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Customer Engagement Strategy: Turning Customers into Advocates

November 22, 2021

In this article you will learn:

According to research by Salesforce, 73% of customers say one extraordinary experience with one company raises their expectations for engagement with other companies. The same report also shows 54% of customers believe companies need to “fundamentally transform” how they engage.

Customer engagement can impact a company at multiple levels—brand image, market positioning, customer retention, and revenue. This article reviews the latest strategies, tactics, and tools companies are using to improve customer engagement, including hyper-personalization, creating a comprehensive view of customers, and more.

In this article you will learn:

What Is Customer Engagement and Why does it Work?

Customer engagement includes anything your company does to create and strengthen relationships with new and existing customers. The whole purpose is to build relationships, and transparency is critical. To establish genuine engagement, you must listen to what your audience shares and understand how they act on it.

The implementation of artificial intelligence (AI) has allowed brands to build personalized messages to interact with their customer base on different channels. Give consumers a consistent and unique experience and in return, you will get a reward of trust, loyalty, and engagement.

Why Is Customer Engagement Important?

When done right, customer engagement adds value and makes your relationships with customers stronger. While product quality and features may initially attract customers, loyalty is what keeps customers around. Salesforce research shows 84% of customers say the experiences provided by a company are as important to them as its products and services.

Customer engagement marketing is commonly used to secure and maintain this relationship—and it takes time, effort, and the right tools. When you get customer engagement right, however, it pays off. Below are some common benefits of great customer engagement strategies.

Increases Impulse Purchases:

Personalized product recommendations greatly encourage impulse purchases, where customers end up buying products they weren’t initially planning to buy. This could include an entirely new product, larger quantities of an intended product or an upgrade on an intended product. According to Forbes, 49% of customers make impulse purchases due to personalized recommendations.

Personalized recommendations can be used both in person and on eCommerce sites. For example, Amazon’s user homepage includes a slew of catered recommendations based on past purchases and search histories.

Reduces Returns:

Customer engagement can help ensure that customers are happier with their purchases, reducing the number of returns made. When customers are given personalized recommendations, they are encouraged to personally identify with a product. This tends to make them report greater happiness with products and discourages the dissatisfaction that leads to returns.

Additionally, engaging customers with recommendations based on previous interest or purchases can eliminate issues caused by “hard sells.” If customers have already expressed interest in similar products, they are more likely to be satisfied with and want to keep their purchases.

Boosts Revenues:

Successful customer engagement leads to increased revenue, either immediately or in the future. Customers are more likely to make purchases while being actively engaged. They are also more likely to return to stores or sites where they had a memorable and positive experience.

Improves Brand Loyalty:

Customer engagement and personalization help customers feel connected to and understood by a business. This feeling of connection leads to increased loyalty.

Customer engagement takes the extra step to “personally” acknowledge a customer and confirm their value to the company. This can help prevent customers from switching brands or services due to cost or quality differences.

Improves Customer Lifetime Value (LTV):

Customer lifetime value is a metric that shows you how much net profit your company gets from a customer over time. Retaining customers is cheaper and more profitable than acquiring new ones. The longer you can retain those customers, the more you increase LTV. A company with high LTVs can afford the higher expenses of creating new customers. Engaged customers are more likely to stay customers for long periods of time.

Increasing all of those areas for your brand sounds fantastic, right? You can achieve just that by using dynamic offers in your customer engagement strategy. Dynamic offers allow you to personalize your customer interactions and provide relevance and emotional connections to your offers. Download our Guide to Modernized Loyalty to learn how companies at the forefront of customer engagement succeed.

4 Examples of Successful Customer Engagement Strategies

In the following customer engagement examples, you’ll discover some of the best customer engagement strategies by leading brands that succeeded in boosting customer engagement.

1. The Coca-Cola Corporation #ShareACoke Campaign

Source: Branding Magazine

This 2014 campaign replaced the company’s logo with 250 names commonly used in the U.S. It also offered customers the opportunity to customize products with their own name or message.

By adding names to its products, Coca-Cola was able to directly engage with its customers. Customers were also encouraged to purchase products that could provide lasting evidence of that relationship. According to Investopedia, personalization was a core reason the campaign was so successful. “For Millennials, personalization is not just a fad, but it's a way of life. The ‘Share a Coke’ campaign enabled this set to express their individual stories and connect with friends and family. A girl who shares a name-branded Coke bottle with her mother feels as though she's connecting with her parent by innocuously creating a topic of conversation.”

2. Carhartt’s Retail Chatbots

Carhartt, which sells work apparel, started using chatbots online to improve customer service and interactivity. For example, if a customer searches for a product and gets no results, a chatbot appears and offers assistance.

This chatbot enables Carhartt to engage with its customers similar to how they might be helped in a brick and mortar store. Rather than forcing customers to search for help or allow them to struggle, they offer automated help in real-time. When customers engage with the chatbot, they receive more product offers and customized interactions.

