Why Candidate Churn Could Be Costing You Millions
Attracting top talent to your organization is crucial. However, a poor candidate experience can cripple recruiter leads and talent pools, and cause candidate churn. But can candidate churn really cost your company millions of dollars?
Joe Matar, VP of Marketing at Brazen, says yes. On this episode of Talent Experience Live, he explains the hidden costs behind candidate churn as well as strategies to prevent it.
You can watch the full episode below, or read on for top highlights.
What factors contribute to candidate churn?
According to Matar, applicants expect three things when it comes to a great candidate experience: speed, personalization, and transparency.
A company that can create a tailored application and interview experience for a candidate, showcase what it’s really like to work there, and extend offers quickly will beat out their competitors and minimize candidate drop off.
Candidates also want consumer-like experiences when they’re searching, applying, and interviewing for jobs. In addition to easy site navigation that allows candidates to find relevant jobs quickly, it’s the recruiter’s job to sell the organization — and the job — to the candidate. When companies can offer more benefits like unlimited PTO or 401K matching, for example, they’re showing the candidate that they respect and appreciate them and can go above and beyond other organizations.
Candidates today are more savvy than ever. They’re combing through Glassdoor and G2 reviews to see if the company they’re interviewing with is really all it’s cracked up to be. If your candidate experience is getting bad reviews, you can expect higher churn rates, and in turn, financial loss.
Related resource: State of Candidate Experience: 2023 Benchmarks Report
How can you calculate recruiter costs when you’re dealing with a large number of requisitions?
“It costs money to advertise your jobs,” Matar said matter of factly. “But digging a little deeper, there’s also the time that it takes to create a compelling job description or for the recruiter to do an intake meeting with a hiring manager. There’s a lot of time involved in recruiting.” And when your recruiting processes aren’t streamlined to be as efficient as possible, that time spent is also money spent.
Here are a few other factors that influence recruiter costs that may not always be top of mind:
Time to hire. This isn’t just a nice-to-have metric. It's a real cost of revenue when you don’t have someone in that role, working that position, and making money for your company. “If candidates are churning, it’s going to add up.”
Extended open roles. If, for example, you aren’t filling your customer service roles fast enough, your customers are then having a worse experience and are more likely to abandon you as well. That’s money lost.
Customer relationships. If you lose a customer due to prolonged vacant customer service roles or other factors, it will cost money to get that customer back. The marketing team or sales team must spend time and resources to gain their trust and loyalty, and if they can’t win back their customer, they now must find a new one. “It can cost up to 10x more to bring on a new customer,” Matar explained.
How does the application process play a role in candidate churn?
The application process is one of the biggest factors in candidate churn, since it’s usually the first way a candidate interacts with your company.
According to Matar, only 3.5% of applicants finish an application that takes 15 minutes or longer to complete. “The completion rate goes down the more questions you have and the longer it takes a candidate to fill out an application. That’s not surprising, but what stood out to me [from Appcast’s research] is the magnitude of completion rates between different scenarios,” Matar said. For example, if you can get your application time between 1-5 minutes, completion rates jump to 15%. “That’s 5x the payback just by shortening your application.”
So, how do you do that? Take out any questions that are unnecessary for an initial screening. Questions that require candidates to do extra work, like asking for the company’s phone number (which most candidates don’t know by heart), can lead to application drop off.
How can companies identify their spend?
Most organizations are looking at their funnel conversion metrics to identify spend. They analyze that in the following way: “Of the number of applications that we get, how many are qualified and move on to a screening interview? What percent of those screens move on to a hiring manager? What percent of those interviews do we make an offer to? What percent accept the offer and move on to day one?” Matar explained.
But without speed, personalization, and transparency that was mentioned previously, top applicants will drop out.
Matar estimated that the average cost of each application is $25, but that can range vastly from as little as $1 to $1,000. If companies don’t have enough candidates in the funnel because they dropped out due to a poor candidate experience, that company will have to pay job boards to open the position back up. Not only does that cost money, but it’s also costing the company revenue since the role is sitting open for longer.
Matar also estimated that on average, if candidates are dropping out of the funnel, it costs organizations an additional $2,500 per open job requisition. “That $2,500 can quickly become millions of dollars.”
How can companies improve their application process?
Matar shared three main ways companies can improve their application process, leading to a decrease in candidate churn and company spend.
1. Build genuine relationships. Candidates crave a human connection before they consider the role… or even apply to it. Build connections with virtual or in-person events, collect names and emails to add to your database, and start nurturing talent to build a relationship… even before they’re an applicant.
Pro Tip: Optimize your career site to help build these relationships. Phenom Career Site, for example, can collect passive leads and build an engaged talent community that automatically funnels into a CRM.
2. Utilize a career site chatbot. Some candidates aren’t yet ready to apply, but have questions about your company. A chatbot can start to engage with the candidate and share information on what your company is all about.
Most people are willing to give out their information in order to learn more and possibly talk to someone later on, so utilizing the chatbot gets your foot in the door and adds potential talent to your pool.
Pro Tip: Ensure your chatbot knowledge base is up-to-date and delivering a candidate experience that’s helpful rather than frustrating. Check out our blog for five key chatbot features that boost recruiting efficiency here.
3. Leverage content. Content plays a huge role in the application process. “Content is king and queen,” Matar said. “Content is the thing that’s going to influence candidates’ behaviors.”
But what does that look like, exactly? Candidates want to envision themselves in the role and clearly understand what benefits this job or this career provides. Tell your company story through content like genuine employee testimonials that share what a “day in the life” looks like or branded videos from the marketing team to showcase company culture.
Pro Tip: Utilize all your career site may have to offer, like the ability to localize content and offer multi-language tenants to connect with candidates in the best way.
The bottom line is that candidates are going to do their research on your company long before they apply for a job. Make sure your candidate experience accurately reflects who you are, what you do, and why a candidate should work for you. If you’re putting forth a poor experience, your candidates are going to churn.
Ready to boost your candidate experience and decrease churn? Download our State of Candidate Experience Report for how to best attract, engage, and convert candidates.
If you want to see how well your career site is performing, you can also request a complimentary career site audit here.
Maggie is a writer at Phenom, bringing you information on all things talent experience. In addition to writing, she enjoys traveling, painting, cooking, and spending time with her family and friends.
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