20 February 2015 – Andrew Cook
Companies are talking about customer engagement and the concept is causing a stir in service-driven companies. But is customer engagement just a new buzzword for customer experience or is it taking companies to the next level? Andrew Cook explores the concepts.
Advertising campaigns, enticing sales promotions, and loyalty reward programmes capture people’s attention, but they don’t create the types of emotional connections that drive actual long-term loyalty. Gallup defines customer engagement as the “emotional connection between your customers and your company”.
A 2014 Gallup report reveals that customer engagement is a strong determinant of profit growth:
- In the retail banking industry, customers who are fully engaged bring 37% more annual revenue to their primary bank than customers who are actively disengaged.
- In the insurance industry, fully engaged policy owners purchase 22% more types of insurance products than actively disengaged policy owners.
- In hospitality, fully engaged hotel guests spend 46% more per year than actively disengaged guests spend.
(Source: Gallup State of the American Consumer 2014)
Experience, on the other hand, is what customers perceive. It is how they regard their interactions with a company. With this in mind, it is easy to see that these two concepts are inextricably linked. If a customer has positive experiences, it follows that he/she will become more engaged.
To add a different take on the question of what distinguishes the two, Andy Frawley, author of Igniting Customer Connections, provides an almost opposing view. He says customer experience is the emotional connection a customer has with a brand, whereas engagement means “actions that the consumer can take include buying, posting, tweeting, liking, following, referring, and more”.
Perhaps the two concepts are interchangeable, but regardless, they achieve one common ground: they indicate a powerful move toward customer-centric strategies in business. Research shows that customer engagement is what drives purchasing decisions. Customers are not guided by the cheapest option or the prettiest packaging. If the brand experiences are consistently good – or better yet, exceedingly great – customers will form strongly positive emotions toward a brand.
Those who love your company will shop more often, advocate your brand, and be less price sensitive. Unfortunately, customer engagement works in the converse too – disengaged customers who have negative perceptions as a result of feeling let down will in turn voice negative perceptions to their friends, family and colleagues – perhaps even a broader audience via social media platforms.
But negative perceptions are not something to be scared of. While you may think customers who are always happy are the most loyal, often it is the customers who see a bad experience being turned around that go from negative Nancy’s to avid advocates.
Coop, a Switzerland-based grocer, actively and consistently seeks feedback from its customers. In 2009, it launched an app called coop@home and used survey feedback to better meet its customers’ needs. What Coop discovered was that the most loyal customers were, in fact, those who had complained and their problem had been resolved.
So rather than ignore negative feedback, those are exactly the moments to use as opportunities to improve processes and create greater value. Businesses that focus on customer engagement are those that take the steps to create an exceptional end-to-end customer experience, even when things go unexpectedly wrong.
Once the customer experience is taken care of, customer engagement is about encouraging your customers to interact with and share in the experiences you create for them as a business and a brand. When well executed, a strong customer engagement strategy will ensure that customers become a company’s most loyal and vocal advocates. The end result is brand growth created by happy customers.