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Customer Engagement Strategy: Turning Customers into Advocates

March 20, 2020

Customer Engagement Strategy: Turning Customers into Advocates

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. Let’s take a comprehensive look at customer engagement and find out the latest tactics and tools companies are using to improve it.

In this article you will learn:

  • What is customer engagement?
  • Why customer engagement is important
  • 4 examples of successful customer engagement
  • Why the future of customer engagement is hyper personalization

What Is Customer Engagement?

Customer engagement includes anything your company does to create and strengthen relationships with customers across all touchpoints.

Below are some of the fundamental ways companies practice customer engagement and why they work.

1) 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.

2) Incorporate customer perspectives into product design.

Why it works: Customer engagement strategies usually involve surveying customers to understand what they like, need and prefer about 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.

3) 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.

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 encourages 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.

4 Examples of Successful Customer Engagement

The following examples show how leading brands succeeded in boosting customer engagement.

1. The Coca-Cola Corporation #ShareACoke Campaign

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 Inc.com, 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.

Why the Future of Customer Engagement is Hyper Personalization

As you can see, a core theme of successful customer engagement practices 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 solution 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.

Learn more about the Formation platform or contact us to see how Formation can help improve your marketing results.