Improving candidate experience ROI can be an effective way to increase hiring efficiency and get more of the right candidates. It's just a good idea all around. But dedicating time and resources to candidate satisfaction requires a dollars and cents return on investment (ROI).
When looking to justify candidate experience ROI, there a three main areas to investigate:
- Lost sales
One of the most significant areas of ROI for candidate experience comes in the form of conversion. When you think about all your candidate acquisition efforts, the majority results in a candidate on your career site, either viewing jobs, researching your company, or applying for a job. Beyond clicking through to jobs and applications, the Talent Board reports that the #1 destination for potential employees to research your company is your career site.
This is where conversion becomes huge. What percent of visitors to your career site convert to applicants? Don't know? Well, recent aggregate data from Talemetry clients show 2.7% of all the visitors who visit Talemetry client career sites, convert to candidates.
So if you have 100,000 visitors a year at 2.7% conversion, you'll get 2700 applicants. Let's say you spend a $1 million annually in candidate acquisition activities. That gives you a cost per applicant of $370.
Now with a focus on deploying a consumer quality career site with targeted content, intuitive search, stunning job descriptions, and smooth and easy applications, you can improve that conversion rate. Let's say you increase that conversion rate to 3.5%, an increase of less than a percentage point.
Now that $1 million buys you 3,500 applicants, an increase of 30% in applicants and a decrease in cost per applicant to $286. Or stated another way, now it only costs you $771,000 to acquire those 2,700 applicants.
"That, my friends, is a $229,000 savings on a candidate experience conversion rate increase of just eight tenths of one percent."
A bad candidate experience can kill any goodwill you may have built with your employer brand. In the days of social networks and tight candidate supply, frustrating candidate experiences get around.
It is pretty widely accepted that a strong employer brand is extremely helpful in being able to hire the best talent more easily. But how does this translate into ROI?
A LinkedIn survey collected cost per hire statistics for organizations and mapped them to their overall brand strength. The results were that organizations with a good/strong employer brand had a cost per hire less than half that of organizations with a poor/moderate brand.
So if you spend $225 per hire and you invest in improving candidate experience, you have the potential to cut that in half. But let's just say your candidate experience investment only improves your cost per hire by one third.
Now you save $75 per hire. If you hire 600 employees annually, that's a savings of $45,000 annually. Big company? Some of our clients hire 50k-plus employees a year. That's nearly $4M annual savings.
For many companies, candidates are customers. The cost of a bad experience can result in lost sales. According to a survey by Software Advice, an applicant tracking system consultancy, 42% of candidates who have a bad experience are somewhat to highly likely to cease buying goods from that company. Thirty-four percent are somewhat to highly likely to tell their friends not to buy from that company.
And of course, the Virgin Media tale of analyzing their candidates and finding that bad candidate experiences were resulting in nearly $7m annually in lost business.
Of course, lost business ROI calculations depend highly on the type of business you run and requires complex analysis. It can range from nothing to millions annually. But you get the idea. Bad candidate experiences hurt the bottom line.
For strategies for improving candidate experience and ROI, check out Talemetry's Candidate Experience Handbook. This free 36-page handbook details the importance of candidate experience in the hiring process and provides dozens of key practices and strategies to help you get the most out of your candidate satisfaction efforts.
- Extracting the Best Candidate Experience
- Free Webinar: Job Applications in the Engagement Era
- Six Elements of a Great Job Application
- Career Sites -- The More the Merrier