Improving Customer Engagement – the challenges continue
Datatrack’s three step methodology
Driving True Customer Engagement – how to impact
Customer Engagement defined – or is it?
Speaking with organisations across different verticals about enabling success, customer engagement regularly comes up in the conversation. Statements like ‘we need to increase engagement of our customers in our brand’, or ‘we want to drive higher customer engagement’ are not uncommon.
The critical question though is – what is customer engagement? Ultimately, one cannot impact something that can’t be defined. When asking organisation to define what they mean by customer, it is surprising the answers that are offered.
One proposed definition was very simple – “It’s our NPS score, it needs to go up”. Another was “we try to measure how often someone mentions our brand in social media with positive sentiment”. Even comments like “how often they use the app to get answer”. Huh?
Let’s break it down.
What is a customer? Merriam-Webster defines this as one that purchases a commodity or service. But is that really what a customer is? In organizations, there are ‘internal’ customers. Should they be part of the definition?
Customer definition proposal. A customer is an individual or entity who exchanges something of value for an experience, product or commodity of equal value, greater value, or that is required of them to possess. Not far from the original one.
The first difference: Scope of a customer. Customers are individuals (B2C) and entities (B2B, Government, a project team, finance department, etc.).
Second, exchange. The customer exchanges something for something else. Seems innocuous, but an exchange requires interaction. Interaction results in experience. Multiple experiences result in relationships.
Third, value. Value for value. It is a contract or obligation to trade something for another. This is core to a meritorious society. In the words of Ayn rand’s Jon Galt ‘I am a trader’ [see Atlas Shrugged for more].
Fourth, value trade parameters. Value equal, greater or required.
Key concept: VALUE. Value is subjective. What is important to one customer is less important to another. As an example, take the farmer and baker. The farmer values large machines, acreage to produce, pesticides to ensure a maximum yield. The baker values the flour and inputs for a great loaf of bread. A baker would not trade value for pesticides as they have no value in their business for adding pesticides. Likewise, a farmer would not buy flour as it yields no value to the goal of the entity, growing grain.
The Customer Challenge: understanding the value dynamic of each and every customer. Dell recognised this as an opportunity and built a business model around it. Prior to the Dell model, you could buy a PC. In the 2 or 3 configurations that the company defined as ‘valuable’. One the company thought people would trade greater monetary value than it cost to produce. This was the model in the industry – and then came Dell. Dell said tell me what is valuable to you in a PC, and we will build it that way. This mass customisation allowed for Dell to rapidly take market share from incumbents.
Continuing the breakdown…. Engagement
Engagement can be taken in many ways. There are 5 sub-definitions of engagement at Merriam-Webster. One of those is relevant to this discussion. “Emotional Involvement or commitment”. In management discussions and publications, this means having your customers be your best advertisement. Ken Blanchard and Sheldon Bowles book, Raving Fans, the need to cerate raving fans is key to success and customer satisfaction leadership.
So, Engagement means emotional commitment to a company. Being a company whose customers positively comment and reference their experience.
The Challenge … how does an organization, team or individual gauge and impact their customers’ engagement. This effort is highly subjective as emotional commitment for one may be different for another.
Today, use of Net Promoter Score is largely used to attempt to gauge how much of the customer base is raving (a score of 9 or 10 a.k.a Promoter) in relation to those who are negatively (a score of 1 to 6 a.k.a detractor) committed. NPS is a survey and in turn subject to confidence levels. For those who are not statisticians, a confidence level is, in lay terms, how accurate, statistically, the result will hold up to be true for the entire customer base. A typical goal for confidence is 95%, which means that 1 in 20 times your results are wrong. Depending on who prepares the data and how the survey is conducted, this skew can vary, beware the source of the data and analysis.
The key to solving the Challenge …. Know what impacts your customers engagement.
NPS is correlated to the amount of effort that customers have to dedicated to maintain their relationship with an organisation. This effort happens on many levels, financial/economic, time, physical and emotional.
Effort: In short, how much financial effort does your product or service require. Even deeper, how much does it cost versus the competition. If your product or service is $50 per month and the similar product from a competitor is $40 per month, this is a risk to your base. Are you providing the experience to compensate for this difference?
Additionally, how much does it cost in relation to the customers effort to obtain it. For example, a $50 a month commitment from Customer Y who makes $50,0000 a year is relatively different than the same commitment from Customer X who makes $500,000 a year.
Combine the two, and if the experience is not as seamless for the customer, the VALUE is perceived difference. If you need to dedicate more time effort say 4 hours per year (20 minutes per month) more to maintain the $40 competitor, then Customer Y would find benefit in leaving. The calculation is Customer Y’s $25 wage rate per hour equates to $8.33 being spent to maintain the competitor $40 per month commitment would be less ($48.33) than staying with your offer ($50). Conversely, Customer X at a $250 per hour wage rate would not see benefit to switch.
This economic concept of price sensitivity is well discussed and documented. The point, is that effort is important and to ignore the effort from the customers view can be devastating to your organisation.
Emotional effort. There can be negative emotional effort and positive emotional effort. Negative Emotional effort occurs when in the customers mind, their money and/or time is being wasted. Transfers between departments, slow response time and the horrible … being put on hold only to not get a result. Positive effort can occur when an unexpected assist is received. Think of this where someone is struggling to load a bag into a car. Someone stops and helps without being asked, there is an emotional connection for both the helper and the helped (apologies to English teachers everywhere). This connection happens today when customer facing employees recognise and act. Case in point, during a recent visit to a national retailer for something needed, the clerk recognised that a $5 credit could be applied and offered to apply it.
The customer is pleased and somewhat surprised that an organisation would reduce the economic impact without being asked and recognise them as a value repeat customer. In contrast, the same situation and the customer leaves and reads their receipt 3 days later that states the $5 benefit needed to be used 2 days ago. The customer is now frustrated and negatively emotionally involved.
The one line answer to this dilemma …. There isn’t one.
There is however a way to begin to affect change. It is to follow Datatrack’s three simple steps while keeping in mind that simplicity is never simple.
In summary, the onus on the organisation is to understand the customers experience, simplify it and be proactive to reduce the amount of effort the customer needs to expend. In short, customer engagement is increased when the customer feels the organization has their best interests in mind. Never an easy endeavour, but an increasingly crucial one to become or stay leaders in their industries.
TURN INSIGHT INTO ACTION
To learn how to make this a reality and gain a competitive edge in Customer Effort Reduction, book a demo to speak with one of our customer journey automation professionals