Liminal by Razorfish - Customer engagement in transition feb 2011


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Liminal by Razorfish - Customer engagement in transition feb 2011

  1. 1. A RAZORFISH ANALYSISOF CUSTOMER ENGAGEMENT IN TRANSITION Change. As marketers, we have always accepted it. Markets change; brands gain momentum and then lose energy; and new mediums come along. Consider the advent of television in the 1950s and how it changed the rules of marketing for decades.The change marketers face today is different than what has come before, in both its pace and its potential, which is why we’ve used theterm “liminal” as the title of this book. The word liminal isn’t just about change, but about being on the cusp of something new. In thecontext of marketing, it reflects the fact that, for the first time, customers have an immediate voice and an ever-expanding array ofchannels in which to use it. If marketers are to survive—and thrive—in this new world, they need to re-examine how to engage withcustomers, across generations and levels of technological savvy.Thus, we undertook the research in “Liminal” from the ground up, so we could understand how people engage with companies, what theyare looking to get out of those engagements, and what channels they prefer. It’s not enough anymore for marketers to have a top-downmentality, simply making sure they have a presence on multiple channels, but to understand what makes some customers still use an 800number, while others reach out to brands on Facebook.Here’s the problem: the above assumes your customers want a relationship with you. They don’t. Yes, they will engage with you, yet only ifit is on their terms. The findings in “Liminal” demonstrate that, in the future, marketers will need to find ways to sustain those engagementsover time, regardless of channel, whether they are traditional, emerging or new.You have long known it is necessary to take charge and build relationships with your customers. We hope you will find that “Liminal,”because it focuses on what customers want out of engagement, combined with the an eye toward the ever-expanding array of channels,will help you realize the opportunities that lie with this liminal world—for both you, and your customers.Sincerely,John ZellVP, Global CRM Solutions, Razorfish
  2. 2. I INTRODUCTION 04 DEFINING ENGAGEMENT: CONCLUSION: Cchapter What’s Important to Consumers The Beginning of Understanding 01 When They Reach Out to Your Brand 08 Consumers and Engagement 56chapter THE POWER OF CUSTOMER VALUE addendum PRIVACY AND PERMISSION: 02 PLUS INFLUENCE 20 01 Four Key Considera�ons All Marketers Should Think About 58chapter LINKING ENGAGEMENT addendum METHODOLOGY: AND INFLUENCE The Research Process 03 To Build Be�er Engagement Strategies 26 02 Behind Razorfish Links 64 VIRGIN AMERICA: Tchapter Crea�ng an I�nerary That Iden�fies THANK YOU 70 04 and Leverages Customer Influence 36 THE TRANSITIONALS: Rfchapter An Encapsula�on of ABOUT RAZORFISH 72 05 How Engagement Is Changing 52
  3. 3. INTRODUCTION I We chose the name “Liminal” for this report because it describes a state of being in flux—on So, if some customers are content to be in touch with you via email, while others champion your the threshold of something new. To us, the word liminal does a superb job of describing the brand through social media; if some customers use channels they find efficient, while others use continuing evolution of how consumers choose to engage with a brand. ones that they find relevant; how do you make sense not only of these divergent touchpoints, but the disparate reasons why customers gravitate to them? We are no longer in a world where To say the least, the number of places where your customers can—or may want to—engage the only car available is a black Ford Model T. Today, consumers can choose from dozens of with your brand has exploded, even in the last two to three years. What used to be a mere brands, each of which produce a wide array of models, with differing features, colors and price handful of options, such as the telephone or postal mail, first began to expand with the dawn points. An active family might choose an SUV; a single, environmentally conscious consumer of the Internet era to include corporate websites and email. However, the roster of ways might drive a Volkswagen Beetle. customers can engage with you seems to increase inexorably. Today, consumers can “Like” a brand on Facebook, post a video about a product on YouTube, or broadcast a complaint And so it is with touchpoints. How do you pick the right combinations to satisfy your about your company to their followers on Twitter. While some customers continue to use older customers’ immediate needs and make them loyal? Better yet, how do you turn these people channels, others are using channels such as these to publicize the relationship between customer into ambassadors who will openly tout your product or service to friends, family, or maybe, and brand beyond the private interactions that used to typify the brand/customer relationship. the entire Internet universe? Liminal: The 2011 Razorfish Customer Engagement Report 7
