Customer Engagement is the latest buzz term for marketers. The long term relationships created by engagement is believed to provide a key competitive advantage. Why all the hype?
As consumers become more sophisticated, they expect more from the organizations they deal with and how those organizations interact with them. Marketers and advertisers are responding by placing a much greater emphasis on “customer engagement.”
Marketing and advertising professionals are working to make brands and advertising more relevant and engaging. This shift to creating greater brand meaning and better brand-consumer relationships is about creating more personal long term relationships with the people who are critical to your business success. Organizations view these relationships as providing a critical competitive advantage.
Customer engagement goes beyond loyalty, customer satisfaction and retention programs. While important, these programs do not consistently demonstrate a strong correlation to key business outcomes.
Business Executives’ Perspective: The Economist Intelligence Unit, in cooperation with Adobe, conducted a broad survey of business executives about their engagement activities. The results:
- 90 percent of respondents indicated that customer relationships are very or extremely important to the success of their business.
- Respondents believe that more customer engagement would result in
- More customer loyalty (80%)
- Increased revenue (76%)
- Increased profits (75%)
- Increased customer referrals (79%)
- Many respondents find customer engagement programs difficult to both implement and measure their effectiveness.
Gallup has created an “engagement ratio” to track the proportion of fully engaged customers to actively disengaged customers. Their research shows that average organizations have less than one fully engaged customer for every actively disengaged customer. Those organizations at or above Gallup’s 90th percentile have an engagement ratio ten times larger (8:1) than the average organization.
Engagement Metric Is Elusive:
Most marketers measure customer engagement through specific behaviors, e.g., frequency of certain actions (visits per day), extent of specific behaviors (time spent) and the specific actions taken (conversions). These specific behavioral measures of engagement are viewed by many researchers as over simplistic and are not valid measures of overall customer engagement.
That’s because engagement is something that happens in the minds of consumers. Measuring the mental state of consumers is difficult for businesses. That’s why a more pragmatic approach is to measure certain behaviors that are thought to be consistent with “engagement” as a psychological state.
Because of the importance of measuring “engagement” the Advertising Research Foundation (ARF) along with the Association of National Advertisers (ANA) and the American Association of Advertising Agencies (AAAA) are working together to lead engagement research initiatives to create a core body of knowledge for the industry.
Gallup Consulting is one organization that is attempting to measure the “engagement mindset” of consumers. They’ve incorporated behavioral economics theories to come up with customer engagement metric that they tout as both straightforward and with a strong connection to key business outcomes. Behavioral economists believe that only 30 percent of consumer decisions and behaviors are the result of rational thought. If so, then 70 percent of consumer decisions are based on emotional factors.
After an extensive analysis of consumer responses to a list of questions, Gallup developed a list of 11 questions that includes 3 rational loyalty questions and 8 emotional attachment questions that consistently demonstrated linkages to important business performance metrics. Gallup calls this their CE metric.
You can learn more about Gallup’s approach here.
Customer engagement is a social phenomenon. It’s created or lost with each brand’s online or offline touch points with consumers. These repeated interactions either strengthen or reduce the emotional, psychological and physical investment a consumer has in a brand. It’s up to each organization or brand to make each touch point a positive experience.Concentrating on one strategy, e.g., social media, does little good if your customer service sucks!
Brands now live in a world where they no longer control the conversations that take place about them. Social media has become the dominant online strategy to create customer engagement. Unless other touch (engagement) points are also very positive, don’t expect to succeed in getting many fully engaged customers.