Using chatbots helps increase customer engagement while also creating higher profits for Carhartt. These profits come both in the form of more sales as well as labor savings. According to MobileMarkter, “Retail sales from chatbot-based interactions are forecast to almost double every year to $112 billion by 2023 from $7.3 billion this year, per an estimate by Juniper Research.”

3. Starbucks Rewards Program

Starbucks has invested in creating more personalized experiences for customers and has seen a huge payoff.

Of the 75 million people who walk into a Starbucks, 18.9 million participate in Starbucks Rewards, a program that offers exclusive, personalized rewards, pay-by-phone, birthday offers, games and bonuses, customized drinks and more.

In a recent Loyalty360 article, Scott Maw, chief financial officer and executive vice president at Starbucks said, “What we have driven over the past several years is significant growth and, over the last couple of years, almost all of our same-store sales growth from those customers that we have digital relationships with and those that are in our Starbucks Rewards program and last quarter those grew 11 percent. They are growing their spending rate somewhere between mid-to-high-single digits. So you are getting both revenue per customer growth and the number of customer growth.”

4. Gravity Payments $70,000 Minimum Wage

Gravity Payments, a credit card processing company, made headlines when it set its minimum wage at $70,000. The increase in base salary was intended to ensure the productivity, happiness, and quality of life of its employees. This change improved employee satisfaction which then resulted in better customer care and increased engagement. According to, six months after the salary hike, revenue and profits doubled and Gravity's customer retention rate rose from 91 to 95 percent in the second quarter.

How to Build a Successful Customer Engagement Strategy

There are a number of proven ways you can drive stronger customer engagement for your brand. Here are eleven tips to ensure that your company can gain, and maintain, its competitive advantage:

Create a Single, Comprehensive View of Your Customer Across Departments.

Why it works: Today’s customers have little patience for companies that demonstrate a fragmented communications model. They don’t want to repeat the same stories to multiple representatives from different departments. So unifying customer data across channels and touchpoints is critical for the best and personalized customer interactions.

Incorporate Customer Perspectives into Product Design.

Why it works: Customer engagement strategies usually involve customer surveys to help you understand what your consumers like, need, and prefer from your offerings. For example, when project managers listen to and understand customer concerns, they can focus on developing or improving features that address those concerns.

Personalize Your Customer Interactions.

Why it works: According to Salesforce, “62% of customers now expect companies to adapt based on their actions and behaviors—almost in the manner of a great coworker who brings your favorite coffee when they know you’ve been having a tough week.” Marketers are now moving towards hyper-personalization, which customizes offers for each individual customer. This approach helps you dynamically tweak offers and marketing messages to each customer’s specific preferences and behavior.

Focus on the Customer

Since price and product alone are no longer enough, companies need to rethink their strategies. The first step is listening to what consumers want, and understanding when, where, and how they want it.

And customers expect companies to learn more about them. About 87% of loyalty program members said they are open to having various details of their activity and behavior watched, monitored, and tracked in order to receive access to personalized rewards or engagements. Using this information, customers expect their favorite brands to anticipate their needs and send them highly relevant offers.

Build a Customer Profile

Loyalty programs offer companies an ideal opportunity to gather accurate and complete information about each individual. Make it easy for them from the start. Ensure that questions are relevant and do not take a lot of time to answer, customers remain motivated to complete their profile.

But don’t stop there. You need to continue collecting information about customer preferences, motivations, and other influencing factors so you can fine-tune offers and foster continued engagement.

Be Smart with Your Data

When you continually collect customer data, you can quickly find yourself overwhelmed with more information than you can handle. You’ll need customer data platforms to help you turn data overload into actionable insights.

Artificial intelligence (AI) and machine learning (ML) can augment and add value to other marketing automation tools. By continuously learning and analyzing customer data, these solutions help marketers automate offer development and execution to streamline their workflow and guide customer journeys.

Leverage Technology

Print ads and TV spots have gone the way of the dinosaurs. Customers want to engage with their brands through a mix of new, emerging, and growing tech, including augmented reality, virtual reality, card-on-file, social media, mobile devices, and more, according to Bond Brand Loyalty.

In fact, the Bond survey indicated that 85% of loyalty program members who have redeemed offers from their mobile phones say their experience was improved by that technology. And 83% have had a better experience by receiving automatic, location-based offers when they were inside their favorite store.

Move from Segmentation toward True 1:1 Personalization

Marketing from the perspective of one-size-fits-many is no longer effective. While marketers have moved toward micro-segmentation driven by data insights, it is not enough to foster deep, lasting customer engagement.

About two-thirds of people hate being shown irrelevant content, according to Janrain. On the flip side, though, nearly half of consumers said they will spend more if their experience is personalized. Brands that can provide customers with a tailored experience will take the lead in building the greatest brand loyalty.

Personalize Across Channels

Some may prefer to pick up the phone or go to the store. Others may only shop and make purchases online, since they can do that 24/7. And some may be enticed with offers that come via email or text.

