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Making Customer Engagement Profitable

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There’s some difficulty reaching a consensus on what customer engagement is and how to do it, which is why we began a research programme …

There’s some difficulty reaching a consensus on what customer engagement is and how to do it, which is why we began a research programme
in 2009 to produce clearer guidelines for our current and prospective clients.

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  • 1. • Introduction• Research programme and methodology• Levels of customer engagement for the UK’s top brands in 2009 and 2010• The customer engagement survey (marketers) 2009• The 2010 follow up survey (customers) 2010• Listen and act in action
  • 2. IntroductionTargetbase Claydon Heeley is an integrated marketing agency specialising in Customer Engagement. Targetbase is oneof the US’s leading data driven businesses. Claydon Heeley is a UK agency with a 20-year track record of award winningcreative work. Together our mission is to produce ‘smarter creative’.Customer Engagement is one of our main areas of expertise, and we’ve seen it become a hotly debated subject in recent times.A quick look online shows just how widely talked about it is, with practitioners across the industry offering several definitions: “Repeated interactions that strengthen the emotional, psychological or physical investment a customer has in a brand.“ Richard Sedley, cScape “The level of involvement, interaction, intimacy, and influence that an individual has with a brand over time.” Brian Haven, Forrester “(Customer engagement is) proactive involvement.” Peppers & Rogers Group “Customer Engagement enables organizations to more effectively respond to the fundamental changes in customer behaviour brought about by the Internet.” Wikipedia “Well-established behaviours that demonstrate interactive multi-channel behavioural attachment and that reinforce commitment to the brand.” Alterian “A deeper, more meaningful connection between the company and the customer, and one that endures over time.” The Economist Intelligence UnitSo there’s some difficulty reaching a consensus on what it is and how to do it. That’s why we began a research programmein 2009 to produce clearer guidelines for our current and prospective clients.
  • 3. Research programme and methodologyCustomer Engagement Survey (Consumers), June 2009An online quantitative study in conjunction with CCB fastMAP. We surveyed a nationally representative sample of 1,200 UKconsumers who identified themselves as customers of some of the UK’s top brands.We set out to understand the relationship between a customer’s value and their corresponding engagement with thebrand. The survey took around 15 minutes to complete.Customer Engagement Survey (Marketers), December 2009In conjunction with Marketing Software Solutions we ran in depth telephone depth interviews with 10 senior marketers,which we followed up with an online quantitative survey, completed by marketing professionals from 11 industry sectors and68 companies.Customer Engagement Survey (Consumers) & Follow-Up Survey (Consumers) June 2010An online quantitative study in conjunction with CCB fastMAP amongst a nationally representative sample of 1,300 UKconsumers. We set out to understand how customers see the issue of customer engagement; how they’d define it and whatthey value most/least in their relationships with brands of which they are customers. It took around 15 minutes to complete.
  • 4. Levels of Customer Engagementfor the UK’s top brands in 2009 and 2010In 2009 we surveyed customers of some of the UK’s top brands, namely: Boots, M&S, Google, Easyjet, Barclays, Lloyds TSB,British Gas, MBNA, BT and The Post Office.We wanted to find out how engaged they were as customers of these brands. In particular, we asked them how each brandmeasured up against eight key rational and emotional measures of engagement: • Straightforward to deal with • Best at what they do • Understands me • Represents good value • Makes time to reward me • Cares about more than just my money • Meets my expectations fully • Relates to me best/wellAt the same time we asked whether this was a brand they would: • Recommend to others • Purchase/use againThis gave us each brand’s Engagement Index, which you can see plotted here:2009 Customer Engagement Index 77% of customers in 2009 not engaged
  • 5. Amazingly, over 2/3 of customers on average in 2009 did not feel engaged (horizontal axis) with the brands of which theywere customers.When we ran the same survey again in 2010 we found the picture largely unchanged:2010 Customer Engagement Index In 2010 68% of customers not engagedStill over two thirds of customers (68%) do not feel engaged with the brands of which they are customers. Any smallimprovements in engagement (horizontal axis) in 2010 has not corresponded in an increase in customer value (vertical axis)
  • 6. The Customer Engagement Survey 2009. MarketersBack in 2009 we’d identified a worrying gap between marketers and customers; something didn’t seem to be working.So in the Marketer’s Survey at the end of 2009 we set out to understand how marketers were feeling about and respondingto the issue of Customer Engagement. We wanted to understand how Customer Engagement is being defined inbusinesses today and how much it features in the marketing plan.We expected to find customer marketers calling for help. But it was quite the opposite; they told us they were confident,investing in it, and been focussing on it for the past two years. Hmmm.Findings – Awareness • 82% have a customer engagement strategy in place. • 30% of respondents have had a strategy in place for more than 2 years. • Only 6% claim to ‘rarely’ or ‘never hear about’ customer engagement. • 74% say it’s something they ‘hear about all the time’.Findings – Focus • 87% of respondents are ‘investing in it right now’. • 24% are ‘investing heavily’. • 63% ‘investing somewhat’. • Just 10% are not investing or planning to invest ‘for the moment’.Findings – Confidence • 78% believe what they are doing is ‘somewhat effective’ or ‘extremely effective’.Findings – Barriers • The biggest barrier to doing more was ‘lack of available budget’, cited by 6 out of 10 respondents. Do it right Profitable customer engagement A key barrier to having a customer engagement plan is lack of budget, the TBCH Client Survey showed. Here’s how to justify having one: • Create a strategy that has measurable KPIs. • Build quick wins into the plan to create payback and momentum. • Choose technology that connects all the data sources for multichannel communication. • Make it integrated. Connect all customer touchpoints - including client-facing staff and call centres.
