Customer Engagement

Establishing Customer Engagement

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The final positive strategy for improving customer retentionOpens in new window is to build customer engagement. Various studies have indicated that customer satisfactionOpens in new window is not enough to ensure customer longevity. For example, Reichheld reports that 65 percent to 85 percent of recently churned customersOpens in new window claimed to be satisfied with their previous suppliers.

Another study reports that one in ten customers who said they were completely satisfied, scoring 10 out of 10 on a customer satisfaction scale, defected to a rival brand the following year.

Having satisfied customers is increasingly no more than a basic requirement of being in the game. Today, many commentators are stressing the need for money for companies to lift levels of customer engagement instead of just focusing on customer satisfaction.

This concept of engagement has migrated into customer relationship managementOpens in new window from psychology and organizational behavior, where it was first explored in the context of the workplace-employee engagement.

Although there is still is no clear consensus on a definition of customer engagement,

Customer engagement can be thought of as a multidimensional construct composed of four elements:

1. cognitive engagement,
2. affective engagement,
3. behavioral engagement and
4. social engagement.

Consumers who are engaged do more than just buy. They may perform acts of corporate citizenship, such as being an unpaid advocate by uttering positive word-of-mouthOpens in new window, providing frequent feedback on their experiences, participating in company research, contributing to a new product or service development, being more forgiving if the company makes a mistake or service fails, and participating in online communities and user groups.

Preliminary research indicates that engaged consumers can exhibit greater loyalty to brands than unengaged consumers, and may develop such a close affinity to the brand that they become highly resistant to competitive influence. One report, for example, indicates that the rate of account closure at a bank was 37 percent lower for emotionally engaged customers than for rationally satisfied customers.

Managers often try to build engagement by creating interactive relationships with consumers that get them more involved with and connected to their brand.

Much of the interactivity is delivered through social media including blogs, Facebook pages and YouTube channels. A recent development that lifts interactivity is gamification of brands.

Gamification can be defined as follows:

At its heart is the idea that competition and play will build consumer engagement with the brand. The more engaged the gamer, the more likely s/he is to remain active as consumer.

Customers may also feel a strong sense of connection to a brand or organization when they build close relationships with the firm’s employees or when their personal values align with those of the firm.

Relational attachment

Customers can become highly attached to a company’s people. An emotional tie may be formed with an individual person, a work group or the generalized company as a whole.

Customers who talk about ‘my bank’ or ‘my mechanic’ or ‘my builder’ are expressing this attachment. They feel a sense of personal identification with that individual. Often, these are employees who ‘break the rules’ or ‘go the extra mile’. They are reliable, competent, empathic and responsive. When these employees recover an at-risk customer, they create a friend.

Customer-focused organizations make heroes out of these individuals. They are feted and celebrated. For example, American ExpressOpens in new window tells the story of a customer service agent (CSA) who responded to a call from a customer who had been robbed, by arranging to have replacement travelers checks delivered personally to the customer.

The CSA also confirmed the customer’s hotel reservation, arranged for a car to collect the customer from the phone booth and notified the police. All of this was above and beyond the CSA’s call of duty.

Customers can also become attached to a work group. In banking, for example, some customers are highly committed to a specific branch and prefer not to transact elsewhere. Finally, customers can become attached to an organization as a whole, believing its people to be better than competitors on dimensions that are important to the customer. They may provide ‘the best service’ or be ‘the friendliest people’.

Values-based attachment

Customers may develop a strong sense of emotional attachment when their personal values are aligned with those of the company. Values can be defined as follows:

Customers have many and varied core beliefs such as sustainability, honesty, child protection, independence, family-centeredness and so on. Many of these values reflect cultural norms.

Where these values coincide with those of an organization, the customer may develop a strong sense of emotional attachment to the organization.

Companies that are accused of using child labor, damaging the environment or otherwise acting unethically place themselves at risk. When BP’s Deepwater Horizon oilrig exploded, claiming 11 lives and releasing 4.9 million barrels of crude oil into the Gulf of Mexico, consumers responded by boycotting BP’s products. This resulted in a 52 percent fall in BP’s share price in the 50 days following the catastrophe.

Just as customers can take action against companies that they feel are in breach of their values, so can they commit to companies that mirror their values. Research supports the claim that there is a hierarchical relationship from values to attitudes to purchase intention and ultimately to purchase.

A number of companies benefit from values-based commitment, for example, Body Shop, Harley-Davidson and Virgin.