Why Does Customer Engagement Matter?

In our Most Engaged Customers study we found that retailers who increased Customer Engagement by at least five points exhibited 56% cumulative share price appreciation. Without a doubt, Engaged customers have a credible impact on positive business results.

Customer Engagement is the outcome of an exceptional, differentiated customer experience. Companies that design and deliver better customer experiences have more engaged customers.

To be clear, engaged customers have a heavy impact on the bottom line because they exhibit four key behaviors:

Retention

An engaged customer will continue to do business with you. Common business sense says it is cheaper to retain an existing customer than acquire a new one, some estimate it is approximately 6 to 7 times cheaper to retain. Engaged customers will spend more with you than with your competition, making their overall customer lifetime value quite significant.

Effort

An engaged customer will go out of their way to do business with you. Seth Godin, the enormously popular marketer/philosopher, warns business about 'The tyranny of low price.' 'If you build your business around being the lowest-cost provider,' writes Godin, 'that's all you've got. Everything you do has to be a race in that direction, because if you veer toward anything else (service, workforce, impact, design, etc.) then a competitor with a more single-minded focus will sell your commodity cheaper than you.'

Engaged customers help companies avoid the tyranny of low price. Engaged customers don't want the cheapest because they understand the value you bring to their lives. Because of this they will actually exert extra effort to do business with you. This means your client contact will speak up for you when their team is considering another vendor, this means your guests won't flinch when you have to raise menu prices, this means your customers will wait hours to shop with you even though they can get the same product at Radioshack.

Advocacy

An engaged customer will spread the word about how great you are. Nielsen's 2012 Trust in Advertising Report shows that consumers continue to trust word-of-mouth more than any other advertising form. The bad news, of course, is that you can't rely on TV ads and billboards to earn customer trust. The good news is that, if your experience is good enough to engage them, Engaged customers will provide free advertising.

Passion

And finally, engaged customers love doing business with you. You have captured their hearts, their passion for the experience you deliver. Whether it's through design, shared values, or front-line people who build authentic relationships with customers, passion starts when customers feel a personal connection.

Customer Engagement matters because it ties directly to business performance. Want better business results? Focus on creating an engaging customer experience.