  4. 4. HERDING THE ENGAGEMENT CATS These surprising findings taught us to assume nothing when it comes to why and how customers interact with brands. As this part of marketing is bound to remain continually liminal, realizing that customer engagement is in a state of constant change is a humbling thingAt Razorfish, we needed answers to these questions, because they are not only on our minds, but on the minds of our clients as well. to learn—and remember.While we all know that engagement channels will continue to proliferate, and the number of channels may be in a continually liminal state,it was clearly time to build a foundation for understanding what channels consumers use and why, setting the stage for buildingengagement strategies now and in the future. We needed to identify a process that could be used and re-used to help companies renewtheir engagement strategies as touchpoints expand. AND FINALLY, A PROCESS FOR NAVIGATING,Thus, from the outset, we wanted to discover truths that were not about individual channels but about consumer needs. What do AND LEVERAGING, THE ENGAGEMENT SHIFTconsumers want when they engage with brands? To answer that question, we did something that has seldom, if ever, been done before: Studies are interesting, but even the best sound bites of data are not very useful unless they give us the information we need to act.we looked at engagement from the customer viewpoint, rather than that of the marketer—something that is crucial to know whether you Therefore, we set out to determine how a marketer could use the data from Razorfish Links to re-orient their engagement strategiessell airline seats, juice, or financial services, or if you are wrestling with whether your company should be on Facebook or, five years from around how their customers prioritize engagement and the channels they might use when they reach out to brands. Thus, also in “Liminal,”now, on a platform no one has yet imagined. you will find ways to:First, we commissioned a study to find out how consumers prioritize engagement, and what channels they use to satisfy their needs in • Map the channels customers use to their engagement priorities. With Virgin America, data from Razorfish Linkspartnership with our client Virgin America, and Loyalty Lab, which employs software-as-a-service technology to drive customer value and allowed us to develop four different Engagement Types within the company’s customer base, based on lifetime valueloyalty. The study, which did not ask respondents about specific brands or engagement scenarios, combined more than 5,600 surveys and 15 (LTV), potential influence, what they want out of engagement channels, and what channels they interviews of Virgin America customers with their existing data on lifetime value (LTV) and engagement. Then we added an overlay • Optimize channels. Some of which may already be in use. For instance, if a company’s high-value customers are heavyof publicly available data on social media use from 100,000 Internet users. These sources allowed us to look at self-reported attitudes and users of Facebook, yet the company has not invested much in the channel, it will learn that it should take the channelpreferences—and independently tracked behavior—enabling us to build a comprehensive understanding of how people engage with brands. more seriously, and what needs it should meet with that channel.We call this process of taking behavioral data on engagement touchpoints, overlaying it with broader social and survey data, and then • Calculate a Consumer Influence Score. This combines a traditional, bottom-line view of a customer’s LTV with his oranalyzing the outcome, Razorfish Links. It’s a proprietary engagement audit that can help any brand get a better handle on its engagement her ability, using social media tools, to influence others, a concept we call enhanced LTV (eLTV).strategy—helping it accurately value its customers, and map each segment’s unique engagement preferences to the channels they use.Ultimately, going through the Razorfish Links process allows brands to develop a truly customer-centric relationship marketing program. • Develop an engagement strategy. One that focuses on the right engagement touchpoints, delivering on what customers need—with an eye to what Engagement Types and channels will have the best return on investment.We will go into detail about the results of the Razorfish Links process further on in this report. For now, here are a few things that surprised us: Where the practice of customer relationship marketing (CRM) creates the framework, we see the goal as creating a Sustained Engagement, • Though social platforms such as Facebook, Twitter and geo-location social services, like Foursquare, are being quickly which aligns channels and customer engagement priorities in such a way that consumers want to maintain a relationship with a company, adopted, customers don’t yet view them as an important way to engage with brands. potentially across multiple channels, brands and products on an ongoing basis. • When we asked consumers to prioritize what was important to them when engaging with a brand, they ranked the following priorities in exactly this order, no matter how we looked at the data: feeling Valued, Trust, Efficiency, With a Sustained Engagement, you can increase sales, decrease churn, and, most importantly, Consistency, Relevance and Control. We called these six qualities the Engagement Elements. In other words, in a world transform consumers into brand advocates through exceptional engagement experiences. full of engagement touchpoints, the most important things to everyone are to feel Valued by the companies they do business with, to get their needs addressed quickly, and to feel the companies they engage with can be trusted. • Even as “the consumer is in control” has become a mantra in the digital age, Control came in dead last. Apparently, the consumer does not need to be in as much control as we thought, seeing other things as far more important. • Even though we associate certain touchpoints with certain strengths—we assume, for instance, that an e-commerce website is efficient—every channel has some ability to deliver on the Engagement Elements. It’s not as though, for instance, phone and email always deliver on making a customer feel Valued, while Facebook and Twitter are incapable of it. • The channels people use to meet their engagement needs varied. In fact, the engagement data of the group aged 35-44—which we call The Transitionals (see Chapter Five)—closely matched those of the 45-plus demographic, yet the channels they use to connect with companies are similar to the 25-34-year-old group. Liminal: The 2011 Razorfish Customer Engagement Report 9
