What if I told you that 32% of hiring managers (that’s right, nearly 1 in 3) have switched their primary staffing provider in the past year?

That’s what we found in the 2018 Staffing Buyer Study – a joint research project conducted in partnership with our friends at CareerBuilder and ASA. The truth is that unsatisfied clients are one of the greatest opportunities that staffing firms have to shore up revenue. In fact, if you look at Net Promoter Score® data for the staffing industry, you can easily spot the power (and more importantly, the massive financial impact) that client churn has in our business.

What is Client Churn?

Client churn (or client attrition) refers to the loss of customers or subscribers for any reason at all. Businesses measure and track churn as a percentage of lost customers compared to total number of customers over a given time period. This metric is usually tracked monthly and reported at the end of the month. It’s important to note that churn rates vary by industry and knowing your market is key to reducing churn with more precision.

What Client Churn Costs Staffing Firms?

An analysis of 3,700 clients of staffing firms over 36 months revealed that Detractors — clients who report they are unlikely to recommend your firm to a friend of colleague by rating you 0 to 6 on the NPS® scale — are 56% more likely to churn than Promoters (i.e. your most loyal clients).

And the worst part? Even if Detractors do continue working with you, they are likely to spend significantly less on your services, taking an average of 14% of their business elsewhere.

Here’s an example to help you put those stats into perspective:

As you can see, a firm projected to earn $20 million this year would lose north of $1.7 million of that — nearly 9% of earnings — assuming the client experience and willingness to spend aligns with industry averages. Put another way, staffing firms in this bracket are compromising nearly $2 million in annual revenue by failing to keep their existing clients happy.

What Causes Client Churn in the Staffing Industry?

So what drives these clients (and their spend) out the door? Our research shows that staffing firm clients usually become Detractors for one of the following reasons:

  • The firm didn’t offer enough candidates to choose from or offered poorly matched candidates
  • The services cost too much (i.e., they didn’t get value from the transaction)
  • The firm was unresponsive to inquiries or questions
  • The staff was not helpful or caring
  • The overall customer experience was poor or lacking
  • There was poor communication on the firm’s part

The majority of these churn factors are service-related — things you can control internally with a focus on responsiveness, communication and exemplary customer care. They also put you at risk for losing a client to your competitors. In fact, 39% of staffing clients who leave their primary firm for a new one do so because of service failures.

Fortunately, service failures represent as much opportunity as they do risk. Thanks to a documented phenomenon known as the ‘service recovery paradox,’ your firm has the chance to turn those unsatisfied clients into loyal advocates for your brand – assuming you have the practices in place to handle the issue quickly and effectively. Our industry NPS data backs this up, showing that scores are in fact higher from clients who have experienced a problem with their firm but saw that problem fixed to their satisfaction within 24 hours.

Transforming Detractors into Promoters

Growing your Net Promoter Score means finding opportunities to transform Detractors into loyal advocates – aka Promoters. As staffing firm clients, Promoters not only spend more with their primary staffing firms, but they are willing (and likely) to refer you to new accounts and help grow your business.

Finding ways to keep Promoters happy, as well as constantly creating more of them, is the key to long-term success in any industry, but most definitely in staffing. What does that take, exactly? According to our survey, Promoters most often note their firm’s:

  • Well-matched candidates
  • Great customer service
  • Responsiveness
  • Professional, caring and helpful staff
  • High level of communication
  • Strong reputation
  • Wide array of candidates
  • Good value given the cost

The bulk of these, again, are service related and within your control — they’re not just the services you deliver, but how you deliver them and when you do it. In a nutshell, it’s the little things that make a big impact on your clients’ overall experience with you.

Invest in Your Success — And Your Promoters

I say it all the time – staffing firms will never see the maximum ROI from an NPS survey if they only spend time addressing Detractor responses (i.e. unhappy clients). It pays to invest time, resources and energy into your Promoters — quite literally. Promoters spend an average of 71% of their staffing budget with their primary firm. Detractors and those who are middle-of-the-road? They spend just 34% and 51%, respectively.

At its simplest, it means the better service you provide, the more you’ll stand to make — all by nurturing your existing clients.

To start ramping up your efforts to better cultivate loyal clients and Promoters, encourage your team to:

  • Set realistic expectations about open positions and the marketplace
  • Submit candidates that are a good fit, and walk clients through the steps you took to find those candidates
  • Be timely, both in responding to inquiries and providing potential candidates
  • Resolve issues and concerns within 1 day if at all possible
  • Be friendly, helpful and professional with your clients
  • Provide data and resources that can add value to your clients’ hiring efforts and don’t assume they know everything you know about their market or candidate pool

Finally, utilize the right technology. Our research shows that 67% of hiring managers believe it’s either “very” or “extremely” important that their staffing firm use the latest technologies. It’s even more important with Millennials (82% say it’s either “very” or “extremely” important!).

An NPS Survey Program Can Help

Want help identifying your Detractors, leveraging your Promoters or just improving your online reputation? An NPS survey program can help. Contact ClearlyRated today to learn more.

  • Eric Gregg

    Eric Gregg is the Co-founder and CX Strategist for ClearlyRated, the leading CX platform for B2B service firms. Eric is a renowned thought leader in the B2B service quality space, and enjoys making his marketing team squirm with campy clip art and long-winded personal anecdotes.