Why You Need a Customer Engagement Metric

CEOs across all industries in companies of all sizes are telling us that organic growth is a top priority.  Although they used the last downturn to address many cost saving efforts and to complete acquisitions and mergers, they know they cannot save their way to revenue and that the time has come to accelerate their efforts to acquire more customers and expand business with existing customers.

Numerous studies have proven the correlation between increased engagement and greater business success  with most organizations finding that active customer engagement correlates with growing income and profit because it makes customers more loyal, generates positive word-of-mouth, and reduces the probability that a customer will switch vendors. An organization that can positively affect engagement is therefore more likely to see increased consideration of the company’s products, increased customer conversion, and more frequent purchases. Even though respondents in these studies recognize the importance of customer engagement, many organizations have yet to define and implement a customer engagement strategy.

What is Customer Engagement?

Engagement takes customer interaction to the next level to develop and cultivate consideration and preference.  Engagement is more than satisfaction; it is something with a more emotional component that suggests potential behavior.  As a result, the methods for measuring engagement vary leaving many organizations to take a “I’ll know it when they see it” approach.  To measure something we have to be able to define it.

Successful companies addressing customer engagement focus on facilitating interaction between their customers and the organization to create a win/win scenario. Ron Shevlin, an analyst at Aite Group, LLC defines engagement as: “Repeated interactions that strengthen the emotional, psychological or physical investment a customer has in a brand.” Essentially customer engagement is a measure of relationship strength.

What are Customer Engagement Strategies?

Customer engagement strategies create a positive and consistent online and offline customer experiences.   They range from developing and implementing efficient and accessible customer service virtually, to rich media to deepen customer relationships, to building a sense of community around a product, service, and brand.

Customer engagement initiatives are not discrete projects with a planned end. Rather, you want customer engagement and experience to be an ongoing process.  If you haven’t mapped your customers’ post-sale experience with your company, this is an important first step.  And just as importantly is to establish a customer engagement performance metric.

How Do You Measure the Value of Customer Engagement?

While there is no universal formula for measuring customer engagement or experience, a number of companies, such as Forrester, Aite Consulting (Shevlin), and Gallup have proposed ways to do so.

For example, Forrester proposes applying four components to create an engagement metric:  involvement, interactions, intimacy and influence. Ron Shevlin’s framework uses the following dimensions for thinking about, measuring and improving engagement: product involvement, purchase frequency, service interaction frequency, interaction type, online behavior, and referral behavior. Gallup created an engagement ratio, which is based on 11 key attributes ranging from satisfaction and intent to purchase to sense of belonging and emotional attachment.

In our work, we have found that there are four dimensions of interactions between the company and the customer that need to be taken into consideration when measuring customer engagement. These aspects include quantity, quality, breadth and depth of engagement, in addition to a measure of correlation between the customer’s pattern of engagement and known stages of the purchasing process. Our customers find this approach particularly well-suited to measuring the impact of virtual interactions as it requires counting and identifying a stream of time-stamped interactions. These values are then combined to produce composite score indicative of the strength of customer engagement by product or any other main focus for the company using online channels.

There are four key dimensions in the VisionEdge Marketing model:

  • Rating and Ranking of Interaction – Engagement Quality
  • Number of interactions/intervention – Engagement Quantity
  • Patterns of Interactions that can be associated with different attitude and intent from the customer – Purchase Process
  • Depth and Breadth of Involvement – Engagement Intensity

While there are numerous, valid approaches, the key is to:

  1. Map your customer experience to identify the process and the gaps
  2. Develop and test a model that will work for you
  3. Consistently track the data and apply it to your model

In summary, as you explore how to increase penetration into your customer and prospect base to drive more and faster customer acquisition and retention, across a multitude of touch points, engagement needs to be a part of your strategy.  It is equally critical that you measure engagement, and have a way to calculate the value and ROI of engagement vehicles. To begin working on creating your own Customer Engagement Metrics, buy one of our most requested workbooks “It’s More Than Money on the Line: Creating Metrics to Measure Marketing’s Effectiveness, Impact and Value.