  5. 5. DEFINING ENGAGEMENT: chapterWhat’s Important to Consumers When They Reach Out to Your Brand 01 Engagement—just the mention of it can spark a visceral response from marketers, partly THE MARKETER DEFINITION OF ENGAGEMENT: because no one has pinpointed what it really means. Let’s get it out there: engagement is a LOOKING AT IT BACKWARDS? messy, complicated idea—yet a critical one—because it gets to the heart of the relationship While there is no single, clean, concise definition of engagement—though everyone from Forrester Research to Fanscape and eMarketer between consumers and brands. We know that it is valuable, but the how, what and why of it is has attempted it—we would argue the myriad definitions do have one unfortunate thing in common: they define engagement from the marketers’ perspective, instead of asking consumers what they consider a positive engagement experience. Top-down definitions of ambiguous at best. engagement focus on a very specific set of numerical measures, typically within a single channel—things like time spent, site visits, page views, search keywords, and session length. Yet those do nothing to elicit how consumers feel about it, particularly in how their thinking However, particularly at a time when potential touchpoints with consumers are proliferating, it affects their channel choices. And certainly, none of the marketer-side definitions connect engagement back to lifetime value (LTV), but instead to lighter measures such as awareness and brand lift. is one of the most important things for a marketer to define. Why? Because consumers pick the Our study turned engagement on its head. The most important principles of engagement lie with the perceptions of people—consumers— channels they use based on how well each satisfies their needs when they engage with a brand. and what engagement means to them. Thus, our study started by asking people what makes an engagement good or bad—in short, what If a customer who bought a computer is seeking out relevant troubleshooting information, he or makes engagement, well, engaging. she has many ways to get it. Whether that person chooses to look for it on a company website, We know that engagement always begins with a need to connect (a thank you, a complaint, a question, a purchase). What happens then? reaches out to that company on Twitter, or goes to an independent community site about that What are people’s expectations of an engagement with a brand, and how can a brand deliver on those expectations? brand depends on which of the three is best able to serve up the most relevant information. THE CONSUMER VIEWPOINT: THE SIX ENGAGEMENT ELEMENTS THAT MATTER From a series of in-depth interviews, we learned that engagement is more than just a channel. It’s a dialogue; it’s the ability to choose how and when to engage; it’s the value each channel represents; it’s whether or not expectations were met. However, while marketers’ definitions of engagement are about how consumers interact with them in particular channels, consumers see it differently. Our interview subjects, instead of going straight into listing the channels they use to engage with a brand, focused on their relationship with a brand and how channels deliver on their interests, needs and expectations in different ways. We learned right away that the channel is subservient to the relationship need. Liminal: The 2011 Razorfish Customer Engagement Report 11
  6. 6. Engagement isn’t just about a channel. It is about the consumer’s relationship with a brand, VALUED CONSISTENCY his or her ability to choose how and when to engage, and the value each channel represents. What a customer feels when he knows he can expect a company to Achieved when customers feel a company is uniform in things such go out of its way to support his needs, and knows that the company as policy, attitude, communication, and messaging. IntervieweesThis enabled us to determine the six most important needs consumers have when they reach out to a brand: feeling Valued, values his business. One interviewee explained: “[It’s] something as reported they noticed when a company’s words and actions clashed.Trust, Efficiency, Consistency, Relevance and Control. simple as calling a person, having them listen and talking to them. Participants also defined Consistency in terms of reliability, durability,We call them the Engagement Elements, and they, not individual channels, should be the starting point for any interaction a brand has Just feeling as though they are out there, working on your behalf, experience and craftsmanship.with a consumer. Again, it is a bottom-up, customer-centric way of looking at consumers’ engagement needs and how to optimize them. that your situation has not been discarded, you are not just another passenger. It’s the personal touch that makes the difference.” EFFICIENCY RELEVANCE When a company respects a customer’s time and energy, Achieved when a customer feels messaging from a company isTHE SIX ENGAGEMENT ELEMENTS and promptly addresses his or her needs. When airlines offer interesting and applicable to their needs. When a retailer offers consumers kiosks, which allow them to get their boarding pass with personalized coupons to its customers with discounts on items they limited interaction with the airline, that is an example of Efficiency frequently buy, that is Relevance (and probably, makes them feel —many of us like to avoid the long lines and laborious process of Valued). One participant mentioned, “A lot of companies are want- 1 2 3 checking in with a company representative. One interviewee praised online transactions through a computer or mobile phone, finding ing to reach you through the Internet. Everybody has a Facebook page. Blah, blah, blah. I’m not