What is Customer Engagement?
Whether or not we can define it, we all know the difference between good customer engagement and bad customer engagement. Did you enjoy the last playlist that Spotify curated for you? Or what about a film recommendation from Netflix? Or perhaps you called the helpline for your phone network provider and had a very quick and useful conversation with a friendly call centre worker?
Good customer engagement recognises us as valuable and unique customers and shows that we are respected by the business. Whereas bad customer engagement views its customers as a homogenous group and provides unhelpful communication links.
Every business should manage customer engagement to ensure that their customers have the best possible experience of their product. This, of course, benefits the customer but also a strong customer engagement strategy has great benefits for the business.
Here, we are going to take look at customer engagement, what it is, the benefits it has, and how to improve it.
What is customer engagement?
Customer engagement refers to the ongoing interactions between a business and its customers. While this can mean marketing and advertising, customer engagement also involves the cultivation of business to customer relationships.
So, while marketing and advertising are used to directly boost sales, engagement generally extends beyond a single sale or transaction. It is an organised and continuous approach led by the business that may indirectly result in greater sales. Through engagement, a business seeks to demonstrate their customers' value and the appreciation of their continued custom as a means of increasing loyalty and boosting the brand's image.
Methods of customer engagement
Customer engagement comes in many different forms that are particular to the product or service of the business behind it. Customer engagement includes:
- customer feedback
- rewards and bonuses for loyal customers
- product customisation
- social media and online content
Online customer engagement
Customer engagement dates back many years before the world wide web. However, the arrival and widespread use of the internet has seen engagement evolve and adapt rapidly as more and more people are reachable for far less effort and far less cost. As there are now around 4.6 billion internet users worldwide, businesses have a huge audience to which they can market their goods and services, and they have simple means of engaging customers all over the world.
The internet also makes it easier for businesses to measure the success of their engagement. Previously, the only measure of this would have been through rising or falling sales. Whilst this remains an important measure, it is now possible to see the success of a particular engagement strategy online by the number of clicks, likes or shares it gets. This means that there is a more immediate response that can be used to gauge the success of a strategy or campaign.
Why is customer engagement important?
An ongoing customer engagement strategy is crucial to long term success and business development. One study showed that increasing customer engagement led to 66% higher sales growth, a 25% increase in customer loyalty, and a 10% rise in net profits.
So, a good engagement strategy will keep the customers happy and the business healthy.
What are the benefits?
Increasing sales and overall profits should be one of the main aims of every business, but there are many other benefits to customer engagement. Some of these benefits will lead to greater sales, while others will improve the overall image of the business.
The relationship between the customer and the company is the backbone of many businesses. And this relationship is built on the customer experience of the product or service and the communication between them and the business.
Continued communication is great for the customers as it instils them with confidence in the company. But it also creates a simple and sustainable connection that allows the business to keep track of their customer feedback and continue to hear suggestions on how they could continue to improve.
Regular communication, therefore, builds trust with customers while also serving as a means of helping to improve the business overall.
Customer retention is when an existing customer continues to give their custom to a business and does not move to a market competitor. Customer retention is one of the main aims of customer engagement, which has been shown to boost sales.
In the world of business, customer retention is the penultimate stage of what is termed the "customer lifecycle" before the final stage of "customer loyalty". The customer lifecycle refers to the long term relationship a customer has with a business.
Customer retention is the opposite of customer "churn". A business's churn rate refers to the number of customers that leave over a period of time. Customer engagement is an effective method of reducing churn.
Increases customer base
Customer engagement can also bring in new customers. New customers may hear of the business through positive word of mouth, for example. Or they may join on a sign-up deal that is relayed via an existing customer who was offered a referral bonus as part of the customer engagement strategy.
Efficient and effective engagement can widen the market of a business and raise its overall customer base.
How can a company improve customer engagement?
So let's now take a look at some customer engagement strategies and how to improve them.
Identify your target audience
Before initiating your strategy, it is important that a business knows who they are seeking to engage with. Of course, not all customers are going to be from the same demographic, but it is important to have as clear as possible an idea of the target audience. Once an ideal customer persona is defined, much of the engagement can be based around that person.
Create engaging online content
With more people using the internet and social media than ever before, online content is a great way of reaching both new and existing customers.
Your online content could be videos, photos, memes, articles, or just about anything else you might find on the internet. However, it should focus on both the target audience and demographics likely to engage with the medium. For example, a TikTok promotional video would probably best be tailored to a younger audience as they constitute the majority of TikTok users.
Listen to feedback
As we have already seen, customer engagement is a great way of creating a quick and easy means of hearing feedback. Businesses do well to make sure they log and listen to all the feedback they receive as it shows them where they need to improve.
For example, if one person complains about the business's helpline then the business may be inclined to think they had a one-off bad experience. However, if over a period of time the business has logged numerous similar complaints, then they will know that it is something that needs to be improved.
Don't overwhelm your customers
It can be tempting for businesses to hit their customers with a constant barrage of feedback forms, advertisements, deals, and other forms of content, however, a good engagement strategy should not put customers off by overwhelming them. Once a customer gets bored or grows tired of a business's communication, it is often only a matter of time until they stop engaging altogether.
Therefore, it is important to choose the right moments and the right mediums of engagement to ensure the strategy is most effective and that customers are well served.
What are the ethics?
Customer engagement comes with many ethical questions. There are many products and services that seek to maximise engagement and consumption by harnessing the addictiveness of that product or service. For example, many social media platforms are designed to ensure users are engaged for as long as possible and they offer no limits or warnings as to the effect of such prolonged engagement.
Other products, such as alcohol, gambling services, or cigarettes, come with a consumer warning to ensure that users are aware of the negative effects that the consumption can have.
Customers should feel as though the business is on their side, so it is important to keep the customers aware of any risks associated with the product. This also protects the business as it means that a customer cannot bring a legal case against them if they felt they were not adequately warned before using the product.
Successful customer engagement makes customers feel valued and respected by the business. A good engagement strategy is great for both the customers and the business itself. It should build long-term trust with loyal customers and help to boost the reputation of the brand.
Therefore, it is crucial to the success of any business that they have a good customer engagement strategy in place.