Is Small Business Employee Churn impacting Customer Retention?

Ponder how small business employee churn impacts the quality of post-sale product and service delivery.

Ideally, a small business customer retention workforce is proactive, not reactive. First, these employees are key elements of a well-crafted human capital strategy. Also, they connect the dots between execution of customer acquisition and customer retention strategy. As a result, they represent an investment in the sustainability of your organization.

Finally, a small business customer retention workforce represents your company to clients. Not only that, they become the face of your brand, as well.

Rate of employee churn is defined as the turnover in total number of employees compared to the number of employees who replace them within a specified time period. A high rate of churn is not desirable. Employee attrition, on the other hand, reflects an employer’s decision not to replace an employee/group of employees who have left an organization.

Consider that a micro business includes companies with up to 10 employees. Small businesses can have up to 100 employees. There are a lot of businesses existing between the limits of two definitions,  aren’t there?

Do I have your attention?

Consider how small business employee churn impacts all the activities dedicated to serving the customer.

First, this workforce represents a lot of people out of the total number of employees. In addition, the small business workforce is involved in the majority of daily activities necessary to sustain a business. After all, these employees produce deliverables and maintain the customer, post-sale.

Consequently, small business employee churn impacts the continuity and capability of employees to interact effectively and productively with customers, in order to retain them.

1. What percentage of your current workforce is hired to serve in this aggregated functional capacity?
2. What is the combined cost of salaries and benefits associated with your customer retention workforce?
3. Are they considered a cost center or revenue center?

For the record, I am not discussing sales force turnover.

Unfortunately, most business models still separate the customer acquisition process from the customer retention process. As a result, sales people tend to abandon customers, post-sale, as they run off to hunt for more new business.

Then again, consider the impact of post-sale customer abandonment on billable time and rework identified by the people who produce contracted deliverables. How might post-sale customer abandonment impact customer retention workforce morale, productivity and profitability?

Ponder how organizational critical mass impacts small business employee churn.

Let’s say you are a micro-business with less than 10 employees or a small business with 20-50 employees. Chances are many employees wear multiple hats and serve multiple functions serving customers, post-sale. As a result of the smaller critical mass of employees in your organization, small business employee churn has a big impact on your organization’s ability to serve and retain customers.

1. What happens when you lose 10-20% of your total workforce of 10 employees? 20 employees? 50 employees?
2. How will employee churn impact the quality of creating enduring business outcomes for clients?
3. Are employees cross-trained and inter-operable with one another?

What is your small business employee churn contingency plan?

Consider that the majority of businesses really are micro- and small businesses. As a result, small business employee churn can have a serious local and regional economic impact. There is a common denominator I observe in the majority of micro- and small businesses I coach. This common denominator relates to what happens as a result of small business employee churn. In most cases, there is dysfunction.

Perhaps it’s time for your business to take a solid look at its workforce strategy. Root causes can have some really big contexts. 

Even if your company enjoys a seemingly stable workforce, that scenario can change in an instant.

On the other hand, if your company is constantly hiring and rapidly firing, why is that? Then again, are employees constantly being poached by your competitors? I think you know the reasons behind that scenario.

After all, the state of the workplace impacts an employee’s ability to be engaged and productive. A good place for background and solid reference work is the 2017 Deloitte Human Capital Trends report, referenced here.

Are you overdue to take a solid look at what is really involved in growing, expanding and sustaining your business? One place to look first is small business employee churn. Contact me and let’s discuss your business case.

Babette Ten Haken is a catalyst, corporate strategist and facilitator. She writes, speaks, consults and coaches about how cross-functional team collaboration revolutionizes the industrial Internet of Things (IIoT) value chain for customer loyalty, customer success and customer retention. Her One Millimeter Mindset™ programs draw from her background as a scientist, sales professional, enterprise-level facilitator, Six Sigma Green Belt and certified DFSS Voice of the Customer practitioner. 

Babette’s playbook of technical / non-technical collaboration hacks, Do YOU Mean Business? is available on Amazon. Visit the Free Resources section of her website for more tools.

Image author: Melpomene. Image source: Fotolia.