going to a company’s page unless you Va Ef Tr them easier, faster and more financially trustworthy. However, not give me a reason to go there. And I don’t want to hear about new everyone feels the same way; another subject complained that being products there. I want to go there if I want to become part of the [brand’s] contacted extensively had the opposite effect, saying, “Initial contact is culture or there is some important information there.” OK but after that I don’t like to be hassled too much.” TRUST CONTROL VALUED EFFICIENCY TRUST When customers feel confident that a company is credible, and will Manifested when the customer can determine if, when and how a handle engagements honestly, sincerely and transparently. One company will communicate with him or her. Interviewees noted they interviewee mentioned, “I need to believe that they’ll stand by what want to give companies permission to be in touch with them up front; they are giving me. If something goes wrong, they will correct [it]. I’ll take conversely, they want to opt out when they are done engaging. Control chances with [trusting a company] so long as I’m sure they are there for can be implicit or explicit, yet the consumer wants to be at the center of it. me to correct any problems.” He or she would rather foster a relationship than receive a one-way push from the marketer. As was said earlier, however, it is noteworthy that in Believing in and taking chances with a “the consumer is in control” era, Control was the least important of the six 4 5 6 company is contingent upon trust. DMNews hit Engagement Elements we identified. One reason for this, we believe, Cn Rv Ct is that if a company delivers on Trust, then Control becomes less the nail on the head when it stated, “Marketers important. must show their customers respect while earning their trust. This means understanding what truly interests them and not simply inundating them with material that you know is just advertising CONSISTENCY RELEVANCE CONTROL in disguise.” 1 1 Martin Reidy, “Loyalty Online Creates Instant Connections,” Direct Marketing News, June 21, 2010. Liminal: The 2011 Razorfish Customer Engagement Report 13
  7. 7. THE SIX ENGAGEMENT ELEMENTS:DRILLING FURTHER DOWN MEAN CHANNEL IMPORTANCEYes, feeling Valued, Efficiency, Trust, Consistency, Relevance and Control are the six consumer-centric needs that form the backbone of 6 WHEN ENGAGING WITH BRANDSengagement. Yet the data from our 5,600-participant survey showed that there is more to know. Below are two further points about theEngagement Elements that stood out to us: 25-34 1. Feeling Valued, Efficiency and Trust, in that order, were overwhelmingly the three most important Engagement 35-44 Elements. Consistency, Relevance, and Control were important, but much less so. 45+ 2. No matter how we sliced the data—whether by gender, age, or favored channels—the rank order of the Engagement Elements remained the same, even if different age groups gave them different statistical weighting. 5 Therefore, the consistent ranking of the importance of Engagement Elements is a barometer that allows us to understand why different channels are more successful than others.Still, it is a complex thing to understand. It turns out each channel delivers, to a different degree, on these elements, at different times, fordifferent reasons. Just as a fast food chain might serve up information on its website that it was offering a special meal deal the next day, itcould also offer that information via Twitter to loyal customers who follow the brand. For some customers, the former touchpoint works,for others, the latter. The fact that every channel has some ability to deliver on the Engagement Elements makes the relationship between 4them turbulent.So, how do the Engagement Elements relate to channels? To answer this, we first explored the importance of each heavily-usedVirgin America channel. We walked away with two provocative findings.1. Channel importance and frequency of use are not related to the overall adoption of innovative new channels.With all the attention paid to such things as social media and mobile applications, consumers do not use these new channels often when 3they need to engage with brands. Our survey showed the most important consumer engagement channels are transactional email,company websites, traditional word-of-mouth and face-to-face conversation with a company representative. Obviously, consumers mostuse the channels they find most important. Those most important channels are Google (to find a company website), company websites,word-of-mouth and email. Further, channel importance and frequency of use matched up almost one-to-one, with the exception of theuse of Google to find a company.Social networking services were the least important, be it LinkedIn, Twitter, Facebook or the even newer location-based social networking 2services. Moreover, the least frequent actions taken on individual channels were participating in a company community site, looking up acompany on YouTube, posting a review, reading or participating in a company community site and sending an email to a company. Twitter REVIEW WEBSITE FACEBOOK LINKEDIN TWITTER INDIVIDUAL EMAIL COMPANY WEBSITE WORD OF MOUTH INTERACTION FACE-TO-FACE PHONE EMAIL NEWSLETTER MOBILE APPLICATIONS INSTANT MESSAGE CUSTOMER SERVICE PRINT AD WEBSITE COMPANY COMMUNITY POSTAL MAIL SOCIAL NETWORKING LOCATION-BASEDand Facebook didn’t even make it into the top nine in terms of importance or frequency of use. Gasp. Liminal: The 2011 Razorfish Customer Engagement Report 15
