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What Is Customer Engagement and Why Should You Be Paying Attention to It?

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Everyone from eCommerce to utilities companies are talking about customer engagement. In fact, one company even sells customer engagement as a service (CEaaS?)

So what is customer engagement, and why does it matter?

We’ll cover that here, and we’ll also look at some of the major benefits of getting customers engaged, along with some strategies for doing just that.

The relationship between customer engagement and CX

Why does customer engagement matter?

What are the benefits of boosting customer engagement?

How can you boost customer engagement?

How do you measure customer engagement?

Conclusion and next steps

The relationship between customer engagement and CX

As products and services commodify in terms of features and price, and switching costs trend downward, more and more people are making their choices about what to buy, and whether to stay loyal, based on the overall experience of being your customer.

And as we’ve discussed before in “10 Surprising Customer Experience Stats,” a good customer experience (CX) has gone from nice-to-have to absolutely mandatory for brand success.

Customer engagement is one aspect of the customer experience. Gallup describes customer engagement as “a customer’s emotional or psychological attachment to a brand, product, or company.”

Why does customer engagement matter?

Engagement matters because emotions matter.

Behavioral economics teaches us that spending isn’t a strictly rational cost-benefit analysis of quality and price. According to Gallup: “The vast majority of customer loyalty and buying decisions are influenced by emotional as well as rational factors.”

Consumers choose businesses with which they feel an emotional connection. As Gallup also points out: “Buying just about anything, whether it’s a $20 shirt or a $20,000 car, is more of an emotional act for customers than ever before.”

“To get customers, you need to go from the heart to the brain to the wallet,” entrepreneur and author Gary Vaynerchuk says.

Engaging your customers is one way to build and maintain an emotional connection with them.

What are the benefits of boosting customer engagement?

According to Gallup research, fully engaged customers are more profitable than the average customer.

On average, they have 23% higher:

  • Share of wallet
  • Profitability
  • Revenue
  • Relationship growth

These numbers are even higher in certain individual industries. For example, in banking the difference in revenue between fully engaged and actively disengaged customers is 37%.

Highly engaged customers are more loyal and more likely to recommend a brand to their friends and family, according to Cynthia Grimm, chief customer experience officer at CX Solutions.

Grimm points to research showing that highly engaged customers are three times more likely to repurchase and recommend a brand to others than customers who are not highly engaged.

Image source: “Why Does Customer Engagement Matter?”

But that’s not all. Highly engaged customers contribute in other ways, including:

  • Offering suggestions on how to improve a brand’s customer experience
  • Teaching other customers how to get more value from the brand
  • Boosting a brand’s employee morale and job satisfaction, retention, longevity, and productivity by providing positive feedback
  • Incorporating a brand into their identity, for example, Apple stickers and Harley Davidson tattoos
  • Building and growing brand-based communities, both on and offline

How can you boost customer engagement?

First, you must listen to, and really hear, what your customers are saying to you. What are their needs? How do they feel about you?

Here are a couple of ways you can listen to your customers and find out what they’re saying about you on the web:

  • Use reputation management software, such as Yotpo. This software crawls the web looking for mentions of your brand on social media and reviews sites and lets you know automatically when a new comment or review appears.
  • Create an online community for your customers where they can engage with each other about your brand and related issues using online community software such as Insightrix Communities.

Second, personalize as much customer communication as possible.

Help desk software with CRM capabilities or an integrated CRM can help with this by giving customer service reps information about each customer such as background on their issue, any past issues, and purchase history.

How do you measure customer engagement?

Gallup uses the Gallup CES, which asks customers to answer “yes” or “no” to the following three questions:

  1. [Company] always delivers on what they promise.
  2. I feel proud of be a [Company] customer.
  3. [Company] is the perfect company for people like me.

But that’s not the only way to measure engagement. In Totango’s estimation, the best three metrics for measuring customer engagement are:

1. Activity time

Activity time is the total time a customer spends on your website, minus inactive periods.

Image source: “Top 3 Metrics to Measure Customer Engagement”

2. Visit frequency

How often is your customer interacting with your brand? Once you start tracking this, you can begin to see dips and spikes.

Image source: “Top 3 Metrics to Measure Customer Engagement”

3. Core user actions

Here are some examples of actions which could be at the core your brand’s offerings, and would offer insights about how engaged customers are, based on how often they perform them:

Image source: “Top 3 Metrics to Measure Customer Engagement”


Conclusions and next steps

Customer engagement is your customers’ emotional attachment to your brand. It matters because engaged customers spend more, are more loyal, recommend your brand to others, and take other actions which benefit your company.

You can improve customer engagement by listening to your customers, creating an online community for your customers, and personalizing as much customer communication as possible.

To learn more, visit our customer engagement software directory and check out the following posts:

Looking for Customer Experience software? Check out Capterra's list of the best Customer Experience software solutions.

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About the Author

Cathy Reisenwitz

Cathy Reisenwitz helps B2B software companies with their sales and marketing at Capterra. Her writing has appeared in The Week, Forbes, the Chicago Tribune, The Daily Beast, VICE Motherboard, Reason magazine, Talking Points Memo and other publications. She has been quoted by the New York Times Magazine and has been a columnist at Bitcoin Magazine. Her media appearances include Fox News and Al Jazeera America. If you're a B2B software company looking for more exposure, email Cathy at cathy@capterra.com . To read more of her thoughts, follow her on Twitter.

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