Let’s talk about engagement - not loyalty
There’s often a big difference between what customers say and what they do. That’s one of the reasons why customer loyalty, usually measured by surveys, is a flawed metric. Look at customer engagement, though, and you’ll get a more valuable picture of what customers think of you – and a more powerful tool for generating profitability.
Customer loyalty has always been difficult to measure in reality, which is why Net Promoter (NPS) and Customer Loyalty Index (CLI) surveys came into their own. However, we know that what people say they’ll do is often very different from what they actually do, so loyalty scores, which only measure stated intent, can never give a true picture. As well as being subjective, customer loyalty is a “lag indicator” of business success rather than a driver, pointing to the consequence rather than the cause.
The good news is that there is a powerful alternative measure. Thanks to technology and social media, we can use customer engagement, which many studies have shown to be an effective leading indicator of both loyalty and profitability. It is not only a metric, but a powerful driver to keep customers happy, build advocacy, keep people buying from us and deliver profits.
Customer engagement is the extent of a customer’s willingness to invest his or her discretionary time with a company for mutual benefit. It reflects the depth of the relationship a customer has with a brand, each interaction builds engagement: making a purchase, reading a tweet, seeing an advert, conversation with a friend, etc.
Relevant activity builds deeper engagement and profits
This chart from Simply Measured (below) shows that the more active the brand is on social media, the more engaged customers are.
Engagement drives profits. Research by Hall and Partners shows that up to two-thirds of a brand’s profits may rely on effective consumer engagement. Another organization, PeopleMetrics, reports that companies focusing on customer engagement see a 13% increase in revenues, compared to a 36% revenue penalty for companies that get in the way of customer engagement.
Consumer marketers understand this well. The need for data analytics has always been great when dealing with thousands or millions of customer interactions. However this approach is just as important, and sometimes simpler to achieve, in the B2B world of fewer customers but deeper relationships.
What is engagement marketing? Unlike the top-down, one-way, awareness-building approach of the past, it is a more evolutionary process by which customers are encouraged to interact with and shape their communications with you. It’s more targeted and personalised, designed to stimulate people-to-people communication. It spreads ideas and ultimately builds advocacy.
B2B engagement versus communication
When I talk about customer engagement it’s important to distinguish this from communication. Both are necessary but it very much depends on your customer segment how you engage, with whom, using what tools. Here’s a mini case study from a personal project I’m involved in. This type of approach could easily be adopted in the B2B world.
I’m involved in a few local environmental and wildlife groups where I live. Well OK, I started a couple of them. Due to my involvement in these I’ve been asked for advice on another local initiative that’s been receiving a lot of anger from residents. This is a multi-million pound initiative: let’s call it Project X. So I’ve looked at Project X’s way of communicating, both the style and the content, and it’s obvious to me what’s happening and what’s gone wrong. Here’s my summary:
The communication has been largely one-way, from Project X to residents
There have been a couple of public consultation events and there is a website, so Project X expects residents to be aware of its plans
There is no-one on the Project X team who is responsible for communications, let alone engagement
In order to harness motivation and action by residents and all people (I’ll call them stakeholders from now on) there needs to be local engagement as well as local communication. Different approaches are needed for different stakeholders. Some need communicating to and others will need full partnership engagement.
The diagram below illustrates the relationship between stakeholder influence/power and stakeholder engagement approaches.
Image reproduced with permission of T Morphy stakeholdermap.com
Each approach is valid, but suited to a specific stakeholder type. “Pull communications” are one-way and depend on stakeholders deciding to access the information. At the other end of the pyramid, partnership engagement approaches give shared accountability, decision making, joint learning and actions.
Project X hasn’t thought this through. I think it should first identify its different stakeholder groups, then for each one, answer:
What’s their attitude and behaviour?
How will Project X affect them?
What influence can they have on Project X?
Then, they need to:
Use engagement approaches that are appropriate to each stakeholder group
Make sure the communication plan isn't over-reliant on push or pull communications
Spending enough engagement time with influential stakeholders and not too much with less influential stakeholders
Replace costly push communication methods like printed materials with cheaper options like email, social media, online surveys or online newsletters.
The next challenge
Today's challenge in both B2B and B2C is less about measuring loyalty after the event but assessing ongoing engagement with customers and creating strong, engaging brand experiences. The key here is creating the experiences pre-emptively, so rather than designing from where you are now, design what journey you want to take the customer on. This should match what they will engage with and what you want to achieve as a business. Now that’s the next article.