Customer engagement


Customer engagement is an interaction between an external consumer/customer and an organization through various online or offline channels For example, Hollebeek, Srivastava and Chen's S-D logic-informed definition of customer engagement is "a customer’s motivationally driven, volitional investment of operant resources, and operand resources into brand interactions," which applies to online and offline engagement
Online customer engagement is qualitatively different from offline engagement as the nature of the customer's interactions with a brand, company and other customers differ on the internet. Discussion forums or blogs, for example, are spaces where people can communicate and socialise in ways that cannot be replicated by any offline interactive medium. Online customer engagement is a social phenomenon that became mainstream with the wide adoption of the internet in the late 1990s, which has expanded the technical developments in broadband speed, connectivity and social media. These factors enable customer behaviour to regularly engage in online communities revolving, directly or indirectly, around product categories and other consumption topics. This process leads to a customer's positive engagement with the company or offering, as well as the behaviours associated with different degrees of customer engagement.
Marketing practices aim to create, stimulate or influence customer behaviour, which places conversions into a more strategic context and is premised on the understanding that a focus on maximising conversions can, in some circumstances, decrease the likelihood of repeat conversions. Although customer advocacy has always been a goal for marketers, the rise of online user generated content has directly influenced levels of advocacy. Customer engagement targets long-term interactions, encouraging customer loyalty and advocacy through word-of-mouth. Although customer engagement marketing is consistent both online and offline, the internet is the basis for marketing efforts.

Definition

In March 2006, the Advertising Research Foundation announced the first definition of customer engagement as "turning on a prospect to a brand idea enhanced by the surrounding context." However, the ARF definition was criticized by some for being too broad. The ARF, World Federation of Advertisers, Various definitions have translated different aspects of customer engagement. According to Forrester Consulting's research in 2008, it has defined customer engagement as "creating deep connections with customers that drive purchase decisions, interaction, and participation, over time". Studies by the Economist Intelligence Unit result in defining customer engagement as, "an intimate long-term relationship with the customer". Both of these concepts prescribe that customer engagement is attributed by a rich association formed with customers. With aspects of relationship marketing and service-dominant perspectives, customer engagement can be loosely defined as "consumers' proactive contributions in co-creating their personalized experiences and perceived value with organizations through active, explicit, and ongoing dialogue and interactions". The book, Best Digital Marketing Campaigns In The World, defines customer engagement as, "mutually beneficial relationships with a constantly growing community of online consumers". The various definitions of customer engagement are diversified by different perspectives and contexts of the engagement process. These are determined by the brand, product, or service, the audience profile, attitudes and behaviours, and messages and channels of communication that are used to interact with the customer.
Since 2009, a number of new definitions have been proposed in literature. In 2011, the term was defined as "the level of a customer’s cognitive, emotional and behavioral investment in specific brand interactions," and identifies the three CE dimensions of immersion, passion and activation. It was also defined as "a psychological state that occurs by virtue of interactive, co-creative customer experiences with a particular agent/object ". Researchers have based their work on customer engagement as a multi-dimensional construct, while also identifying that it is context dependent. Engagement gets manifested in the various interactions that customers undertake, which in turn get shaped up by individual cultures. The context is not limited to geographical context, but also includes the medium with which the user engages.

Online customer engagement

Although offline customer engagement predates online, the latter is a qualitatively different social phenomenon unlike any offline customer engagement that social theorists or marketers recognize. In the past, customer engagement has been generated irresolutely through television, radio, media, outdoor advertising, and various other touchpoints ideally during peak and/or high trafficked allocations. However, the only conclusive results of campaigns were sales and/or return on investment figures. The widespread adoption of the internet during the late 1990s has enhanced the processes of customer engagement, in particular, the way in which it can now be measured in different ways on different levels of engagement. It is a recent social phenomenon where people engage online in communities that do not necessarily revolve around a particular product, but serve as meeting or networking places. This online engagement has brought about both the empowerment of consumers and the opportunity for businesses to engage with their target customers online. A 2011 market analysis revealed that 80% of online customers, after reading negative online reviews, report making alternate purchasing decisions, while 87% of consumers said a favorable review has confirmed their decision to go through with a purchase.
The concept and practice of online customer engagement enables organisations to respond to the fundamental changes in customer behaviour that the internet has brought about, as well as to the increasing ineffectiveness of the traditional 'interrupt and repeat', broadcast model of advertising. Due to the fragmentation and specialisation of media and audiences, as well as the proliferation of community- and user generated content, businesses are increasingly losing the power to dictate the communications agenda. Simultaneously, lower switching costs, the geographical widening of the market and the vast choice of content, services and products available online have weakened customer loyalty. Enhancing customers' firm- and market- related expertise has been shown to engage customers, strengthen their loyalty, and emotionally tie them more closely to a firm.
Since the world has reached a population of over 3 billion internet users, it is conclusive that society's interactive culture is significantly influenced by technology. Connectivity is bringing consumers and organisations together, which makes it critical for companies to take advantage and focus on capturing the attention of and interacting with well-informed consumers in order to serve and satisfy. Connecting with customers establishes exclusivity in their experience, which potentially will increase brand loyalty, word of mouth, and provides businesses with valuable consumer analytics, insight, and retention. Customer engagement can come in the form of a view, an impression, reach, a click, a comment, or a share, among many others. These are ways in which analytics and insights into customer engagement can now be measured on different levels, all of which is information that allows businesses to record and process results of customer engagement.
Taking into consideration the widespread information and connections for consumers, the way to develop penetrable customer engagement is to proactively connect with customers by listening. Listening will empower the consumer, give them control, and endorse a customer-centric two-way dialogue. This dialogue will redefine the role of the consumer as they no longer assume the end user role in the process. Instead of the traditional transaction and/or exchange, the concept becomes a process of partnership between organisations and consumers. Particularly since the internet has provided consumers with the accumulation of much diverse knowledge and understanding, consumers now have increasingly high expectations, developed stronger sensory perceptions, and hence have become more attracted to experiential values. Therefore, it would only be profitable for businesses to submit to the new criteria, to provide the opportunity for consumers to further immerse in the consumption experience. This experience will involve organisations and consumers sharing and exchanging information, which will generate increased awareness, interest, desire to purchase, retention, and loyalty among consumers, evolving an intimate relationship. Significantly, total openness and strengthening customer service is the selling point here for customers, to make them feel more involved rather than just a number. This will earn trust, engagement, and ultimately word of mouth through endless social circles. Essentially, it is a more dynamic and transparent concept of customer relationship management.

Marketing value

Customer engagement marketing is necessitated by a combination of social, technological and market developments. Companies attempt to create an engaging dialogue with target consumers and stimulate their engagement with the given brand. Although this must take place both on and off-line, the internet is considered the primary method. Marketing begins with understanding the internal dynamics of these developments and the behaviour and engagement of consumers online. Consumer-generated media plays a significant role in the understanding and modeling of engagement. The control Web 2.0 consumers have gained is quantified through 'old school' marketing performance metrics.
The effectiveness of the traditional 'interrupt and repeat' model of advertising is decreasing, which has caused businesses to lose control of communications agendas. In August 2006, McKinsey & Co published a report which indicated that traditional TV advertising would decrease in effectiveness compared to previous decades. As customer audiences have become smaller and more specialised, the fragmentation of media, audiences and the accompanying reduction of audience size have reduced the effectiveness of the traditional top-down, mass, 'interrupt and repeat' advertising model. A Forrester Research's North American Consumer Technology Adoption Study found that people in the 18-26 age group spend more time online than watching TV.
In response to the fragmentation and increased amount of time spent online, marketers have also increased spending in online communication. ContextWeb analysts found marketers who promote on sites like Facebook and New York Times are not as successful at reaching consumers while marketers who promote more on niche websites have a better chance of reaching their audiences. Customer audiences are also broadcasters with the power for circulation and permanence of CGM, businesses lose influence. Rather than trying to position a product using static messages, companies can become the subject of conversation amongst a target market that has already discussed, positioned and rated the product. This also means that consumers can now choose not only when and how but, also, if they will engage with marketing communications. In addition, new media provides consumers with more control over advertising consumption.
The lowering of entry barriers, such as the need for a sales force, access to channels and physical assets, and the geographical widening of the market due to the internet have brought about increasing competition and a decrease in brand loyalty. In combination with lower switching costs, easier access to information about products and suppliers and increased choice, brand loyalty is hard to achieve. The increasing ineffectiveness of television advertising is due to the shift of consumer attention to the internet and new media, which controls advertising consumption and causes a decrease in audience size. This has shifted advertising spending online.
The proliferation of media that provide consumers with more control over their advertising consumption and the simultaneous decrease of trust in advertising and increase of trust in peers point to the need for communications that the customer will desire to engage with. Stimulating a consumer's engagement with a brand is the only way to increase brand loyalty and, therefore, "the best measure of current and future performance".

