What is Customer Engagement (and Why Is It Important)?

Hana Mohan

3min read

We all have a certain feeling for what “engagement” with a brand means. After years of interacting with different businesses, consumers develop individual opinions and preferences. But how do companies influence consumer decisions? Some of the most successful companies devote significant time and effort into fostering customer engagement. According to Bain & Company, companies that excel in customer experience are likely to grow revenue at a 4-8% higher rate than industry peers. A better customer experience cultivates customer loyalty, turning customers into brand advocates and promoters. These loyal customers have a customer lifetime value that's 6 to 14 times more compared to detractors.

Customer experience begins with your brand identity and is impacted by every interaction a customer has with your brand, from pre-purchase research to marketing interactions, the buying experience, and interactions with customer service representatives post-purchase. Each customer may make judgments quickly, but they can become genuinely engaged through a series of positive experiences. As customers seek to have more personalized services, it is as vital as ever to find new ways to strengthen your customer relationships through active engagement.

Definition of Customer Engagement

Choosing a concise definition of customer engagement can be challenging since there are so many perspectives and opinions. The HubSpot blog defines customer engagement as “the process of interacting with customers through a variety of channels and strengthening your relationship with them.” At its core, customer engagement is about the interactions between customers and the company. Improving customer engagement means finding ways to improve the quality of those interactions, regardless of the channel.  

Another essential part of this definition is finding ways to strengthen customer relationships. As you’ll see in this post, one of the best strategies involves improving your customer experience while adding new and unique value that your customers can appreciate. In many ways, customer engagement is the glue that holds together any customer-centered strategy.

Why Customer Engagement is Important

Fancy customer acquisition strategies are unlikely to have a lasting impact on sales and customer retention if you don’t have strong customer engagement with your brand. Focusing your effort on developing customer engagement plans is important because it is the best way to increase the emotional connection customers forge with brands and products. Your absolute best customers will often have a strong feeling about the company’s vision and values. For this reason, it is essential not to overlook the importance of your brand messaging and how you are communicating on all available channels.

The Impact on the Customer Journey

Industry experts refer to interactions between a customer and a company as “touchpoints.” When thinking about customer experience management, it is necessary to monitor these individual interactions and activities to ensure that customers are satisfied through each step in the process. Yet it is also just as important to look at the entire relationship, called the customer journey. Customer engagement is highly dependent on a customer’s opinion of a company and its products and services. Finding ways to interact with customers before, during, and after any individual touchpoints is one of the best ways to maximize the value of customer engagement.

The Impact on Customer Experience

Customer experience considers all interactions that someone has with your brand and is integral to fostering strong engagement. When a customer has consistent and positive experiences over time, they can become loyal brand advocates. Another way of looking at this is that their engagement with your brand should strengthen. One caveat: A single negative experience or unresolved issue could change everything and ruin even the best relationships, so having exceptional customer service in place to turn customer issues into positive outcomes is a must.

Fortunately, several helpful tools can help improve the customer experience and give your audience multiple ways to interact with your team.  Offering self-service options through a customer portal can empower customers to find the information they need and notify you of any challenging issues. You could also use a shared team inbox to help your support team centralize and manage your customer communications.  These tools give your team an interactive platform for communication where they can personalize messages and follow up promptly.

The Impact on Customer Retention

Strong engagement is likely to lead to excellent customer retention over time, which is a leading indicator of a strong business. Taking time to implement loyalty programs, discounts, and promotions that target your active customers can help to increase engagement. You may also want to look at metrics for product engagement, churn rate, and referral rate, helping you understand your engagement and retention levels. Positive customer experiences are vital to retaining more customers.

Customer engagement is a far-reaching topic that can have a significant impact on your business. The best strategy for many companies is to take a broad view of all customer-focused functions, including service, experience, and support. This holistic approach lets your team better appreciate how everything fits together and what improvements will be most appreciated by your customer base.

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