There is much at stake in times of uncertainty — for businesses and customers alike. While meaningful engagement is always an important part of building customer loyalty, an extreme market shakeup, such as the current COVID-19 pandemic, makes a strong engagement strategy critical to the future success of a business.
For example, Forrester reported customer experience leaders had three times higher returns to shareholders than laggards in the aftermath of the 2008 financial crisis. Although the long-term impact of the COVID-19 crisis has yet to be determined, it behooves companies to proactively take a nuanced and thoughtful approach now, to deeply understand their customers and work to create bonds that will stand the test of time.
Yet current market conditions dictate that you can't connect with customers the same way you have in the past. You must focus on more authentic, empathetic, personalized and contextually relevant connections to prepare yourself for longer-term changes that will inevitably impact customer interaction.
What Is Customer Engagement?
Customer engagement is a lasting, two-way relationship between a customer and a brand that delivers mutual value at every interaction and increases over time. Engagement is earned by creating relevant and personalized contributions that positively impact people’s daily lives, both practically and emotionally. In fact, Salesforce reports that 80% of customers show more loyalty to companies that prioritize strong ethics. Achieving engagement is rooted in delivering on customer’s needs and wants — not just what product you can sell them.
Related Article: Customer Trust: Are We Experiencing an Existential Crisis?
How Does Customer Engagement Lead to Value Creation?
As we have shared in the past, the key to differentiating on customer experience is a focus on value creation. The path to building valuable, lasting customer engagement has three key components:
1. Create a Value Ecosystem
The most successful programs provide multiple types of value, from functional to emotional to ease of use. The more types of value a brand delivers, the greater the share of life a company will occupy with its customers. This customer value, in turn, results in increased share of wallet/market for the company. There are several proven program components that can be combined to deliver this value ecosystem and build engagement:
- Personalization — An emotional reward for deeper engagement, personalization builds trust by making you feel known by the brand.
- Community — Facilitating connections between like-minded people builds social incentive to stay engaged.
- Inspiration — New and contextually relevant content is introduced, extending engagement with the brand’s platform.
- Social Advocacy — Emotional resonance is created by enabling you to champion a cause you are passionate about.
- Exclusivity — Competitive consideration is removed by giving you insider treatment you wouldn’t receive anywhere else.
- Achievement — Switching costs increase by reinforcing the feeling that you have invested in your relationship with the brand.
- Surprise and delight — Done well, unexpected day-brighteners can have an outsized impact vs. rewards you are trained to expect.
- Gamification — By offering an engaging, satisfying experience, an anticipatory craving for the promised reward is built.
Related Article: Tracking Customer Data? You Better Provide Value
2. Establish a Reciprocal, Two-Way Relationship
Engagement is built when value is exchanged between the customer and the brand. To foster this mutually beneficial connection, companies should proactively provide cues and benefits to encourage customers to reach back out to them. The longer this reciprocation goes on, the deeper and richer the relationship becomes. Ultimately, this creates a virtuous cycle in which each interaction reinforces the next, thereby creating a solidified bond between the customer and brand.
Consider the case of Starbucks, a company that has successfully turned a simple coffee purchase into up-leveled engagement. Its approach has included a popular app for ordering ahead and skipping lines, personalized offers, and friendly baristas who know your name and order. These actions increase the cost of switching to another coffee chain and turn a daily purchase into a ritualized habit. It has adapted to COVID-19 limitations by reassuring customers that every available precaution is being taken for the safety of employees and customers alike and continuing to provide their product via drive-through and delivery.
Related Article: Rethinking Customer Engagement: Put Your Relationship First
3. Measure the Economic Value of Engagement
Increasing engagement among customers enhances the perceived value of your brand and reduces the likelihood of competitive consideration. As engagement increases, so does customers’ level of spend with your brand. This can be measured through a research approach called engagement economics. In our own research, we found that across virtually any category, improved engagement led to an exponential increase in business value creation. A study of a cross section of brands showed that the most engaged customers spent an average of 35% more than the least engaged customers.
Engagement strategies of the past were often centered in and around the products. Companies touted product features, sales bundles, points and rewards cards, and other transactional offerings. While these efforts might satisfy some customers during normal times, these types of functional engagement strategies will fall short during the journey that lies ahead.
Related Article: Customer Experience Complexity Calls for a New Breed of Measurement
Finding Success in a Turbulent Economy
COVID-19 has shifted the way we need to think about customer engagement. It has elevated the need to build a reservoir of trust and goodwill that will meet customers’ needs today and have a lasting effect into the future. To succeed in these conditions, companies should remain focused on three critical elements:
- Use data-driven insights to understand, in near real-time, the current emotions and sentiments of customers, and be prepared to find ways to adapt to their needs, wants and fears.
- Be empathetic, help customers feel connected to a community, and find ways to provide assurance and authentic comfort — elements that are especially relevant in the current environment. In fact, 43% of consumers find it reassuring to hear relevant information from brands they trust.
- Continue to creatively deliver on core value propositions. Accomplishing this will require short- and long-term shifts, such as expanding home delivery options, adapting contactless operations, migrating customers more to digital channels, and evaluating operational trade-offs grounded in what matters most to customers.
Some companies have already created COVID-19 response engagement strategies. American Express has reached out to customers encouraging them to contact customer support to develop a personalized plan that works in their current situation. OpenTable has added functionality allowing customers to reserve times at grocery stores to avoid large crowds and is helping restaurants re-position themselves as pop-up grocery and take-out stores. Reverb.com, a digital musical instrument marketplace, is connecting artists, venue owners and small businesses with organizations offering financial support during the crisis.
To succeed in these conditions, companies must double down on ensuring customers remain engaged with their brands throughout this crisis and beyond. Now is the time to shift from growing customer loyalty to showing loyalty to your customers.