Customer engagement driving customer loyalty

Michael Maoz

Customer engagement management is about attracting and influencing customers in order to hold their attention and encourage them to participate in a commercial relationship that is beneficial for both buyer and seller. In short, customer engagement can lead to customer loyalty.

Technology assists in engaging customers. However, the requirement to reduce expenses and meet the needs of the mobile customer leads many businesses to introduce lower-cost support channels such as websites, portals, interactive voice response (IVR) and other forms of self-service. This can potentially lead to disengaged customers, particularly in industries where more than 80 percent of customer interactions no longer involve an enterprise employee.

This, combined with poor customer interaction design and the rise of social media as an alternative channel for information, has seen customer trust in big business decline over the past decade. Customers are now more willing to complain and to share that complaint with a mass audience. They are also more willing to switch suppliers after a poor experience and to tell others about their defection.

On the other hand, studies have shown that actively engaged customers are more willing to participate with the organisation, provide feedback when asked, make best use of products or services on offer, and make suggestions to improve them. They are also better advocates of a brand, more loyal, and more profitable.

Yet Gartner has found that relatively few organisations have an enterprise-wide approach to engaging with customers. Estimates show that only 15 percent of the world’s largest organisations have customer engagement initiatives in place.

So what creates an engaged, loyal customer?

There are a number of engagement approaches that build customer loyalty such as being proactive, building emotional links with customers, fostering customer participation in processes, and acting within ethical frameworks.

Research shows that a cornerstone of customer loyalty is trust. While customers may remain without trust, in the long run, it will cost the business less if trust is present.

Customers carry an explicit and implicit expectation that they will be treated with a sense of integrity and honesty. While they may not be able to point to concepts such as values, principles, and morals, humans carry these as internalised expectations.

When companies demonstrate their ethical intentions and adhere to principles that uphold the corporate promise, customer loyalty follows.

One area that adversely impacts trust is when organisations misuse customer data. Organisations can elevate trust and engagement by respecting a customer’s privacy, and limiting the number of third-party intrusions. Allowing customers to access the personal data, and giving them the ability to set controls on what data can be used puts them in a position of control, and puts them at ease with their provider.

In the past, ethical engagement was seen as somewhat optional, with retailers using child labour to manufacture clothes, cosmetic manufacturers testing on animals, and banking executives taking home huge bonuses. Businesses had the perception that unethical actions didn’t matter as long as you didn’t get caught.

Now society as a whole is more ethically aware and, given the massive increase in social media and mobile phone usage, organisations can no longer hide their ethical misdemeanours.

Another cornerstone to customer loyalty is emotional engagement. Organisations want to leave customers with a feeling of contentment that their problems have been dealt with swiftly and with the least effort.

This is often a more powerful influence than rational or physical elements, and effects how a customer engages with an organisation.

The emotions associated with owning a product or using a service, and with the interactions customers have with the organisation are of key importance. A recent innovation that businesses are using is what might be called a concierge approach to customer engagement. This means that the enterprise analyses a far greater set of data about the customer to better pinpoint personalised information about products and services that are of greatest relevance to the customer. These highly targeted pieces of information foster a greater emotional attachment, as the customer comes to trust and depend on the business for reliable advice.

An interesting nuance is the variation of the level of involvement linked to aspects such as the complexity, and importance or price of the product/service in question. For example, choosing a car usually has a high level of rational engagement associated with it, whereas purchasing a shampoo has less engagement.

However, recognising and measuring emotions in a systematic manner is extremely difficult. Customer satisfaction surveys have been used in an attempt to detect and quantify emotions related to happiness and unhappiness. These show that customers who are emotionally engaged are more likely to complain less, compliment more, buy more, and contribute more than those who are not emotionally engaged. They are also more likely to defend the brand on social media sites.

Enterprises that embrace an overall approach to customer engagement that includes social media, and that connects it to other forms of interaction, are better able to connect with customers and prospects, present a consistent image and understand the markets in which they compete.

As much as organisations tout the importance of people and process over technology, it is not possible to deliver an engaging customer service experience without technology. Think of the simple example of Apple’s Genius Bar in the US. Before customers arrive at the store, they have already been online, and been exposed to community forums and a search engine of possible answers. If their questions are not answered online, they are directed to the nearest store and shown a calendar with available time slots.

Great companies, like Apple, Sephora, Disney and FedEx identify their most engaged customers, turning them into brand advocates. By understanding the underlying attributes of customer engagement, companies can greatly improve their customer loyalty levels.

The author is is a research vice president and distinguished analyst in Gartner Research