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Do Recognition Programs Impact Customer Retention?

When it comes to recognizing your employees, it’s sometimes difficult to measure the ROI. There is no exact formula that can easily explain why a formal recognition program is beneficial to your company in cold hard numbers. However, you can see how other areas of your business improve after implementing a recognition program. One huge factor that is impacted is increased customer service quality, and by extension, customer retention.

According to a 2013 study, the majority of companies with Engagement Ratings over 50% retained more than 80% of their customers. Now it makes sense that when employees are happy, customers are happy too – but let’s dive in and understand exactly how this happens.


Employee Recognition

It all starts with you – the employer. When you implement an official recognition program and then use it to its fullest potential, you plant a seed. Your company’s values become clear and accessible, and your employees’ attitudes are impacted for the better.

This doesn’t occur if you are reluctant to recognize your employees, however. You need a fully optimized recognition program to truly make an impact on the company atmosphere. This means going beyond monetary rewards and recognizing employees for their hard work in more social ways. Encourage managers and supervisors to give shout outs for employees regularly to demonstrate that your company values the employee. That’s the first (and most important) step. The rest won’t follow if the employee does not feel valued.

Internal Shift

It may take a while to see a company-wide change, but if recognition is a seed planted in each person, an internal shift occurs when the seed starts to sprout. Every person reacts to Recognition differently. However, if you succeed in creating an engaging recognition program, you create the right environment for your plant to grow.

When in the right mindset and environment, an employee learns to clearly see the importance of their work. Along with confidence, they gain pride in their work. There’s a difference between doing a job because it’s what you do, and actively contributing to a company that cares about its people. Employees who are regularly recognized start to actively participate in their jobs after the internal shift of attitude has taken root.

At the same time, when employees feel valued, they begin to feel confident in their contributions to the company. Before being recognized regularly, an employee might feel they are okay at their job on the best of days. Now that they feel better about their abilities, you should see a change in their behavior.

Behavioral Changes

After an employee begins to feel the change in attitude internally (whether consciously or subconsciously), you can see a change in the employee’s behavior. The employee starts to take ownership of their work since they know they can get it done – and do it well. They start to do work right the first time, believing precision and quality over speed and quantity. And they start to have a general positive attitude as they perform their work. These changes become infectious, as an overall shift in atmosphere occurs. It is here, where the behavior changes, that we start to see a noticeable return from the recognition program.

Customer Appreciation

When your employees display good behaviors across hundreds or thousands of employees, your customers are bound to notice. They appreciate the hard work that your company produces as a whole and become more loyal to your brand.

When your employees are dedicated and take ownership, the customer feels they are a priority. When your employees operate with minimal errors, the customer feels your brand is reliable. When your employees show they are happy with their job and are eager to work with the customer, the customer appreciates and reciprocates the goodwill. There are so many possible ways where engaged employees can impact the customer for the better.

Customer Retention

Happy employees lead to happy customers. If your values are clearly demonstrated from the top of the company, through your employees, and are apparent to the customer, you can be sure there is loyalty to your brand. 89% of American consumers said they feel “loyal to brands that share their values.” The best way to show your values to the customer is to make sure your employees are familiar with and believe in your values as well.


A surefire way to get customer appreciation is through employees who became engaged through an inclusive recognition program. In the end, you want to keep customers, but the drive to make it happen comes from deep inside the organization. Taking an idea from Simon Sinek, it’s when you start thinking about the why before the how or the what that you will see success. There are so many points along the way, which is how you get your result. But if you work backwards and focus on why your employees would change their behavior, you will be far better equipped to create an optimized recognition program that actually makes a difference in your company. Why recognition works is because most people genuinely want to be happy and fulfilled in what they do.

So after implementing your recognition program, make sure to water the seed regularly otherwise your employees will begin to fall back on into a disengaged environment, and your customers will start to notice. If your metaphorical plant of employee engagement starts to wilt, don’t worry. We know how to help you revitalize an outdated recognition program.

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