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Pinpointing the ROI of Employee Experience

November 14, 2022 Employee Experience
Lance Haun
By Lance Haun

Over the past couple of years, a lot of research has focused around the value of employee experience (EX) on a company's bottom line. Even without hard data, most leaders know that employees who have positive experiences in the workplace tend to perform at higher levels, demonstrate greater engagement and deliver a better output for customers. 

Earlier this year, I wrote about how academics at Columbia University found the causal link between better employee experience and better business results. The groundbreaking research gave organizations a path to proving the ROI of investing in employee experience. 

Then, in October, came Qualtrics CrossXM. It’s an ambitious product that the company hopes will not only combine a company's employee and customer experience data into one view, but will also measure the impact one might have on the other.

That predictive value that Qualtrics promises is the important part. Up until now, organizations have had logical reasons to believe that improving employee recognition has a positive impact on the customer experience. In fact, a Forbes Insights study found that seven out of 10 organizational leaders say improving EX has a direct impact on CX.

But how much does a company need to invest in EX to move the needle on CX?

First Stop in CX Success: Improving Employee Experience

One of my favorite examples of a great customer experience is my local dive bar. They offer a great experience to customers without relying on fancy CX tools. In fact, they only started taking credit cards just a few years ago. The aesthetic of the place isn’t great — unless you really like neon signs and wood paneling. And the food is good, but it's nothing to write home about.

The difference, of course, are the frontline employees delivering an inviting experience, even if you only show up a couple times a month or a couple times a year. In an industry where skilled and motivated workers can easily find other employment, this place has managed to retain its staff — even through a pandemic. 

I mention this example frequently because it shows that every organization can prioritize employee experience for the good of the company, even if they don’t define it that way or have fancy technology. 

The culture of the organization, including how people are trained, the behaviors that are rewarded and the way leaders prioritize basics like staffing levels and scheduling, ignites the feeling that employees matter. In turn, that drives everyday customer success.

When you look at what sets retailer Nordstrom apart from other department stores, it is almost exclusively about employees delivering a consistent experience that relies on good judgment. 

So, as chief customer officers or sales and marketing leaders ask themselves how they can improve a customer’s experience, their first stop should be with the people of the organization.

Related Article: Is EX the New CX?

Changing the Conversation

Whether you buy into Qualtrics’ CrossXM potential or not, one exciting thing for leadership teams is that it seems we are on the verge of being able to connect the dots between a company's investments in employee experience and the impact that has on the organization across many facets, from recruitment to the bottom line. 

For now, it seems a given to want to invest in EX. After all, the labor market is dictating that companies that do not prioritize positive EX are very likely to lose the race. But what happens when the dynamics shift again and employers regain leverage in the relationship? Will EX still matter?

Having data that demonstrates it should can motivate leaders to be more proactive in their conversations about the employee experience. So there's a lot riding on these new capabilities, including refocusing marketing's efforts when CX is on the decline.

Is there an employee issue at play here that HR leaders can help marketing or sales leaders solve? That's an angle that's hardly ever been explored until today.

The good news is, there is growing recognition that there is an important employee experience connection to customer experience. Work leaders may want to start having conversations in those domains before they are pulled into them unwittingly.

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