Companies must have many ways in which customers can interact with them, since not every individual enjoys the same channel.

Create an Organizational Model Focused on Experience

An effective customer engagement program requires buy-in from the entire organization - from the C-suite to a variety of departments who design, build and execute offers. Once everyone is on the same page, it's vital to draft a roadmap that will guide the organization to activate its goals.

With a new organizational model, it's imperative to share customer information across cross-functional teams (this is where AI and ML play an important role). And you need to continually examine the metrics and make adjustments as you move forward with your roadmap.

Improving customer engagement isn’t simply about getting them to purchase more at one time. It’s a long-term strategy used by brands to build customer loyalty, which translates into increased customer lifetime value, and has the potential to deliver as much as a 3x growth in net incremental revenue.

Measure Customer Engagement

In your customer engagement plan, measuring is a crucial step to help you gauge performance. The more often your customers engage with your brand the greater the chances your brand uses this to improve conversion rates. There are several metrics that can measure customer engagement. Take a look at Customer Retention Measurement: 10 Key Metrics to Track to help you find the metrics best suited for your brand goals.

Why the Future of Customer Engagement is Hyper-Personalization

As you can see, a critical piece of a solid customer engagement strategy is personalization.

Formation provides an AI marketing personalization solution that analyzes customer interactions at scale and understands an individual's underlying motivations. It generates offers and actions that are individually tailored to each customer, to optimize relevance and boost engagement.

Formation’s platform includes a library of dynamic offer types suited for multiple objectives throughout the customer lifecycle, from initial visit to purchase and retention stages. The offers are hyper-personalized, with an endless number of combinations of personalized elements, ensuring each offer is tailor-made for each individual customer.

To learn more about Formation’s Dynamic Offer Platform (DYNO) and how we can help your organization transition from mass to dynamic offers -> Click Here!

Keeping customers engaged and loyal to your brand is not a one-time exercise. As CRM expert Paul Greenburg explains, it is the “ongoing interactions between company and customer, offered by the company, chosen by the customer.”

In essence, a customer engagement strategy is a continuum, starting simply with making them aware of the brand and getting them to genuinely care about a product or service, according to the National Business Research Institute. Engagement then begins when consumers “actively consider purchasing the product or service,” making inquiries about it and comparing it to other offerings to see if it meets their needs. At the highest point of this continuum is satisfaction with their purchase and becoming repeat, loyal customers.

Engagement can take many forms. But all revolve around making the customer feel that they have a personal stake in your brand. According to Ron Shevlin, senior analyst at Aite Group, LLC, this includes “product involvement, frequency of purchases, frequency of service interactions, types of interactions, online behavior, referral/behavior intention and velocity.”

Personalization: The Key to a Strong Customer Engagement Strategy

2020 is the year that Frost & Sullivan predicted that customer experience would overtake price and product as the key brand differentiator. And we’re seeing that seriously take hold with major brands, like Starbucks, Amazon, Sephora and others. These companies are seeing double-digit revenue growth associated with highly engaged customers in their respective loyalty programs.

The most effective way to build long-term relationships and customer satisfaction is with 1:1 personalization. Sending customers emails addressed to their first name, or using basic demographics, such as gender, age or geography to develop offers, isn't enough. Neither is creating microsegments based on more detailed attributes like lifestyle, interests, attitudes, purchase behavior, search behavior, buyer stage and other factors. This kind of data can make offers relevant to smaller, more closely related groups of customers, but they often still miss the mark because they do not reach and engage with the consumer on a 1:1 level.

Learn more about how Formation’s Dynamic Offer Optimization Platform leverages customer engagement to build personalized offers.

Learn More About Customer Engagement

Customer engagement can influence a company at multiple levels, such as market positioning, brand image, customer revenue, and retention. Customer engagement includes anything your company does to create and strengthen relationships with customers across all touchpoints.

There’s a lot more to learn about one-to-one marketing. To continue your research, take a look at the rest of our blogs on this topic:

7 Tips for Improving Your Customer Engagement Strategy

Customer engagement strategy is a continuous process, starting from making customers aware of the brand and getting them to genuinely care about a product or service. At the highest point of this process is satisfaction with their purchase and becoming repeat, loyal customers.

Discover how to ensure that your company can gain, and maintain, its competitive advantage with these 7 tips for Improving your Customer Engagement.

Read more: 7 Tips for Improving Your Customer Engagement Strategy

Customer Data Platforms: Can They Deliver 1:1 Personalization for Marketers?

A customer data platform (CDP) is a tool for storing customer data in a centralized place. Marketing teams can gather behavioral, transactional, and demographic data in their CDP from multiple sources and correlate it to get a singular or in-depth view of any customer.

Read more: Customer Data Platforms: Can They Deliver 1:1 Personalization for Marketers?

See Our Additional Guides on on Customer Loyalty & Artificial Intelligence for Marketing

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