The Economics of Engagement: Quantifying the Link Between Engagement and Growth

Engagement is complex. It can be difficult to measure, a challenge to track, and financially minded executives may be skeptical about the likelihood of it translating into concrete business value. Like any human relationship, customer engagement depends on building a personal connection with a brand over time. The benefits of this relationship accrue in the long run, but investing in a long-term plan can be difficult to justify on an annual budget cycle, as the immediate payoff may not be clear.

The “Economics of Engagement,” the third and final white paper based on the 2014 Rosetta Consulting Customer Engagement Consumer Survey, focuses on how strong customer engagement provides direct economic value to the brand. Rosetta Consulting found clear top- and bottom-line benefits to engagement based on stronger loyalty, reduced competitive threat, greater advocacy, and increased opportunity for upsell and cross-sell. Top-performing brands in customer engagement experienced 50% higher revenue growth than all other brands, and 36% higher growth than their category average.

The Rosetta Consulting Customer Engagement Consumer Survey polled 4,800 U.S. consumers about their experiences with 83 market-leading brands in 15 different industries. Respondents were surveyed on attitudes (including perceptions, feelings, and opinions), as well as behaviors (including advocacy, interactions, and transaction history). Highly engaged consumers were identified using a predictive scoring mechanism that selected the respondents that best demonstrated a broad range of key engagement characteristics.

The Four Drivers of Customer Engagement

Rosetta Consulting’s Customer Engagement Consumer Survey identified four tangible and measurable ways that engagement drives brand value:

  • Stronger loyalty—94% of highly engaged customers (HEC) describe themselves as loyal vs. 19% of others
  • Reduced competitive threat—HEC are 2x more likely to purchase their preferred brand even when a competitor has a better deal or lower price
  • Greater advocacy—HEC are 4x more likely to have advocated to colleagues and acquaintances
  • Increased opportunity for upsell and cross-sell—HEC are 6x more likely to say that they would try a new product or service from the brand as soon as it comes out

As a result, highly engaged customers buy 90% more frequently, spend 60% more per transaction, and have 3x the annual value compared to non-highly engaged customers.

The Bottom-Line Value of Customer Engagement

Most brand executives would agree that highly engaged consumers are valuable: they are loyal and even sticky, they advocate often, and they are likely candidates for upselling and cross-selling. But how are highly engaged consumers contributing to company growth?

Marketers seeking to invest in engagement can find it challenging to predict the effect it will have on their company’s bottom line. Data from this study, in conjunction with publicly available financial data, make it possible to explore the relationship between engagement and brand-level financial performance.

The results reveal that top-performing brands—those with a greater incidence of highly engaged consumers—enjoy higher rates of company revenue growth. On average, the top performing brands experienced 50% higher revenue growth than all other brands and 36% higher revenue growth than the category average. These findings confirm that across industries and categories, companies with higher engagement levels generate greater revenue growth over time, demonstrating the power of engagement to impact the company’s bottom line.

For more facts and figures on the value of Customer Engagement, download the Rosetta Consulting white papers:

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