  8. 8. So, while a lot of people are using social media channels, their use is not lining up with which channels they perceive to be important or use ENGAGEMENT ELEMENT frequently when they want to engage with brands. What’s going on here? EXPECTATIONS BY CHANNEL meets expectations expectations not met 2. Under used channels aren’t necessarily bad at delivering on Engagement Elements; it’s often that companies are not using them correctly, if at all. We believe consumers do not use some of the hot, new channels to interact with brands because brands are neither fully nor consistently using them to deliver on the Engagement Elements, particularly in social media. Obviously, if a brand has many customers who are active onVALU E D Facebook, yet its own Facebook page is moribund, it’s not going to deliver well on the Engagement Elements in that channel. In fact, there is wild variation in how each channel fulfills consumers’ expectations. The chart at the left gives a detailed look at how different channels perform against the six Engagement Elements, with dark green being theEF F I C I E N C Y best and dark red being the worst. Here are a few snapshots: • Postal mail, print ads, mobile applications and real-time chat with customer service representatives are theTR U ST lowest performers. • Company websites, individual email, face-to-face interaction and traditional word-of-mouth are the highest performers. • Twitter, email newsletters, company community sites, Facebook, and review sites are liminal. They are neither whollyCONSISTENCY good, nor wholly bad, at delivering on the Engagement Elements and are evolving every day in terms of delivering new features, and also in how companies and consumers use them. Face-to-face interaction excels at delivering Trust and making consumers feel Valued; company websites are best at Efficiency andR E LE VAN C E Consistency; transactional emails are best at delivering Relevance and giving Control to the consumer. In fact, face-to-face interaction, transactional email, and company sites perform well on most all Engagement Elements. Postal mail and print ads score poorly in all six Engagement Elements, even though, as we said earlier, all channels have the potential to deliver them, depending on a variety of factors.CONTRO L What about some of the newer channel options—the ones in that middle space? These middle performers are wildcards. They may knock one or two of the Engagement Elements out of the park, but they strike out on the others. Twitter, for instance, scores quite well in Control and Relevance, but is a laggard in making consumers feel Valued. Why do some channels score so well—or so poorly—across most of the Engagement Elements, while others offer a hodgepodge of scores? M O B IL E A P P L ICAT IO N S COMMUNITY WEBSIT E S OC IA L N E T WO R KIN G We think it has to do with the ubiquity and longevity of individual channels and the familiarity consumers and marketers have with them. EMAIL NEWSLET T ER CUSTOM ER SE RV IC E COMPA N Y W EB SIT E IN D I VI D UAL EMA IL INSTANT MESSAGE WO R D OF MOU T H LO CAT IO N- BA SED R E V IE W W EB SIT E To look at the full history of marketing channels, turn the page. It shows not only how long modern marketing has been around, but also how heavily-weighted channel innovation is FAC E- TO -FAC E INTERACTION POSTAL MA IL toward the last few decades. FAC EBO O K COMPA NY P RI NT A D L IN KEDIN T W IT T ER P HO NE Liminal: The 2011 Razorfish Customer Engagement Report 17
  9. 9. Liminal: The 2011 Razorfish Customer Engagement Report 19
  10. 10. TWEAKING THE WEBSITE, WHILE PAYING MOBILE NO MIND CONSTRUCTING THE ENGAGEMENT ECOSYSTEM:What we found is that the ubiquity, longevity and familiarity of a channel all play a huge role in whether consumers believe it delivers on LEAVING THE LIMBO FOR SOLID GROUNDthe Engagement Elements. The high and low ends of the engagement spectrum are filled with the most tried-and-true channels. Company The journey of reframing the concept of engagement has been powerful, as we have discovered that top-down marketing notions ofwebsites, transactional email and face-to-face interaction are high performers because they have been around for a long time, are proven, engagement don’t tell us what matters to consumers. Further, the six Engagement Elements play out in different ways across differentand have been refined over time. Also, people with limited technology skills have been able to keep up with changes in email and websites, channels due to factors such as how ubiquitous a channel is and how familiar consumers are with it—and whether or not a channel canallowing those channels to stay within their reach. consistently deliver on consumers’ engagement needs.Print ads and postal mail also stand out, but in a negative way. While these channels have survived over time, they have not kept up with Of course, unleashing the Engagement Elements genie—and the proliferating channels consumers can use to engage with a brand—the changing nature of engagement. The high and low ends also have another similarity: people’s ratings of them across the Engagement underscores that there are almost infinite engagement scenarios. The challenge for marketers is to take these ingredients and build theirElements barely varied. No matter what they thought of an individual channel, they generally agreed on whether it was good or bad. own proprietary recipe—a unique blend that allows them to figure out what channels, based on their individual strengths and consumers’ use of them, best deliver on the Engagement Elements.But when you stop to think of it, marketers have similar, fixed attitudes with tried-and-true channels because of the same ubiquity,longevity and familiarity. Websites are constantly being tweaked and optimized, whereas email is often categorized as a cheap direct That said, what’s the goal? What are you, as a marketer, looking to do by mixing these ingredients? We will go into more detail aboutresponse vehicle—and is treated as such. Yet, customers may still derive a lot of value from email—value that is not optimized by some Sustained Engagement in Chapter Three, but it’s about more than just driving revenue—we believe it’s to drive LTV. But, not just that, either.marketers because they pigeonhole that channel. At a time when some newer channels—such as social media platforms—make brand engagements public, it’s to build enhanced LTV—or what we call eLTV. eLTV is built not just on the strict monetary value of one customer to a brand, but also on each customer’s unique powerWhen you consider the consistency with which people rate older channels, it is not surprising to find their feelings about newer channels to influence others to be interested in it.are all over the place. We believe it is because both the channels themselves, and the way marketers use them, are in a liminal state. All men and women may be created equal, but all customers are not. The trick is to identify those customers who can deliver eLTV—lifetimeIn fact, many marketers suffer from a form of bias when it comes to delivering on newer channels; they tend to inconsistently deliver on value that takes into account each customer’s ability to influence.them despite the heavy usage of new platforms by many consumers. Much of the time, it is because marketers are misinterpreting the factthat their consumers do not reach out to them on new platforms. It may have nothing to do with these channels in and of themselves, butmarketers’ inability to use them well.Nowhere is this more apparent than mobile applications; astonishingly, they ranked in the bottom four of the 16 channels we studied.Yet, the more we thought about it, the more it made sense. For one, mobile does not have the ubiquity, longevity and familiarity that olderchannels do—the iPhone app store has only been around since 2008. Not surprisingly, the channel’s newness has led many marketers totreat it as the redheaded stepchild of engagement, and consequently it scored poorly in delivering on the Engagement Elements,particularly in making consumers feel Valued, and in Efficiency and Trust. Yet, it’s easy to see that mobile—including tablets—has greatpotential as devices, apps and mobile experiences become more ubiquitous and marketers get better at using them to deliver strong brandinteractions. However, for most companies, right now mobile is where company websites were in the mid-90s: a place to shovel staticbrochure-ware that does not deliver a satisfying experience.Facebook is another channel inconsistently meeting consumer needs—or, more likely, the marketers who use it are inconsistent. It deliverson Control and Relevance, yet it struggles with making consumers feel Valued, reflecting the oft-voiced problem that marketers know theyneed to be on Facebook, yet are unsure of how to leverage it. Still, some brands are constantly improving the channel. Best Buy has madeits Facebook page a model of Efficiency by adding a shopping tab; the luxury shopping club Gilt Groupe gives its Facebook fans advancenotice on sales, making them feel Valued; and Starbucks provides its Facebook fans Control by allowing them to manage their rewardpoints within the platform. In all three examples, the consumer experience has improved because the marketers’ Facebook pages do abetter job of delivering on one or more of the Engagement Elements.A successful engagement audit should get around this problem by signaling what consumers want and what channels they are apt to use toget what they want from your brand. Liminal: The 2011 Razorfish Customer Engagement Report 21
  11. 11. THE POWER OF CUSTOMER VALUE chapterPLUS INFLUENCE 02 It’s time to rethink the definition of lifetime value (LTV) to include an additional component: We should point out that the power to influence—via traditional word-of-mouth—has been influence. Just as it has become ever more difficult for the disparate parts of a marketing with us for as long as there’s been retail. The reason it is time for this concept to become an organization to exist in silos, it is impossible to look at a consumer’s LTV without taking into integral part of any LTV calculation is twofold: account each consumer’s power to influence other current and potential customers. • For the first time ever, it is possible to measure influence more accurately. Digital platforms For Kai, a maker of perfume, scented candles and body lotions, it may be wonderful if an allow us to identify who the influencers are and how much influence they wield. individual customer spends thousands of dollars on its products over her lifetime. But the Kai customer with the highest eLTV is probably Oprah Winfrey, who named its Body Butter and • Digital channels also allow influencers to broadcast their brand advocacy. Influential people Body Buffer among her “Favorite Things” in 2007. True, this is an outsized example, but the used to recommend products to friends and family on a one-to-one or one-to-a-handful basis. effect is clear: Oprah may spend no more on Kai products over her lifetime than the anonymous Now, an influential person can broadcast what they think about a brand to dozens, hundreds, Kai customer we just mentioned, but she is more valuable to the brand than any other thousands, and even millions of users, using anything from a simple email list to Twitter. customers because of her enormous influence. In their own ways, people with huge influence through social channels are their own Oprahs, because they have the power to recommend brands to a large cadre of followers who trust what they have to say. Liminal: The 2011 Razorfish Customer Engagement Report 23
