Think of the last time you received really great customer service. What made it so special? Maybe the representative was warm and friendly, offered to go out of their way to accommodate you or helped you troubleshoot a particularly tough problem. You might chalk this up to the individual’s chipper and helpful personality, but that’s not the only thing at play. Odds are, they were pretty happy at work!
A new Glassdoor Economic Research report, Happy Employees, Satisfied Customers: The Link Between Glassdoor Reviews & Customer Satisfaction, revealed that companies with happy employees are more likely to have high customer satisfaction scores than their counterparts.
The Employee/Customer Satisfaction Connection
In the study, Chief Economist Dr. Andrew Chamberlain and Senior Economist & Data Scientist Daniel Zhao looked at a panel of 293 large employers across 13 industries between 2008 and 2018, comparing the link between employee satisfaction through Glassdoor reviews and customer satisfaction through the American Customer Satisfaction Index (ACSI).
Chamberlain and Zhao discovered that each 1-star improvement in an employer’s Glassdoor company rating out of 5 is associated with a 1.3-point increase in customer satisfaction out of 100.
“Across all companies and years, customer and employee satisfaction are positively linked. In our sample, there is a clear overall link between satisfied employees and happy customers,” the report says.
Higher Customer Contact, Higher Impact
The connection between customer and employee satisfaction was not equal across all sectors, though. In industries where front-line employees directly interact with customers, employee satisfaction had an even bigger impact on customer satisfaction.
“Focusing only on sectors where front-line employees have the most direct and frequent contact with customers — including retail; restaurants, bars and food services; travel and tourism; financial services; and health care — we find the effect of satisfied workers on customer satisfaction is more than twice as strong, with each 1-star higher Glassdoor rating predicting 3.2 points higher customer satisfaction,” the report says.
It might come as no surprise, then, that the satisfaction of employees in front-line roles like sales and customer service directly impacts customer satisfaction, regardless of industry. After all, it’s not easy to provide good service if you’re unhappy at work!
How Customer & Employee Satisfaction Boost Earnings
So it’s clear that employee satisfaction is closely tied to customer satisfaction — but how does that actually affect a business’s bottom line? By leveraging a 2006 study published in the Journal of Marketing that associated ACSI customer satisfaction score with stock market performance, Chamberlain and Zhao were able to estimate how an increase in employee satisfaction translates to financial gain.
“Based on one recent estimate, each 1 percent increase in customer satisfaction is linked to 4.6 percent higher company market values,” the study says. “That translates into a predicted boost in company market valuations of 7.8 to 18.9 percent for each 1-star improvement in overall rating on Glassdoor — a potentially large financial boost from better customer satisfaction via an improvement in employee morale.”
What It Means for You
If you manage a team of direct reports, or serve as a leader in any way, this information offers unique insight into how you can boost team performance. Check in with your employees through regular one-on-ones, and consider sending them a survey so you can gauge how satisfied they are. Ask how satisfied they are overall, as well as what they currently enjoy about their job and what you can do to make it even better. Don’t just sit on this information, though — act on it! Employees who see meaningful action come as a result of their feedback will feel more acknowledged and empowered. And don’t forget to check in regularly so that you can measure your progress over time.
Employees in non-managerial roles might want to leverage this data when making a case for investing in company culture — for example, it could be a lot easier to get funding for monthly pizza parties if you can prove to your boss that happier employees are more productive.
And finally, if you’re searching for a customer-facing role — such as customer service or sales — make sure to keep this information in mind as you browse openings. No matter how great a company sounds on paper, or how much they’re willing to pay you, you won’t be set up for success if they don’t prioritize employee happiness. Read Glassdoor reviews to learn how current employees feel and talk to anybody you know who works there, or has in the past. In interviews, ask what the company is doing to invest in their company culture and keep an eye out for signs that employees love working there, such as a lively office brimming with laughter and activity. Being happy at work won’t just benefit your mood — it can help you advance your career.