) is imperative to customer experience (CX); it’s where the whole chain begins. 

As much as we hate to bring up COVID-19, the pandemic was a turning point for many employees, resulting in the Great Resignation - a 20-year high in "quit rate". It's very unlikely that staff simply woke up and decided to quit one day, but rather it was the culmination of months (maybe years) of growing resentment due to burnout, under compensation, and mismanagement. 

Another disheartening trend in the labor force at the time was Quiet Quitting, where staff did the bare minimum without striving to achieve more.  

With the pandemic behind us, we can use it as a cautionary tale for the future of retail–and how we can maintain employer-staff relationships through changing market dynamics. To move in the right direction, it all begins with one thing: Employee Experience. 

"Employee experience invites, empowers and inspires. It connects meaningful work to those who seek it, balances the needs of the individual, the needs of the business and the customer, and is centered on mutuality and trust." 

(Source: PwC)

Current Trends: Employee Engagement and Employee Satisfaction are Slipping

We're currently witnessing another drop in two key metrics as it pertains to EX: employee engagement and employee satisfaction. 

Employee Engagement:the involvement and enthusiasm of employees in both their work and workplace. (Source: Gallup)

Employee Satisfaction:measures how content employees are with their roles. Many factors can drive this contentment (or discontentment), including compensation, growth opportunities, employment stability, and job outlook. (Source: bambooHR)

Engaged employees doesn't always mean satisfied employees, but they are closely related metrics as engagement and satisfaction in the employee journey impacts productivity, turnover, optimism, and performance. 

Here's why this matters for US-based retailers: only 31% of employees cite being engaged and 51% are satisfied. While there are multiple variables that impact these results, one thing is very clear: company loyalty is waning.

And this can spell disaster for customer experience. 

Photo by Jopwell

How Does Employee Experience Impact Customer Experience?

The formula is quite simple: how you treat your employees is how they'll treat others, including team members and customers. 

By creating a healthy work environment, you are fostering a space of positive energy for confidence and productivity to thrive. Prioritizing EX, you are firmly being an example of what brand excellence looks like from the inside-out that staff can follow: walk the walk, talk the talk. 

A clear example of exceptional EX is Hilton with a Fortune 100 Best Companies to Work For score of 95% outpacing the average US-based company score of 57%. 

Hilton is cited to be welcoming, treat staff with respect regardless of position, have high management competency, and high ethical practices. All of which drive employee advocacy. Other leaders in the EX space include Cisco, American Express, NVIDIA, and Accenture.  

These companies continue to retain and attract top talent while remaining profitable year-over-year, and company culture is a big reason for this success. 

The Impact of Employee Experience: 

Increased Motivation and Confidence 

Creative solutions emerge when staff feel confident and motivated, which gives them the clarity to excel in their role. 

Morale Boost 

Show your staff that you're there to help them grow professionally and personally. This continual investment into employee wellbeing invigorates employees to be reciprocal, giving back to a company that's given them so much. 

Attract Talent 

As you know, word gets around. Exceptional employers get talked about, putting the company on the radar for fresh new talent. Also, current staff are more likely to refer their network to job opportunities, potentially shortening lead time between recruitment and hiring. 

Company Loyalty 

Why mess up something that's working? If employees are at a workplace that takes care of them and their families, there's less likelihood that they'll ever leave. Even in the face of poaching competitors. 

How to Improve Retail Employee Experience? 

EX is a key component to long term success for any company, large or small. When an employee is on edge or stressed out, it's usually a sign that there is a lapse in remedial measures, such as adequate pay, health benefits, internal communication channels, paid time off, and many others employer offerings. 

Here are some ways that you can start improving EX in retail. 

Showcase Wins 

Losses don't feel good. But only focusing on losses creates a toxic cycle. Showcase wins, even in the face of shortcomings. This leads to positive attitudes and an environment of optimism. Also, if team members suggest a successful idea or hit sales goals, highlight them. This shows staff that their efforts are being recognized.  

Examples: highlight leaders in storewide communications and social media, prizes and awards, reflect on wins in quarterly meetings, personalized thank you, monetary bonus 

37% of staff say that personal recognition encourages them to produce better work more often

(Source: Great Place to Work) 

Invest in Growth 

Staff want to invest their time in places where they feel valued and believe that they can grow. It's important to remember that if people are struggling to make ends meet, they're not going to be focused on excelling at work. And it's not just financial growth that impacts EX but also supporting growth in skills and health, including mental health. 

Examples: living wage-based remuneration, promotional pipelines, quarterly reviews, skill building courses, educational subsidies, adequate health benefits 

Create Safe Spaces for Communication with Management 

If staff are walking on eggshells, then they’re likely to avoid engaging with managers. Create a safe space where staff know that they can provide feedback to management that results in real change. No one likes to keep things pent up inside; it's a bottle under pressure ready to explode. By creating a space to vent, you give staff a sense of security in the workplace. 

Examples: regular check ins, employee satisfaction surveys, anonymous feedback forms, third-party employee interviews 

4% of employees have regrets about starting a job with the first week

(Source: bambooHR) 

Clarity in Objective Settings 

Execution gaps create a serious problem for staff. For strong communications to exist, two-way transparency must exist where staff and management can engage with one another. This must begin at the start of the employee journey as new hires are sensitive to onboarding inefficiencies: 70% of new hires know if a job is the right fit within the first month; 44% of employees have regrets about starting a job within the first week.  

Examples: establish standard operating procedures for information sharing, third-party audits for training and coaching, employee feedback 

Photo by Helena Lopes

Employee Experience is Impacting Your Customer Experience 

Workplace satisfaction impacts customer satisfaction. Employees that are given the tools to mentally, physically, and financially prepare for circumstances are more likely to be confident in day-to-day functions and be in a better mood.  

At the end of the day, your employees are people that just want to be treated with respect. This can take the form of growth opportunities, platforms to be heard, or showcasing their successes.  

By honoring your staff, you're helping to build trust in your brand from the inside-out. This attracts talent, reduces turnover, and establishes a reputation of excellence, building an experienced staff roster that supports customers for the long term. 

So, make sure to engage with your staff regularly to understand what matters to them. It's often best to have a third-party conduct interviews and surveys since staff may feel nervous or refrain from giving candid feedback to managers or head office personnel. 

But the first step to understanding where you can improve requires a staff overview assessment. This begins with a Continuous Experience Evaluation from Competitor IQ. 

If you're looking to audit your in-store experience, give us a ring.