  12. 12. THE IMPORTANCE OF INFLUENCE During a time of ongoing technological change, it should be acknowledged that no attempt to measure consumer influence will be perfect. Indeed, the equation focuses heavily on Twitter because, at this point, Twitter is the most public and trackable of major social platforms.It is difficult to understate the importance of influence. For all of the billions spent each year on marketing in the U.S. alone, it’s still That could change. We also acknowledge that, at times, this equation may over-reward, for instance, the particularly chatty teenager.person-to-person recommendations that carry the most weight when someone is deciding whether to purchase a brand. There are dozens Although, in the case of Twitter, its core user base is older, according to numerous studies.of statistics we could use to illustrate this. Here are just two: Yet, however liminal social channels are, it is time to start quantifying the role they play in influence, and this equation will help. 1. When asked what sources “influence your decision to use or not use a particular company, brand or product,” Additionally, each individual’s scores will evolve over time. There will be continual evolution of measurement techniques, tracking of social 71 percent say reviews from family members or friends exert a “great deal” or “fair amount” of influence. 2 behavior, and company engagement strategies. In addition, over time, companies will learn more about the behavior of influencers and 2. Ninety percent of consumers online trust recommendations from people they know; 70 percent trust opinions of how much that influence translates into incremental sales. unknown users.3 We believe by combining traditional LTV scores—which measure things such as an individual’s average purchase, acquisition cost andThere are actually two components to influence. One is direct influence—when a customer directly influences friends, family, or even retention cost—with their direct influence, indirect influence and long-term effect, marketers can determine which customers have high eLTV.people he or she does not know, becoming a brand ambassador. The other is indirect influence—the incremental reach of friends andfamily—in other words, how influential those influencers are. Both kinds of influence need to be included in the value equation. 1 50%THE CONSUMER INFLUENCE SCORE: AVERAGE PURCHASES PER AVERAGE PROFIT 10% DISCOUNTINTRODUCING A NEW EQUATION TO MEASURE CUSTOMER VALUE $100 YEAR PER $25We know influence is important, but how do we quantify it? As we said above, one of the most powerful things about some of the newer AVERAGE CUSTOMER CUSTOMER MARGIN 80% RATE CUSTOMERchannels is that they make influence measurable. Thus, Razorfish developed a way to calculate the propensity to influence. It’s a calculation PURCHASE ACQUISITION RETENTIONwe call the Consumer Influence Score, a measurement of human and brand connections based on the number of times a customer con- AMOUNT COST RATEnects via social media and how many people he or she is connected to across social platforms. The formula is presented below: NEW CUSTOMER # # of social # consumer TRADITIONAL INPUTS valuation FUTURE INPUTS of Twi�er followers # of Twi�er networks the individual belongs to of unduplicated friends across influence updates all social networks score LONG TERM DIRECT EFFECT Consumer Influence Score : A measurement of human and brand connections based on INFLUENCE the number of times a customer connects via social media and how many people he or she INDIRECT is connected to across social platforms. INFLUENCE2 Whitney Heckathorne, Marketing Manager, Harris Interactive, The Harris Poll #74, June 3, 2010.3 Jake Hird, Senior Research Analyst, Econsultancy, “Online Consumers Trust Real People, Not Companies,” July 8, 2009. Liminal: The 2011 Razorfish Customer Engagement Report 25
  13. 13. A STRONG ENGAGEMENT DRIVES INFLUENCER VALUEWhat role does engagement play in consumer influence? Engagement drives the value of influencers. Better engagement with customers—and providing them with easy ways to spread the word—unlocks their power.As a marketer, you can build a campaign, you can advertise to the masses and you can create highly targeted messages. Yet, without giving INFLUENCE CAN BE GOOD AND BADconsumers an experience truly worth sharing, and the means with which to share it, the influencers will not connect with your brand, and Years ago, brands simply pushed out messages using the limited media available. Today, it’s not just that media channels havethey will not recommend it. The analytics showing who has a strong social graph and the willingness to leverage existing social communities proliferated and that new technologies have enabled customers to interact with brands on the go, on their terms. Many of thoseor create new ones will not matter if you ignore the basics. These influencers are people, after all, and we cannot make them ambassadors same technologies let consumers share their opinions about your brand—and sometimes brand messages they create—not justof your brand if it is not worth it to them. with their friends but also with millions of users online.This brings us back to the Engagement Elements. Let’s face it: not every customer wants a relationship with you, but he or she will engage if For the purposes of this discussion, we have mostly focused on the ability of these technologies to spread positive influence; wethere is a compelling reason. Therefore, if you are doing well on meeting the Engagement Elements you are going to provide more value— make the assumption that customers truly like your brand. But let’s face it—when a customer feels a certain service is not up toand that is something a customer will tell others about. While your mind might jump to viral marketing efforts like OfficeMax’s “Elf Yourself” scratch or doesn’t make them feel appreciated, they can use these technologies to negatively influence perception. One of theand the YouTube-based “Old Spice Man” campaign, that’s not at the heart of what we’re talking about. Those are lightning strikes—lottery best examples of the last few years is “United [Airlines] Breaks Guitars,” a music video featuring an original song by the aggrievedwinners—that are also short term. guitar owner, which became