49

Customer engagement analytics

What is it?

Customer engagement analytics is a highly evolving field at the moment where businesses are trying to map the entire customer interactive journey on- and offline. In essence it is the process of assessing how well (or otherwise) you engage your customers with your products, services or brand through these various interactions.

Engagement is a subjective term, but thankfully research firm Gallup has simplified the various levels of engagement. Based on answers to just 11 questions Gallup have categorised customer engagement according to four levels:

  • Fully engaged customers – those who are emotionally attached and rationally loyal to your business. These are your most valuable customers.
  • Engaged customers – those who are beginning to feel the stirrings of emotional engagement. These customers are ripe for development and could relatively easily be pushed up to fully engaged.
  • Disengaged customers – those who are emotionally and rationally neutral. These customers are also ripe for development because they are neutral so could be swayed upwards (or pushed downwards).
  • Actively disengaged customers – those who are emotionally detached and actively antagonistic. These customers pose a serious threat to your business – especially in the age of the internet and social media.

Customer engagement analytics can help you figure out how many of each you have, what to do about it and what you need to do in the future to ensure more fully engaged customers and less actively disengaged customers.

Why does it matter?

Customer engagement matters because business is notoriously bad at it and yet it impacts bottom line results. When customers want to speak to you and get passed around several departments, having to explain the situation all over again to each department, this can be infuriating for customers. Often businesses end up operating various different systems that don’t communicate with each other and one part of the business will not necessarily know what another part is doing. This often happens in banking. And being able, therefore, to know all the customer interactions and map the journey a customer has with you is becoming increasingly important.

Not least because it has been discovered that customer satisfaction is not the predictor of behaviour that many companies once assumed it was. The argument has always been that satisfied customers = loyal customers = profit. Unfortunately in the modern world of multiple options and constant deals, whether a customer is satisfied is not necessarily enough to keep them as a customer.

For example, Xerox found that more than a quarter of their customers defected at the end of their contract despite describing themselves as ‘satisfied’ customers. Further analysis by Xerox found that there were strong correlations between genuine loyalty and customer longevity and whether customers described themselves as ‘very satisfied’. When those ‘very satisfied’ customers were pressed further to explain their satisfaction it almost always came down to their engagement or the nature of their perceived relationship with Xerox.

Gallup’s research data has also backed up this argument. Collected from almost three million customers in 16 major industries across 53 countries over a four-year period their research revealed that fully engaged customers deliver, on average, 23 per cent more in terms of profitability, share of wallet, revenue and relationship growth than the average customer. Actively disengaged customers represent a 13 per cent discount in those same measures. Companies that have high engagement have outperformed their competitors by 26 per cent in gross margin and 85 per cent in sales growth, and their customers buy more, spend more, return more often and stay longer. Customer engagement is the key to keeping customers, not necessarily satisfaction – so measuring engagement really matters.

When do I use it?

You would be wise to conduct customer engagement analytics at least every six months so that you can establish whether the trend is stable, positive or negative. The earlier you know of any problems that could be affecting customer engagement the faster you can potentially solve those problems and maintain high levels of customer engagement.

It is also especially useful and relevant if you are making any changes to your product or service or introducing new systems that will impact the customer experience.

What business questions is it helping me to answer?

Customer engagement analytics helps you answer business questions such as:

  • How engaged are our customers with our products, services or brand?
  • How are our customers interacting with us?
  • Can everyone in the business appreciate the entire journey or do they just see their part?
  • Are our customers interacting with us on social media?

How do I use it?

Historical customer engagement can be measured via a survey (Chapters 19 and 20) to gauge customer engagement. Social media analytics can also be used to measure engagement (Chapter 48).

That said, every company needs to create their own model for what ‘engagement’ is in their context. There are specialist companies that can help you to create your own customer engagement model and there are also many tools that can turn the data from places like Google Analytics into a customer engagement score. These scores can then help you to predict engagement which can in turn direct decision making and strategy.

Practical example

US-based Rent-A-Car deliberately moved away from satisfaction analysis to a self-designed analysis tool called the Enterprise Service Quality Index (ESQi). The reason for this move was that, like Xerox, internal research had demonstrated that customers who stated they were ‘completely satisfied’ on a five-point scale from ‘completely satisfied’ to ‘completely dissatisfied’ were three times more likely to return as a customer and recommend Rent-A-Car to others.

Customer engagement analytics found that these customers value the relationship with Enterprise Rent-A-Car and so can be described as ‘engaged’. As a result of this analysis all Rent-A-Car offices are only measured against how many of their customers are ‘completely satisfied’. Focusing their attention to ensure that as many customers as possible state they are ‘completely satisfied’ with their Rent-A-Car experience has increased results. Knowing that ‘satisfied’ alone is not good enough and that ‘satisfied’ does not result in repeat business and increased revenue has allowed the company to deliver better than expected service.

Tips and traps

You can’t please all of the people all of the time, but customer engagement analytics can help to identify what aspects of your product or service are most valued so you can constantly improve your offering and maintain valuable connections to your customers.

Don’t expect to find the perfect model straight up. Decide on a model that seems to make sense to your business and your customers and run with it. You may then need to fine tune it as you use it, but that process is made much easier if you get into action instead of getting stuck because ‘the model isn’t perfect’.

Further reading and references

For further insight into customer engagement analytics see for example:

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