Did you know that an engaged customer buys 23% more than a non-engaged customer (Gallup, 2018)? Therefore, having a customer engagement strategy can be crucial for the success of your company! Read below to find out more about what exactly customer engagement is, why is it important and how to increase it.
1. What is customer engagement?
Customer engagement is one of those terms that can be quite difficult to define and can mean different things to different people. More often than not, customer engagement is the outcome of positive customer experiences. A good suggestion for a definition is offered by Paul Greenberg from HubSpot:
“Customer engagement is the ongoing interactions between company and customer, offered by the company, chosen by the customer.”
However, customer engagement is not only the interaction between company and customer, but it also includes the interaction between the customers. Examples of this include community forums, customer reviews and testimonials, social media fan pages and discussions, etc.
2. Why is customer engagement important?
Customer engagement is extremely important, as proven by Hall & Partners who found out that up to ⅔ of a brand’s profits are dependent on effective customer engagement.
Another statistic was provided by Ray Wang of Constellation Research. He said that:
“companies which have improved engagement increase cross-sell by 22%, drive up-sell revenue from 13% to 51%, and also increase order sizes from 5% to 85%.”
Therefore, it becomes clear that there is a direct correlation between higher customer engagement rates and more revenues. Customer engagement also increases customer loyalty. This means that the number of customers who will buy exclusively from you and not your competitors will increase. What is more, loyal customers are often your best brand ambassadors.
3. How to improve your customer engagement?
As we mentioned earlier, defining and measuring customer engagement can be tough. However, some metrics for customer engagement include:
- Number of accounts – the higher the number of customer accounts you have, the better. This is an indication that customers don’t mind going through the trouble of creating an account vs. purchasing as a guest.
- Buying frequency – when your customers’ buying frequency is high, this means that they keep returning to your brand and their loyalty is high
- Buying amount – if your average customer is buying more from you this is a clear indication that they feel engaged with your brand
- Churn level and retention level – low churn rate and high retention rates indicate a higher customer engagement
Those are some of the main metrics which one can use to measure customer engagement. Therefore, concentrating on increasing those can help you greatly improve your customer engagement.
4. Examples of customer engagement strategies
Below you can find 3 examples of big companies who are doing things differently in order to improve their customer experience and increase retention and engagement.
- Ryanair implemented a customer engagement strategy, which, as SEO Michael O’Leary said: “would help them stop p***ing off their customers”. This not only helped them keep their leadership position, but also increased their number of passengers.
- Carhartt is currently using a technology which connects customers to advocates (the so-called advocate-assisted commerce), which helps the customer to make the right choice when purchasing. This has lead to up to a 10 fold increase in conversion rates and up to 25% in the average order amount.
- Gravity Payments implemented a minimum yearly salary of $70,000 for all employees, which dramatically increased both customer and employee engagement and retention, lead creation, job applications, and profits.
In conclusion, high customer engagement can have a tremendous impact on your bottom line. The way you decide to increase your customer engagement might depend on your company, products and the industry you are in. However, if you put the time and efforts in, the results will undoubtedly come!