It’s Cheaper to Train Than Recruit

by Sharlyn Lauby on April 5, 2012

I learned a long time ago that in business it’s cheaper to keep the customers you have than to continuously attract new ones. That’s not to say companies shouldn’t always try to get new customers. But there needs to be a focus on keeping training, development, employee training, acquisition, customer service, recruitthe customers you have for two reasons: first, you already spent the cost to acquire them and second, because you’ve already won them over to your brand.

Businesses stay focused on keeping customers by knowing the cost of acquiring a customer and the customer’s satisfaction with their product/service. In addition, they know the cost of losing a customer.

Occasionally, customers leave for all the right reasons. For example, when they outgrow the needs of a product or service. But they remain raving fans of the company – because that company helped them grow and succeed.

If we think about it, the same philosophy applies to employees. When a company hires an employee, they invest a lot of time, energy and resources in sourcing, advertising, interviews, offers, etc. Then the new hire goes through orientation and onboarding. They might participate in other kinds of company training. Their supervisor spends time talking with the employee about performance expectations, departmental policies and more.

My guess is the company has thousands of dollars invested in this new employee.

So when the employee makes a mistake, instead of immediately thinking warnings, discipline and possibly termination, maybe we should consider coaching, mentoring or additional training? After all, the company already has a lot of money invested in this employee.

Another way to look at it is examining the cost of hiring an employee and the impact of employee satisfaction. Along with the cost of losing an employee.

Like customers, sometimes allowing an employee to leave the company is exactly the right thing to do. Maybe the company can’t give them what they need. Letting an employee pursue their professional goals, even if it means them leaving the company, could turn them into a raving fan for your business.

I know, I know, it can be a pain to fix employee situations and customer complaints. On the surface, it might appear easier to find another customer or hire another employee. But if we’ve already made the investment, it might make sense to look for alternatives to abandoning the relationship.

Previous post:

Next post: