Measuring Customer Engagement (Part 2)

In the first article of this series we discussed common characteristics of an engaged customer. In this article we’ll look at measuring customer engagement.

Measuring customer engagement is a process that begins with a clear objective followed by determining measurement metrics, then data gathering and of course, analysis and reporting.

Defining Engagement Measurement Goals

The goal is simple: Is what we are doing working?” Answering this question requires an examination of internal customer and financial data to profile the engagement characteristics of profitable, repeat (loyal) customers and compare them to customers that are less engaged.

Define the Metrics for Engagement

Examine the channels of customer involvement: POS, Website, Call centers, trials and demos etc. engaged customers utilize.  These channels, when measured, contain the data  points used for measuring customer engagement and present the frame work for establishing a measurement goal.   To minimize the complexity of the measurement and to reduce the cost in dollars and time, less is more.  It is better to closely examine several key metrics than to inundate the analysts with reams of data from every touch point or interaction.

Gather the Data

For many companies data gathering possesses challenges related to data ownership and data reporting channels.  The specialized software and tools used to gather web analytics, marketing campaign management and loyalty club data typically belong to Marketing, while call center, agent analytics, IVR analytics and contact center platforms belong to operations or IT.  Consolidating this data for cross analysis with financial data is a keystone for successfully measuring customer engagement.

Reporting

In the simplest sense, what to do with the information gleaned from a consolidated data analysis is straightforward: get the analysis into the hands of the decision makers.  But that is only half the reporting story.  The data must be fed back into the data pool for action by the various touch point channels in the form of recommended action so that, after implementation, the result of the action is compared with prior data to determine the efficacy of the change.  This process, repeating itself constantly, provides a substantial  customer engagement level and an engagement strategy success picture on an ongoing basis allowing for continuous adjustment to maximize return on the engagement strategy investment.

Whew!

Isn’t There a Single System or Process?

If measuring customer engagement seems a bit convoluted and anything but straight forward it’s because it is convoluted and anything but straightforward.

Some engagement metrics are extremely difficult to obtain and quantify.  On line data is much easier to capture than off line data.  It’s not easy to capture data that isn’t typically recorded; like time in store, number of items reviewed or compared on a shelf before a purchase decision, etc.  It is also difficult to correlate some data types to a specific customer.  Anonymous data such as that obtained from surveys, cash purchases or web site visits do little to enhance the customer engagement profile.

There is no single methodology or formula to plug into your business model to measure customer engagement. The complexity of measurement requires individualized, company wide programs tailored to fit the needs of your business.

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Knowing the profile of an engaged customer in your organization and having the ability to measure customer engagement are but two of the three legs required to successfully create fully engaged, loyal and repeat customers. The third leg is creating a customer engagement culture, bottom-to-top, top-to-bottom, so that your customers are effectively engaged at every stage of interaction with your company, before, during and after the sale, and the next sale and the next….

The final post in this discussion explores some prevalent methods for creating a culture well suited to customer engagement.

Establishing Deeper Connections with Customer Engagement

This article is the first in a three part series exploring the twin concepts of customer engagement and the engaged customer.  Some CEOs, especially in the SaaS arena describe an engaged customer and a non-engaged customer like describing the difference between a Van Gogh and overstock office art , “I don’t know much about art, but I do know what I like.”

What is an Engaged Customer?

An engaged customer is engaged by your company on two fronts: (i) before, up to, and including the point of sale and (ii) during the life cycle (use) of the product or service.  Recent research has shown that an engaged customer exhibits three specific traits that, if identified, promoted and supported within your organization, translates directly to a better bottom line.

Common Attributes of an Engaged Customer

Customer Loyalty

A hallmark of an engaged customer, loyalty is an essential trait for survivability in the current slower paced and more costly market place.  It costs less to maintain (for repeat business) a current customer than to identify, attract and convert a new one.  The slower pace refers to the lower rate of business transactions rather than the frenzied pace of product development.

Customer Interaction

Customer interaction refers to the customer’s relationship with your company.  Interactions occur on line and off line, before and after the sale.The type, quality and frequency of these interactions have a huge impact on maintaining an engaged customer.

Customer Feedback/Input

Providing a means for customers to provide feedback and input about your product or service creates a sense of involvement in the process of determining what the consumer wants.  If your average customer’s input has an identifiable impact on your product offering, they are more likely to buy the product or update once it is available.

The Point Is…

The methods of engagement vary but most commonly involve an interaction before there is a problem or complaint.  On line; product reviews, product ratings, surveys and live chat are recent customer engagement examples.  Check-in calls to customers, special events at retail outlets, unique purchasing opportunities and loyalty point programs are examples of off line engagement.

Regardless of the method, the goal of engagement is to create a deep connection with customers. Your customer’s involved relationship and emotional brand attachment are competitive advantages that are difficult for competitors to overcome.  This leads to the question, “How do you measure customer engagement?”  That is the topic of the 2nd article in this series.

Develop Customer Retention Strategies from Analysis of Survey Data

Challenging economic times combined with easy access to the web have made it more difficult for businesses to gain and retain customers.  According to numerous studies, the cost of a new customer acquisition is ten times more than retaining one. Now more than ever, it is important to understand how to develop long-term relationships with your customers.

When it comes to bottom line figures, the thriving companies are the ones reporting high customer satisfaction and customer retention rates. There is no denying the direct correlation between satisfaction levels reported on customer surveys and retention rates. How you analyze survey data will play an important role in the development of effective customer retention strategies.

Strategy from Survey Data Analysis

The companies that are succeeding constantly analyze their client relationships and develop strategies based on identified trends.  A prime example is identifying factors that lead to customer attrition.  By learning the shared characteristics of clients you have lost, you can identify those most likely to leave next, and develop techniques directly aimed at retaining these “high risk” customers. The ability to focus your marketing strategies appropriately to different client groups can increase your retention rate and the lifetime value of each customer.

A vigilant program of survey data analysis can give a company the edge it needs to understand how customers respond to various factors in their business relationship. Fortunately, advances in survey and data analysis technologies have made it easier to scrutinize the wealth of information needed to develop future strategies.

Customer Retention Rate – What does it mean?

t is one of the most profitable methods for selling goods and services. Once a company has attracted a consumer to ‘buy’ and ‘try’, a satisfied customer is the best means to retain that business for the foreseeable future.

There are many reasons to keep customers satisfied; most importantly to earn their business again. All marketers know that it costs much less to convert an existing satisfied customer into a repeat sale than to ‘conquest’ a new sale from another brand. If you browse enough web sites, you will see that…

  • Acquiring new business can be 5 times more expensive than retaining customers.
  • Increasing customer retention by just 2% can translate into a 10% cost reduction
  • Some retailers indicate their top 15% of ‘loyal’ customers comprise 50% of their sales revenue.

Those are some valuable customers and the statistics speak to why a high customer retention rate is so important.  Substantial sums of money are spent on survey data and questionnaires because a Satisfied Customer = A Valuable Customer !

So, how likely is your company to retain customers in the future? Past and current behavior is the best predictor of future trends. It is of the utmost importance for marketing analysts, brand managers and advertisers to understand both the current retention rate and defection from the analysis of ownership and/or survey data. The Customer Retention rate is often referred to as Loyalty.  Loyalty is represented by the percent of current owners that repurchase the same brand. Those who don’t repurchase the same brand are defectors and they represent lost business.

Also of importance to brand health is the measurement of conquest. Instead of looking at the current owners and “where the business went” (retained or lost), a look at new customer’s behavior will supply a measurement of where the business came from, or where new sales were ‘conquested’ from a competitive brand. Conquest is also important when considering a brand’s customer retention rate.

The graph below shows overall brand health by plotting the brand customer retention rate (loyalty of current owners) against the conquest rate (new sales from a competitive brand).

  • Brand A is the healthiest of brands given its strength in customer retention of current owners while attracting new buyers from the competition.
  • Brand B is successful in attracting brand switchers, but needs to work on current owner’s satisfaction to ensure a higher customer retention rate.
  • Brand C is relying on customer retention, but is in danger of slipping into ‘Decline’ if a downward trend in loyalty occurs.
  • Brand D is the weakest relative to its competitors and needs to identify a strategy to move its position.

Where is your brand’s health in the customer retention and conquest relationship? Is your survey data capturing these elements? What does it look like in terms of specific demographics or geography?  How does it compare over time?

PAI would welcome the opportunity to demonstrate how PAI’s mTAB™ service would benefit your understanding of customer retention rates, defection and conquest.  Please visit the PAI website to schedule a no-obligation review of mTAB for an analysis of consumer behavior data.