a viral sensation. The first video posted currently has more than nine million views; all told, the number is much higher than that. The “United Breaks Guitars” saga also resulted in dozens of news stories.We are talking about the long term, built through satisfying and sustainable everyday engagement that meets consumers’ needs and fulfillstheir expectations. For example, imagine being a woman who has opted in through her mobile device to get promotional offers when she In that case—at least according to the song—United failed on the Engagement Elements on at least two touchpoints, face-to-facewalks into her favorite retailer. If your data indicates that this person has both high LTV and high eLTV, you might have a manager greet her interaction and the phone, as the company turned a deaf ear to the guitar owner’s assertion that he saw his guitar beingand invite her to the back room to get a sneak peak at a new line of clothing. That’s a great experience for her, and the kind of unusual expe- mishandled on the tarmac. Whatever the particulars, the case makes clear there is an urgent need for businesses to treat theirrience she is likely to share with her friends. customers well.It is experiences like that which will build true incremental value that goes straight to the bottom line. So, as you ponder which engagement touchpoints you should be using to fulfill the Engagement Elements, and as you calculate which of your customers has a high Consumer Influence Score, keep in mind that customers can put touchpoints to work for you or against you, based, in large part, on how well you deliver on the Engagement Elements.THE IMPORTANCE OF INFLUENCEIN BUILDING AN ENGAGEMENT STRATEGYIn Chapter One, we discussed the importance of looking at engagement across touchpoints from a consumer-centric perspective, and what, tipwhen it comes to interacting with brands, consumers clearly want, ranging from feeling Valued to Control. In this chapter, we examinedthe power of influence, a concept which has become so important in the digital age that we believe marketers should look at a new metric,eLTV, which is traditional LTV plus the powerful enhancement of influence. The next step is to combine touchpoints and influence into acoherent, ongoing engagement strategy, the topic of Chapter Three. Liminal: The 2011 Razorfish Customer Engagement Report 27
  14. 14. LINKING ENGAGEMENT AND INFLUENCE chapterTo Build Better Engagement Strategies 03 Plain and simple, every business needs to rethink how it engages with consumers. In a world SUSTAINED ENGAGEMENT: full of demanding customers, who use multiple channels to engage with businesses—and who BUILDING CUSTOMER RELATIONSHIPS THAT LAST can use some of those same channels to influence other potential customers—it’s clearly time to As you’ll see further on in this chapter, there’s a lot of nitty-gritty involved in building an engagement strategy, from determining which touchpoints to focus on, to discovering what your customers value when they connect with your company. But before we get to that, let’s build new, cross-departmental engagement strategies that can be implemented across multiple take a moment to look at the larger vision: it’s to build Sustained Engagement with your customers. Here’s how we define it: touchpoints. A Sustained Engagement is achieved when a level of feeling Valued, Efficiency and Trust is As we’ve talked with CMOs and other heads of marketing, we’ve discovered that they want established between a consumer and a business. Those three Engagement Elements, coupled to be less product-centric and more customer-centric. They want to create multi-channel with Consistency, Relevance and Control, will result in the consumer’s willingness to maintain customer-relationship-building environments. And, they know consumers expect those a relationship with the business across multiple channels, brands and products. environments to deliver on what they promise. We also know today’s CMO is more focused than No, this isn’t simply CRM. A vision as ambitious as this is referred to by the Harvard Business Review as a BHAG: A Big Hairy Audacious Goal. ever on driving top-line sales and bottom-line results. Now that social media is maturing into a And it is. Yet with the emergence of a variety of new touchpoints, from mobile to Twitter, which allow consumers to express opinions, critical engagement channel, executives also want to understand its value and return on indicate preferences and derive satisfaction from a brand’s products, there’s an opportunity to deepen the dialogue and lengthen the period investment. In fact, it is becoming increasingly important to prioritize a multitude of of time in which brands and consumers can interact. engagement touchpoints and get a grip on where to allocate resources. We should note that Sustained Engagement does not mean bombarding customers with endless messages. We know customers move from periods of high engagement to little or none and then, we hope, back to being engaged. Consumers are not always in the market for a car, or a computer, or a new bank. We still believe in right message, right time and right place. The challenge to achieving a Sustained We believe the approach we define in this book gives marketing executives the steps they need Engagement is to marry the consumer and business views of engagement to the benefit of both: to start identifying, prioritizing, testing and optimizing CRM engagement touchpoints in this • The bottom-up consumer view emphasizes knowing how a consumer wants to engage, what he expects during this new world. engagement and where he is in the customer journey. • The top-down company view creates a seamless, multichannel engagement strategy that has sustainable impact on top-line results—without adversely affecting the bottom line. Liminal: The 2011 Razorfish Customer Engagement Report 29