Consumer behaviour

CE behaviour became prominent with the advent of the social phenomenon of online CE. Creating and stimulating customer engagement behaviour has recently become an explicit aim of both profit and non-profit organisations in the belief that engaging target customers to a high degree is conducive to furthering business objectives.
Shevlin's definition of CE is well suited to understanding the process that leads to an engaged customer. In its adaptation by Richard Sedley the key word is 'investment'."Repeated interactions that strengthen the emotional, psychological or physical investment a customer has in a brand."
A customer's degree of engagement with a company lies in a continuum that represents the strength of his investment in that company. Positive experiences with the company strengthen that investment and move the customer down the line of engagement.
What is important in measuring degrees of involvement is the ability of defining and quantifying the stages on the continuum. One popular suggestion is a four-level model adapted from Kirkpatrick's Levels:
  1. Click - A reader arrived
  2. Consume - A reader read the content
  3. Understood - A reader understood the content and remembers it
  4. Applied - A reader applies the content in another venue
Concerns have, however, been expressed as regards the measurability of stages three and four. Another popular suggestion is Ghuneim's typology of engagement.
Degrees of EngagementLowMediumHighHighest
AdoptionCollaborative FilteringContent CreationSocial
Bookmarking, Tagging, Adding to the groupRating, Voting, Commenting, Endorsing, FavouritisingUpload, Blogging, Fan community participation, Create mash-ups, Podcasting, VloggingAdding Friends, Networking, Create Fan Community

The following consumer typology according to degree of engagement fits also into Ghuneim's continuum: Creators, Critics, Collectors, Couch Potatoes.
Engagement is a holistic characterization of a consumer's behavior, encompassing a host of sub-aspects of behaviour such as loyalty, satisfaction, involvement, Word of Mouth advertising, complaining and more.
The behavioural outcomes of an engaged consumer are what links CE to profits. From this point of view,
"CE is the best measure of current and future performance; an engaged relationship is probably the only guarantee for a return on your organization's or your clients' objectives." Simply attaining a high level of customer satisfaction does not seem to guarantee the customer's business. 60% to 80% of customers who defect to a competitor said they were satisfied or very satisfied on the survey just prior to their defection.
The main difference between traditional and customer engagement marketing is marked by these shifts:
Specific marketing practices involve:
All marketing practices, including internet marketing, include measuring the effectiveness of various media along the customer engagement cycle, as consumers travel from awareness to purchase. Often the use of CVP Analysis factors into strategy decisions, including budgets and media placement.
The CE metric is useful for:
a) Planning:
b) Measuring Effectiveness: Measure how successful CE-marketing efforts have been at engaging target customers.
The importance of CE as a marketing metric is reflected in ARF's statement:
"The industry is moving toward customer engagement with marketing communications as the 21st century metric of marketing efficiency and effectiveness."
ARF envisages CE exclusively as a metric of engagement with communication, but it is not necessary to distinguish between engaging with the communication and with the product since CE behaviour deals with, and is influenced by, involvement with both.
In order to be operational, CE-metrics must be combined with psychodemographics. It is not enough to know that a website has 500 highly engaged members, for instance; it is imperative to know what percentage are members of the company's target market. As a metric for effectiveness, Scott Karp suggests, CE is the solution to the same intractable problems that have long been a struggle for old media: how to prove value.
The CE-metric is synthetic and integrates a number of variables. The World Federation of Advertisers calls it 'consumer-centric holistic measurement'. The following items have all been proposed as components of a CE-metric:
Root metrics
Action metrics
In selecting the components of a CE-metric, the following issues must be resolved: