While many business managers see only doom and gloom ahead, some are focusing on a new way to unlock a prosperous future—even in a tough recession. Through the game-changing principle of engagement, companies can learn to use technology and best practices to extract new revenue from their existing customer base.
Traditionally, businesses have competed in the battlegrounds of price, service, and quality. But in this economic environment, companies are having difficulty keeping customers based on these elements alone.
Engagement presents a new way for companies to retain customers and surpass their competition. Engagement, which involves making an emotional connection with customers, provides a competitive edge that can make the difference between a company's success or failure.
Engagement is needed more than ever during tough times because it has a powerful impact on retention, growth, and profits. Engaged customers demonstrate behaviors such as referring other people, buying more products more often, staying longer in a business relationship, and remaining loyal even when faced with poor customer service or a bad product experience.
Customers who increase these desirable behaviors are thus more economically valuable. By measuring the impact of these behaviors, business managers can show how engagement activities increase revenues.
Real engagement goes beyond customer satisfaction and loyalty. Customers become engaged with a company or brand through the repeated and ongoing positive interactions with it. When customers are engaged with an organization, they are passionate about its products and services, as well as aligned with the purpose and direction of the organization.
To capitalize on engagement, businesses first need to understand what drives engagement so it can be measured. Allegiance loyalty experts have identified four primary drivers of engagement: feeling protected, feeling confident and informed, feeling valued, and helpful service.
These drivers are the foundation of how customers rate their emotional bond with a business. They also provide a basis for measuring and evaluating levels of customer engagement over time.
For example, customers begin to form a strong emotional bond with an organization after they experience multiple episodes of helpful and enjoyable service. Over time, exceptional service and learning experiences engender a belief and feeling a company cares about the overall well-being of its customers.
When this happens, customers "buy in" and "relate to" the vision and direction of the company. They gain a sense of protection and security. The result is totally engaged customers who identify and express themselves by the company's products and services they purchase and use.
Increasing Retention and Revenue
The current economic climate is forcing customers to be more selective about where and with which businesses they spend their money. As a result, many companies are losing customers at a rapid rate. This is compounded by the fact many companies focus too much on acquiring new customers and therefore fail to build relationships with their existing ones.
Building lasting, profitable relationships with customers starts with knowing 1. why current customers continue to do business with your company; 2. which specific factors are causing customers to leave; and 3. which company offerings and programs customers care about most, by priority. Companies should regularly survey existing customers to find out if customers are engaged, and to ascertain what specific aspects of the business, products, and services they value most. This will provide valuable insights that can be used to increase retention.
At the same time, companies that take the time to actively listen to the voice of customers and use feedback to improve their businesses will not only survive, but thrive when it comes to attracting, retaining, and competing for customers. Therefore, businesses should provide customers a convenient way to continually express their concerns, report problems, and offer suggestions.
Companies can encourage customers to provide feedback by requesting it prominently on their Website, in company brochures, in company correspondence, at point of sale, and more. This will increase the likelihood customers will provide feedback. To make the most of this feedback, businesses need to be able to collect both solicited and unsolicited input through a centralized system.
Solicited feedback is collected through customer surveys, while unsolicited feedback is gathered from customer comments and suggestions. By managing both in a centralized system, companies can monitor engagement trends and determine further actions to increase engagement.
Once feedback is gathered and managed, businesses need to use the data to take action to improve customer relationships. This includes responding quickly to resolve customer complaints, as well as making changes to products and services.
Letting customers know whenever the company initiates changes resulting from customer suggestions or feedback, and what specific changes were made, will increase engagement and future feedback.
Measuring Engagement ROI
Historically engagement has been elusive and hard to measure. But there are four outcomes of customer engagement that can be measured in actual dollars:
1. Share of wallet. Engaged customers buy more products and services, more often.
2. Positive referral. Engaged customers persuade potential customers to switch brands.
3. Customer churn. Engaged customers remain loyal and stay longer.
4. Feedback response. Engaged customers give more feedback, which allows companies the opportunity to address concerns and save potentially lost revenue.
The ability to identify, measure, and manage engagement cost-effectively across the enterprise is now possible with new technology, thus opening up a new opportunity for businesses. What used to be available only to companies with a culture built around the concept of engagement is now available to a much broader spectrum of organizations.
Even using conservative numbers, the financial benefits of engagement are substantial. Allegiance's research shows it can be measured, and it is not as difficult as companies think. In fact, even improving customer engagement by a small amount (as little as one percent) can have a dramatic impact on financial results.
The economics of engagement are real, and they can have a major impact on any business willing to invest the time, energy, and resources in a plan of action. While most companies continue to compete on the traditional battlegrounds of price, service, and quality, those who capitalize on engagement will create an unbeatable advantage.
Chris Cottle is vice president of marketing at Allegiance, a provider of feedback management software. For more information, visit www.allegiance.com.