Acquiring a new customer costs between five and 25 times more than keeping an existing customer. Your long-term success depends on reducing churn, increasing customer lifetime value, and improving customer satisfaction. That’s why you need to be sure you have an effective customer engagement strategy.
What is Customer Engagement?
An engaged customer is one whose positive feelings about your brand lead them to directly or indirectly participate in activities that increase the value of your company or any of its products or services.[1] Direct contributions take the form of purchases.
But indirect contributions are just as important. For example, an engaged customer of a fashion brand might blog about different ways to combine the brand’s products. An engaged customer of a software product might help other users troubleshoot issues in an online form.
The Benefits of Customer Engagement
Research suggests that customer engagement is necessary to drive sales, gain a competitive advantage, and increase profitability. Why? Because engaged customers recommend your company to people in their networks, provide valuable feedback, and can even co-create value through their involvement with your brand (e.g., participating in the creation of user-generated content).[2]
Engaged customers will:
- Refer other people to your brand
- Talk about the brand online and offline (e.g., on social media)
- Offer feedback on their experience with your company and its offerings[3]
Customer Engagement Statistics
In various studies conducted by Gallup, customer engagement led to
- 44 percent more visits from fully engaged customers in the consumer electronics industry and a 29 percenter higher average order value
- 56 percent more visits a month from fully engaged customers of casual restaurants
- 28 percent more visits a month from fully engaged customers of fast food restaurants
- Fully engaged customers in the hotel industry are worth 46 percent more a year
- Engaged retail banking customers are worth 37 percent more annually[4]
How to Improve Your Customer Engagement Strategy
The following preliminary steps will set you on the right path to developing a more effective customer engagement strategy.
The keys are to
- Get your metrics right.
- Get your product or service right.
- Get your messaging right.
- Promote engagement.
1. Find Your New True North
The first thing to understand before you begin to develop or update your customer engagement strategy is that the key performance indicators (KPIs) are much different than you may be used to.
Rather than transactional metrics like purchase frequency, recency, and value, customer engagement is measured based on KPIs such as customer satisfaction and emotional involvement.[5] Tracking these metrics will require qualitative research.
The primary factors that influence customer engagement are
- Satisfaction. How well does your product or service get the job done? A high degree of customer satisfaction is a necessary but not sufficient condition for customer engagement.
- Positive Emotions. How do customers feel about your brand? Do they like it or do they love it?
In “Customer engagement: the construct, antecedents, and consequences,” a study published in The Journal of the Academy of Marketing Science, researchers developed a matrix that looks something like this:
| Customer Engagement Matrix[6] | ||
| High Positive Emotions | Passionate | In Love |
| Low Positive Emotions | Indifferent | Attracted |
| Low Satisaction | High Satisfaction |
Your goal is to get as many customers as you can to fall in love with your brand.
2. Prioritize Customer Satisfaction
When it comes to increasing customer engagement, improving customer satisfaction is the low-hanging fruit. Find out what your customers need from your product or service and make sure that it’s giving that to them.
3. Rethink Your Messaging
Your messaging can also affect customer satisfaction. If your messaging is setting the wrong expectations, you may be attracting customers who aren’t a good fit.[7]
Bad or unclear positioning can also lead to customers who are emotionally neutral (or worse) to your brand.
To fix this, consider your unique selling proposition. What makes your company different from the competition? Whatever you think it is, does it resonate with your customers?
If not, you’ll need to rethink your messaging. For companies that already have engaged customers, that’s as easy as asking them why they love your brand. That’s not always an option, in which case, you’ll need to rely on other tactics like split testing.
4. Create Opportunities for Engagement
Some companies are so perfect for their markets that customers will go to any lengths necessary to engage with the company and other customers. Your company might be one of them. Still, why make it harder than it has to be?
Make it easy for customers to make indirect contributions– and don’t forget to ask them for help!
Here are a few ways you can do that:
- Establish a forum on your site or elsewhere for customers to interact with brand representatives and other customers.
- Ask your customers for reviews.
- Create a channel for customers to offer feedback and ask them for it.
Increase Your Bottom Line by Improving Customer Engagement
Getting serious about your customer engagement strategy is a great way to increase growth long-term. When your brand gets customers so excited that they’re going out of their way to spread the word, every new customer is like an advertisement that pays you.
[1] Gupta, S., Pansari, A., & Kumar, V. (2018). Global Customer Engagement. Journal of International Marketing, 26(1), 4-29.
[2] Brodie, R., Hollebeek, L., Jurić, B., & Ilić, A. (2011). Customer Engagement. Journal of Service Research, 14(3), 252-271.
[3] Pansari, A., & Kumar, V. (2016). Customer engagement: the construct, antecedents, and consequences. Journal of the Academy of Marketing Science, 45(3), 294-311.
[4] Ibid.
[5] Ibid.
[6] Ibid.
[7] Ibid.