The Hidden Link Between Employee Engagement, Customer Service, and Profitability
In our customer-centric world, most businesses recognize that exceptional customer service is a key driver of success and bottom line results. In 2023, the Harvard Business Review (HBR) published an article, Elevating the Value of Customer Service through a Data-Driven Approach, highlighting the value of customer service. Respondents to a survey unanimously agreed that customer service directly impacts business performance. Their focus was on customer-centric data, tracking key performance indicators like customer satisfaction scores, retention rates, and resolution times.
In their efforts to improve customer service, survey respondents focused on the following nine areas:
Increase automation in the customer service process
Implement more predictive/proactive service
Improve/increase knowledge sharing between customer service and other teams or departments
Provide customer service agents with more data or better profiles/history
Upgrade the technology systems
Provide service through more touchpoints
Increase use of “swarming’ collaborative support
Invest in talent and performance of customer service agents
Solicit more customer feedback
Surprisingly, only two of the above focus on the customer service agents themselves (knowledge share/transfer and investing in talent). When asked for the biggest barriers to improving customer service, second from the top was “Talent issues (e.g. high turnover, lack of engagement…, lack of .. training, etc.).” Many organizations struggle with a lack of motivated employees, which ultimately hinders customer service improvements. This finding serves as a crucial reminder—customer service excellence isn’t just about policies or technology; it’s about engaged employees delivering outstanding experiences.
This brings us to the critical question for today: How does employee engagement impact customer service and, ultimately, the bottom line? A decade of data from Gallup’s Q12 engagement survey offers some revealing insights. In Gallup’s recent article, Employee Detachment Threatens Customer Satisfaction, they point the finger squarely at their finding that Employee pride in the quality of products and services has fallen 8% since 2020.
Why should you care? If we all agree customer satisfaction directly impacts the bottom line and one of the most critical components to improved satisfaction centers on the people directly in the line of fire, then a near 10% drop in employee’s pride about their own organization in only 4-5 years should be enough to wake us all up!
This is important because pride in one’s work directly impacts the quality of customer interactions. When employees believe in what they do, they are more likely to provide exceptional service, build strong customer relationships, and contribute to a positive brand image. Disengaged employees are less committed, more prone to delivering subpar service, and may even damage customer relationships through indifference or negativity. Simply put, which employee do you want engaging with your upset customers? The one reading from the screen someone else wrote? Or the one who values what they do and is motivated to provide a great service experience.
Gallup’s research consistently shows that engaged employees:
Deliver higher-quality service – Engaged employees go beyond task completion; they take ownership of customer issues and proactively find solutions.
Build stronger customer loyalty – Customers who interact with engaged employees are more likely to return, increasing retention rates.
Enhance brand reputation – Employees who are excited about their work naturally advocate for the company, influencing both customers and potential hires.
The link to profitability is also just as easily proven:
Higher productivity – Engaged teams are 21% more productive than their disengaged counterparts.
Stronger financial performance – Organizations in the top quartile of employee engagement enjoy 23% higher profitability than those in the bottom quartile.
Better customer retention – When employees are engaged, customer service improves, leading to higher customer retention and lifetime value.
Regardless of size, businesses cannot afford to overlook employee engagement if they want to maintain strong customer relationships and better bottom line results.
For organizations looking to boost customer satisfaction, investing in employee engagement makes common sense. Cultures where employees feel valued, motivated, and connected to the company’s mission, lead to better customer experiences, stronger brand loyalty, and ultimately, greater profitability.
The bottom line?
If you want happier customers, start by engaging your employees. If you’d like to learn more about measuring or fostering more employee engagement, feel free to contact us.