12ahead recently featured this article by Rosetta Consulting’s Nick Hahn, Chetna Bansal and Kara Schnoes, discussing the “Customer Engagement from the Consumer’s Perspective” white paper. The original piece can be found here.
Engaged consumers are the ideal customers. They aren’t simply “Satisfied” with your product or service. They aren’t just “Loyal” repeat buyers. And the dedication to their favorite brands extends well beyond their willingness to “Advocate.”
Engaged customers are all of these things, and more. Customer engagement is a personal connection between a consumer and a brand that is strengthened over time, resulting in mutual value. It’s an enduring, two-way active relationship that simultaneously delivers on your customers’ needs and generates greater profitability for your brand.
And according to a recent study by Rosetta, polling 4,800 US consumers on their experiences with eighty-three market-leading brands, the value of these customers is clear – they buy 90 percent more frequently, spend 60 percent more per transaction and are five times more likely to indicate it is the only brand they would purchase in the future. All of these factors lead to engaged customers delivering three times the value to the brand over the course of a year.
By examining the differences between the brands that simply meet our expectations – those that we purchase from regularly but have little attachment to – versus the brands we feel truly passionate about, marketers can develop measures of engagement and an action plan to foster it.
What defines an engaged customer?
Research shows that interpretations of engagement vary widely across companies and even within departments. The term is used to describe a brand’s “best” consumers, but often remains undefined, obscuring the goal. Engagement is complex. Like a human relationship, it is the culmination of ongoing interactions and experiences with the brand.
Highly engaged customers have a personal connection to a brand, built on experiences that drive affinity with its ethos. Highly engaged customers recognize when a brand understands their personal needs. They believe that the brand reflects their personal identity – both how they see themselves and how they want others to see them. For highly engaged consumers, the tangible and intangible value they receive from the brand outweighs the effort and cost they expend as loyal consumers.
A simple five-point scale question, like that typically used to measure satisfaction, will never capture the nuances and intricacies of this relationship. Rosetta asked consumers dozens of questions about their brand experiences to better understand how customers become deeply engaged, and the characteristics and experiences shared by these valuable customers.
Intuitively, marketers understand that engaged consumers are worth more – they are loyal, sticky and they advocate on behalf of the brand. When examining hard measures of value, such as spend and frequency of purchase, this perception proves true. Highly engaged consumers are worth significantly more to the brand; specifically, they spend more and will continue to do so in the future.
Take, for example, athletic clothing shoppers. When we compare highly engaged athletic clothing customers to non-highly engaged customers, we see that highly engaged consumers spend 97 percent more on average ($112 versus $57) and purchase 94 percent more frequently (4.76 times a year versus 2.45).
And despite significant market and competitive differences across industries, these trends are present from financial services to fast food and from laptops to lodging.
Deepening the relationship
Engaged customers act on their desire to create closer ties with the brand. They trust it and are willing to take steps to deepen their connection. Starbucks has taken advantage of this active engagement through its MyStarbucksIdea.com website. It enables customers to make suggestions about products, the customer experience and community involvement. Visitors can vote on ideas and see updates on suggestions put into action. The site has received nearly 200,000 suggestions – many of which Starbucks implemented, including bringing back banana nut bread and building bike-friendly facilities – and each one of those comments represents a customer seeking deeper engagement with the brand. The brand benefits not only by encouraging interaction, but also from the real-time feedback and customer insights.
Highly engaged customers not only interact more with their brand of choice, but they actually welcome communications from the brand. They are four times more likely to say they “appreciate when this brand reaches out to me” and seven times more likely to “always respond to this brand’s promotional offers.” That willingness to deepen the relationship even extends beyond the products they already love – they are six times more likely to say they would “try a new product or service from the brand as soon as it becomes available.”
In fact, engaged consumers are even willing to overlook occasional functional and convenience-related shortcomings. Despite a barrier to purchase, a negative experience, or even higher prices, the most engaged consumers often stay committed.
For example, when the iPhone 5 was released, there were more than 1,400 people waiting in line at Apple’s flagship 5th Avenue store in Manhattan for the midnight release – some had been there for weeks. These are not customers looking for convenience, the lowest price or a product that has all the bugs worked out. They are highly engaged customers devoted to the Apple brand who are willing to spend time and money to deepen their commitment.
Marketers know that engaged customers are their best customers, but you manage what you measure. Until brands are tracking engagement directly, rather than obliquely through one-dimensional facets such as satisfaction and loyalty, they will miss out on the tremendous value that these committed customers have to offer.
For more facts and figures on the value of Customer Engagement, download the Rosetta Consulting white papers: