How Do You Define Customer Engagement?
filed in Communications, Loyalty Futures, Thought Leadership on Feb.11, 2010
Trendy business buzzwords aren’t any fun until you form an opinion and seek feedback to get to the substance of the issue.
Customer Engagement is one of those terms that is being mentioned more frequently than Kim Kardashian was during the Super Bowl. It’s the 2010 version of “what’s hot, what’s new, what’s next?”
The question is, should Customer Engagement be treated as a new marketing sub-set, on par with Loyalty and Word of Mouth Marketing, or is it a concept that’s been around for quite some time and just happens to be a point of pain in the Relationship Value Chain (RVP) for marketers today?
Relationship Value Chain? That’s the term that my good friend and former Colloquy colleague, Kelly Hlavinka, coined almost 10 years ago. The experience of many at the once proud Frequency Marketing was that customer value increased across a spectrum of customer interaction. Link the points of interaction and you had a value chain that loyalty marketers could use to influence communication plans and allocate marketing budget dollars to encourage specific behaviors.
The RVP is similar to the “acquisition – activation – usage – retention” lifecycle marketing that credit card issuers have been using for years, but takes objectives down to a more granular level.
One example of a flow that constitutes a RVP:
- Awareness
- Response to Invitation
- Program Enrollment
- First purchase
- Multiple purchases in response to offers
- Redemption for Reward
- Response to Survey
- Response to Future Bonus
- Multiple Redemptions
No one has a lock on defining the steps in the chain as they should be customized to the business situation under review. Going to back to Customer Engagement, just where does it live in the value chain used as an example here?
Let’s look at a few steps in the RVP and see where, if accused of being “Engaged”, there would be enough evidence to gain a conviction!
Program Enrollment – Doesn’t everyone enroll in programs without much care for future interactions? I enroll in just about every program where I know the odds are that I’ll be back (by choice or force) and the offer looks worthy enough to give it a whirl. The only caveat is that I won’t sign up if the data collection hurdle is too high at the outset.
First Purchase – You’ve got my attention, but what makes you think I’m “Engaged”? I may be a cherry-picking consumer or have just satisfied a one-time need for your product or service. Not enough evidence to convict me as engaged at this point in time.
First Redemption – I’ve stayed around long enough to make multiple purchases over time – how else would I have qualified to redeem? But did you catch me in a cycle of life that won’t soon be repeated, or can you count on me to do it again? Engagement? We’re getting closer, some say “yes”.
Survey Response – I’ve transacted, collected, redeemed, and now I am willing to actually have a conversation. You’ve got my attention, but I am skeptical of what you will do with the information and if I will hear from you again. Does this sound akin to dating? Conversation is certainly an accelerator to engagement, but does not constitute the end goal itself.
Multiple Redemptions – Once I’ve completed the purchase/collection/redemption cycle more than once, I think you can count me as “Engaged”. The focus shifts now to retaining my interest, expanding the conversation, and developing more business as a result.
My take on Customer Engagement is that it describes an end objective that marketers hope to achieve through smart execution of a well designed data-driven Customer Strategy. If you try to define engagement as one of the individual steps, take Enrollment as an example, then what you are truly talking about is more tactical ala “how to create awareness for a program and convert interest to enrollment”.
It’s a step along the way, not engagement itself.
The Loyalty Truth on Customer Engagement is that it has been around for quite a while. The reason the topic has been deserving of the spotlight lately is that customers are increasing difficult to engage, not to mention retain.
What’s your take?
February 11th, 2010 on 12:56 am
Good question to ask.
Customer Engagement actually is at a whole other level because each of these pieces you mention in the article (loyalty, WOM and even RVP) are parts of the natural customer engagement lifecycle.
Customer Engagement is more than a technology, CRM strategy, loyalty program, type of customer and any other previous marketing tactic. It is the next evolution for marketing to venture into.
This is a really good question that needed to be asked. I’ve seen the term used to define loyalty programs, a kind of marketing program, tactics and even a CRM system. You opened up a can of worms when you asked that question – its time to take those worms and go fishing for more perspectives. Great article!
February 11th, 2010 on 1:16 am
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February 11th, 2010 on 9:12 am
Bill -
In my opinion, customer engagement (or engagement marketing) is all about encouraging customers to participate in the definition and evolution of the brand. Social media tools have enabled this process and that’s why it’s the new buzzword. It goes one step beyond dialogue marketing to actively engage consumers.
February 11th, 2010 on 2:54 pm
Interesting ideas. But until there is some rigorous study they are just ideas. I think it would be worth while if you actually had some data to support your ideas.
February 11th, 2010 on 3:37 pm
Engagement to me is the ability of an organization to retain the attention, focus, and loyalty of a customer despite the appeals of competitors and their marketing.
February 12th, 2010 on 8:54 am
For Dr. B. and others interested in data to support the increasing customer value across the Relationship Value Chain, there are a number of reports available that address the topic. MasterCard Advisors covered the topic in a 2007 report as have Colloquy in a series of articles on the subject (check their web site). A Visa panel study from 2006 has additional data. Add to that the primary data we have from years of direct client experience, and the statements of increasing value are not difficult to support with data.
February 14th, 2010 on 12:47 pm
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June 17th, 2010 on 5:49 am
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August 9th, 2010 on 4:00 pm
Customer engagement is quite the equivocal term. There’s not any given one that is right or wrong, but open interpretation as to how it’s purposed or the unique perspective that can be put on the phrase.
Putting on our customer hats though (hadn’t seen this view yet in the string), let’s take a different perspective and understand what it means to them. Bombarded by more communications than ever before (with some studies putting it above 6,000 per day), consumers are weary and leery. Tired of sorting through everything on their own, they’re looking to engage companies, associations, groups, other consumers – okay, anyone – to inform and align their spend, trust and (oh yes) their loyalty decisions.
Don’t just provide me, the customer, with what you deem as relevant, valued or timely communications, offers or opportunities. Instead, engage me. No, not through automated IVR’s, PURL’s or other scalable solutions, but rather through simple one-on-one, two-way exchanges where we can truly engage each other.
There’s a serious COI (cost of inaction) here if an organization can’t figure out the right mix and truly balance their customer engagement strategy.
August 13th, 2010 on 12:56 am
Jim, Good comments and I agree that a two-way dialogue is the way to show that data collected has been put to good use and that the brand is actually listening.
Social networks and game-based communities can unlock this two-way conversation and engage customers, all at a low enough price point to listen and engage more diligently than many brands have in the past.
February 23rd, 2011 on 5:26 am
How Do You Define Customer Engagement? | Loyalty Truth Blog…
[...]Link the points of interaction and you had a value chain that loyalty marketers could use to influence communication plans and allocate marketing budget dollars to encourage specific behaviors. The RVP is similar to the “acquisition … In my opin…