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Customer Engagement: Does It Mean What You Think It Means?

by Anthony J. Bradley  |  February 15, 2017  |  1 Comment

This is a guest post from one of my analysts Craig Borowski.

It’s no secret that engaged customers are better customers. Improving customer engagement can strengthen customer loyalty, increase a customer’s lifetime value and improve and solidify brand perception. It’s thus no surprise that companies invest a lot of time and effort trying to better engage their audiences.

The real surprise—and it’s a big one—is that many, if not most, business customer engagement strategies fall far short, leaving much of the potential value they can offer on the table. This is especially true in the SMB space, as smaller organizations are usually more focused on more immediate concerns.

engagement

The cause of this oversight? Many small businesses simply miss the real meaning of engage. Fortunately, there’s a simple solution. But first, let’s look at an example scenario to see how a company’s typical engagement initiative might play out.

A Typical Engagement Scenario

A local footwear retailer needs to increase sales. They tried increasing sales to existing customers (with sales promotions and a new loyalty program), but had mixed results. They decide the best approach is to increase their new customer acquisition rate. To find more new customers more quickly, the company enacts a three-stage engagement plan:

  1. The marketing department publishes ads, promotions and content on a wider variety of forums, media sites and social media groups to engage more potential customers.
  2. Traffic to the new content grows, signaling increased engagement. Surveys confirm that audience recognition of the brand is growing.
  3. As the newly engaged audience yields new customers, sales increase, and the company’s customer engagement initiative is deemed a success.

So was this plan a success? Absolutely! The ROI of the company’s campaign is clear and measurable, showing up as a strong uptick in year-over-year sales. But was it as successful as it could have been? Was it really engagement? Not by a long shot.

This company’s simple, common—yet costly—mistake was that they viewed their engagement initiative as a one-way effort: flowing from the company to its customers. But this limited both their expectations and their own definition of a successful campaign. Most importantly, it limited the value they received from the effort spent trying to engage customers.

It Takes Two to Engage

To highlight what the company missed, let’s imagine a company and its customers as two gears that are fully engaged. The teeth of one gear extends to engage with the other’s. When a company engages with customers, the company’s teeth—in this case, its content/ads/promotions/etc.—reach into the outside world. As a result, the company’s engagement efforts begin to turn the other gear, and customers thus change their behavior (purchasing patterns) or beliefs (brand perception).

But what about the teeth on the customer’s’ gear? They must also extend to mesh with the company’s gear. So to stay true to the definition, shouldn’t how the customer’s gear turns also affect the company? Yes!

This is precisely where many businesses, especially time-pressed SMBs, drop the ball: When a company frames engagement as a one-way effort, they don’t expect customers to have a larger impact on the company beyond the transactional sale. This means that companies don’t make the preparations needed to fully capitalize on the effects of the customer engagement they sparked.

A Typical Engagement Scenario—Revised

Imagine another small footwear retailer in the same position, but that is devoted to executing a two-way engagement model. They take the following steps:

  1. While the company prepares to engage more customers, it also prepares to be engaged by more customers. This additional preparation—the part most companies overlook—could start with a meeting of the their department heads. They discuss what value and insight (strategic value) each head might get from two-way customer engagement. For example:
    • The Service team wants to know how to improve its Exchange and Returns processes
    • The Purchasing team wants feedback that might indicate upcoming styles and trends
    • The Sales team wants to know why some models sell well in some regions, but poorly in others
  2. The Marketing team starts publishing ads, promotions and content on a wider variety of forums, media sites and social media groups to engage more potential customers.
    • Each week, the Marketing team creates and shares a report with all other teams. It’s a short summary of the week’s engagement highlights, including information about which content topics were most popular, what types of questions were asked on social media and what the traffic metrics say about the company’s growing audience.
  3. As the company’s newly engaged audience begins to translate into new customers, every customer interaction is turned into a targeted bonding experience designed to improve their shopping experience.
  4. Sales increase, and the company’s customer engagement initiative is deemed a success.

From a purely bookkeeping point of view, these two scenarios have similar results: more customers and more sales.

But after one year, the first company is slumping and the second has doubled in size. Why? The second company was gaining strategic value while the first wasn’t even looking for it. What strategic value did they gain?

  • The Service team learned that a seemingly widespread complaint was actually confined to one particular group of users. It created online self-service resources to target that particular group’s needs, and lowered the volume of incoming support requests while increasing customer satisfaction.
  • The Purchasing team stopped using national trends to guide their purchases. Instead, they collected and analyzed feedback from their newly engaged and local audience, ensuring their product line closely matches the preferences of their actual customers.
  • The Sales team learns that the shoes they’ve been selling as lightweight hiking shoes are actually more popular with runners. They reorganize their in-store displays and work with the Marketing team to reposition the shoes, and together they create a new segment of very valuable customers.

A Two-Way Process for Engagement Success

The successful company did two things differently. First, it defined engagement correctly: as a two-way effort that affects both company and customers. Second, before engaging, the company planned ahead. Using each business unit’s feedback on what it hoped to learn from its customers, the company built a clear plan for interacting with these new customers.

Now, some readers might think: “The second company expended much more effort, and not all companies have the extra bandwidth.” But this isn’t actually the case.

In fact, the bulk of the additional effort comes from collecting, sharing and learning from the information and feedback gathered from the engaged audience—the very tasks that modern CRM and customer service platforms are designed to perform. With proper planning and with the right software in place, customer engagement initiatives can deliver both financial and strategic value with very little additional effort.

What are your experiences with customer engagement? Does it really mean what we think it means?

Category: 

Anthony J. Bradley
GVP
10 years at Gartner
26 years in IT

Anthony J. Bradley is a group vice president in Gartner Research responsible for the research content that Gartner publishes through its three internet businesses (softwareadvice.com, capterra.com and getapp.com). These responsibilities include creating and leading the research organization and infrastructure needed for the strategy formulation, planning, research, creation, editing, production and distribution of the content. He has four global teams of highly talented people who are advancing towards the world's greatest destination for content on how small businesses succeed through information technology.


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