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Marketing’s New Imperative – Engagement
by Laura Patterson, President, VisionEdge Marketing

 
       
   

As products become more commoditized, switching costs decrease and differentiation based on product features becomes more difficult, companies are exploring how to use customer experience and engagement as a competitive advantage.  The term and concept of engagement has become mainstream over the past few years.  The second Annual Online Customer Engagement Survey conducted in October 2007 attracted over 1000 responses, making it the world’s largest survey on the subject. According to the results of the study, this year appears to be a key year for companies attempting to integrate customer engagement strategies and tactics into the business plan. More than three-quarters of companies (77%) who participated in the study say that the importance of customer engagement has increased in the last 12 months.  Half of company respondents (50%) now regard the online dimension of this discipline as ‘essential’ to their organizations, with a further 40% saying that it is ‘important’.  As a result, engagement is fast turning into a key corporate imperative with marketing leading the charge for creating and influencing customer engagement behavior.  

The Value of Customer Engagement

There have been numerous studies that have examined and confirmed the correlation between enhanced engagement and greater business success.  According to the study, customer engagement initiatives impact the bottom line.  Organizations that have implemented customer engagement initiatives over the last 12 months are seeing ‘improved customer loyalty’ and ‘increased revenue’.  These are two benefits link customer engagement.  Effective customer engagement is a prerequisite for customer loyalty and retention. We have already come to accept the fact that improved customer acquisition and retention increases income and profit and that improved customer loyalty means reduced loss of business through churn and increased word-of-mouth marketing.

Defining Customer Engagement

While there still isn’t a universally accepted definition of what customer engagement is or how it should be measured, Ron Shevlin offers a good starting definition:” Repeated interactions that strengthen the emotional, psychological or physical investment a customer has in a brand.”  Essentially, engagement is the connection between the brand and the customer. 

A customer’s actions, affinity, and advocacy provide insights into their level of engagement.  Behavior represents action and includes online behavior such as click throughs and downloads as well as offline behavior such as event attendance.  How attracted a customer is to the company and its products/services, that the degree of affection and preference reveals a customer’s affinity.  And lastly, engaged customers actively recommend and endorse a company and its products and services.  Therefore the purpose of customer engagement strategies is to create a positive and consistent customer experience both online and offline that stimulate action and predispose the customer toward affinity and advocacy .  To that end, companies are deploying a number of strategies to improve engagement ranging from developing and implement efficient and accessible customer services’ to the use of Web 2.0 and rich media to deepen customer relationships to building a sense of community around product/services/brand.  

Measuring Customer Engagement

There is no universal return-on-investment (ROI) formula for measuring customer experience.  However a number of companies are experimenting with ways to measure customer experience and engagement.  Six components adapted from the framework offered by Ron Shevlin provide a foundation for how to measure and improve engagement:

  1. Product involvement. Reflected by the degree that a particular product category may be more or less central to people's life, their sense of identity, and their relationship with the rest of the world (Traylor, 1981).

  2. Purchase frequency. The number of occasions during a period of time that a customer purchases a particular product or buys from a particular seller defines purchase frequency. A customer who purchases more frequently may be more engaged than other customers.

  3. Service interaction frequency. Branding experts like to say that repeated, positive interactions lead to brand affinity.

  4. Interaction type. Not all types of interactions are created equally. Therefore it is important to categorize and score the types of interactions and then apply this scoring to your engagement calculation.

  5. Behavior. The degree and recency of response to calls to action.

  6. Advocacy Behavior. Engaged customers are more likely to actively refer and endorse a company and its products/services.

There are three steps you will need to take before you can launch your customer engagement imperative.  First, you will need to define what customer engagement is for your company and assess your current customer engagement baseline in order to know whether customer engagement is increasing.   Once you complete this step you will need to establish the metrics and measurement platform.  Lastly, you will need to develop and implement a plan that facilitates customer engagement.


       
   
 
       
   

The Author

Laura Patterson

Marketing Metrics in Action

Laura Patterson is president and co-founder of VisionEdge Marketing, Inc, a leading data-driven metrics-based strategic and product marketing firm located in Austin, Texas. Her passion and experience for connecting marketing to business results enables the company to specialize in consulting and learning services that help organizations improve and measure marketing performance. For more information, go to www.visionedgemarketing.com.  Laura’s newest book, Marketing Metrics In Action:  Creating a Performance-Driven Marketing Organization, has just been published by Racom Communications.

VisionEdge Marketing enables organizations to leverage data and analytics to facilitate marketing accountability and operations, measure and improve marketing performance, develop dashboards, and enhance marketing and sales alignment in order to accelerate revenue  and create a competitive advantage. For more information, go to www.visionedgemarketing.com.

 
       
   
 
       
   
Many more articles in VisionEdge Marketing and Marketing Insight in The CEO Refresher Archives
 
       
   
 
       
   
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Copyright 2008 by Laura Patterson. All rights reserved.

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