  • 7. The 2010 Follow Up Survey 2010. CustomersConfident that there was a serious disconnect between marketers and customers, we set out to define customerengagement in our follow-up 2010 Customer Engagement Survey.Customer Engagement is not something to be taken lightly; there are major upsides for a brand in getting it right.We went on to find that two thirds of us are willing to show support for our favourite brand through positive word ofmouth, increased spend, recommendation and so on. But the picture is pretty much reversed when it comes to ourbank, telco and supermarket relationships.In the Follow Up Survey we set out to arrive at a definition of Customer Engagement we could hang our hats on - somethingthat clients could develop into a strategy for improving the engagement they have with their customers. So who better toask than customers themselves? After all, failing to ask them where they stand on this issue might be where we’ve all beengoing wrong.We discovered that while we practitioners might struggle to agree on a definition, customers themselves were much morealigned. They told us loud and clear what customer engagement means for them.The customer definition of customer engagementOffering 1,300 UK consumers several potential definitions of Customer Engagement, we asked them how brands shouldbuild better relationships with them.They overwhelmingly said: “Listen to what customers have to say – and act on it”.To our amazement, we found this unanimously shared across the age and gender spectrum.We were also surprised to find that “Give you special customer offers and deals” and “Give you more, the longer you are acustomer” proved to be much weaker contenders.
  • 8. The most popular ways of expressing their engagement for a brandWe were also interested to know what brands can expect from engaged customers. In other words, what value do engagedcustomers offer back to a brand?So we asked them to tell us: “In the last 12 months what have you done to show your support for your favourite brand?Please tick all that apply.”Neck and neck at the top we discovered that the most popular ways of expressing or showing their engagement for a brandare ‘bought more with them’ and ‘recommended them to someone’. Both highly valuable behaviours.Where customers say brands should focus their effortsNow we had our definition for customer engagement “listen to what customers have to say – and act on it” we wanted tofind out where brands should focus their efforts? What exactly should they be listening to and acting on?We thought customers would know this best of all. So we asked them how they wanted to be made to feel by the brandsthey choose; the values they hold dear. We gave them 16 options: • Up to the minute • Empowered • Organised • Stylish • Clever • Understood • Confident • Respected • Ethical • Loved • Important • Individual • Worry-free • Exclusive • Informed • ExcitedIrrespective of their demographic profile, customers agreed on: • Respected • Worry-free • Informed • Confident • Understood • OrganisedIt might come as a surprise to some that they were colder to the idea of brands spending their efforts making them feel:clever, loved, stylish, up-to-the-minute, empowered, exclusive and excited. Arguably, these are the essentials of brandengagement, rather than customer engagement.
  • 9. Delivering these values in the real worldTesting how well these values are delivered in the ‘real world’, we asked customers how well their bank, telco and mainsupermarket fare in these six areas: how engaged they are in those relationships and what have they done in return forthe brand.The good news is that for these categories they appear to be on the right track.But while these three “everyday” categories seem to have their priorities in the right place (in other words they make abigger effort in the areas that are most important to customers), they fall dreadfully short on expectations.The sad fact is that, overall, they aren’t delivering on these values nearly enough.In some areas like ‘worry-free’, ‘confident’ and ‘informed’ this is very pronounced. With these six values they’re telling uswhere we should be spending our efforts, and where we are way off the mark in our day-to-day dealings with customers.
  • 10. The shifting importance of the magic 6We also discovered that the values themselves played a different role each time. Some of the values were better at makingcustomers feel good about the relationship, some better at propelling customers to act on that engagement. Furthermore,in each category there was one value seemingly able to drive both. Fortunately, at least one brand in each category seemedto have cracked this.For Banks, ‘informed’ is the driver for both a good relationship and customers expressing their engagement (showingsupport). Smile and First Direct do best at making customers feel ‘informed’.For Telco it is ‘worry-free’. O2 and Virgin do well at making customers feel ‘worry-free’ but O2 do it best. The main driver forSupermarkets is ‘respected’.
  • 11. Here, Marks & Spencer and Waitrose do the best job of making customers feel ‘respected’.
  • 12. The hard-to-engage customersInterestingly, the results for “showing their engagement” suggest that 35% of all customers are extremely difficult to engage.In our survey they strongly disagreed with the following statements: ‘If short of cash I’d rather buy or use less of a product than downgrade to a cheaper brand.’ ‘I will often try to make recommendations to friends and family on brands/products I think they might like.’ ‘When a satisfied customer of a brand, I would always consider buying their other products before seeing what competitors have to offer.’These customers fail to identify a way they’ve supported their favourite brand. And the picture gets worse still for theessential everyday relationships we all have with banks, supermarkets and mobile phone networks.Where brands might be wasting their efforts on customer engagementFurthermore, our survey revealed a hardcore group of customers for whom customer engagement may always beunachievable. 30% of all customers in our survey showed no engagement for their mobile phone provider, bank andsupermarket. Of those, around 2/3 also refused to show their support for even their favourite brand. This equates to 19%of all customers. And they showed a bias towards being male.
  • 13. Listen and act in actionYour customers have spoken. They want you to “listen – and act”.So across all channels apply this framework and ask of your business: LISTEN are you listening in all the places your customers are talking about your service/product SHoW yoU ARE LISTENING have you acknowledged your presence/taken the time to thank customers for their contribution ACT how quickly does it take you to act on what you find, and are you using the appropriate private or public customer channel to do so SHoW yoU HAVE ACTED are you diligent about checking back in and announcing your actions so your customers know you have acted‘Listen and act’ is two-way - and so is social mediaEven though social media is the perfect place to have an exchange with customers (by its very nature it’s “two-way”) brandsare failing to get more of their customers engaging with them in this space.Despite the fact that: • Globally, 65% of firms use Twitter • 54% use Facebook • Firms are tweeting 25-30 times a week on average • They are active on Facebook with 3.8 posts a week SOURCE: Burston-Marsteller, Feb 2010We found that just 4% of UK customers bother with them, even when it comes to their favourite brand. We think this isbecause social media has yet to be cracked for customers.There are some out there who agree: “People come to my desk and say ’when are we going to get a Facebook page?’ I say we will get one when we know what we will do with it, what will add value and what will make customers want to interact with us.” Robbie Tutt, web design and development manager at Comet.There is no doubt that social media gets brands closer to customers than before. And allows brands to be more responsivethan ever. But it’s not without its challenges.Customers have said to ‘listen – and act’, but with around 38% of bloggers posting brand or product reviews and over 3.5 billionpieces of content shared on Facebook each week, we can’t listen to everything (Source: Econsultancy’s Social Media Statistic, Jan 2010)What will make customers want to interact? How can greater customer engagement be achieved in this emerging channel?The answer lies in the 6 values customers deem all-important: • Respected • Worry-free • Informed • Confident • Understood • Organised
  • 14. The 6 social media rules for customersCustomers wantRespectedAnd if social sites are where customersHave become used to sharing their experiences and ideasThen driving customer engagement means:Inviting (and responding to) customer opinionCustomers have asked us to do a better job at respecting them. So if we must have a presence on sites such as Facebookand Twitter, we should welcome our customers’ participation and (uncensored) feedback. Not only can it be a source ofinvaluable feedback and ‘free’ research, done well it will make customers believe you are listening and taking them seriously.Customers wantWorry-freeAnd if social sites are where customersFeel tempted to carry out revenge on brands that wrong or ignore themThen driving customer engagement means:Intervening on the key issues and offering solutionsSure we’ve started to see brands like Best Buy in the US and Carphone Warehouse in the UK adopt Twitter as a primarycustomer service channel, it remains a massive step change for most businesses today. Still ignore it altogether at yourperil. Daily we hear of irate customers taking to the social sites to warn others off a brand. At the very least setting up amonitoring programme will allow you to intervene on the critical issues and demonstrate to prospect customers that thereare two sides to every customer complaint.Customers wantInformedAnd if social sites are where customersExpect to be treated as individuals, not en-masseThen driving customer engagement means:Turning the public facts into personal serviceCustomers want us to do a better job at keeping them informed. But there’s more information than ever available online.In this space customers expect to be addressed person to person. It would be weird indeed to ask a question and to geta textbook response back by way of an answer. Brands that use social sites to address customers one-to-one earn theirplace on social sites – and the fan base to prove it.
  • 15. Customers wantConfidentAnd if social sites are where customersCatch on to news fast and pass it onThen driving customer engagement means:Giving them the facts behind the rumours when it countsWe’re in an age where stories break and news explodes if the online mood takes us. Customers want to feel confident,long after the point of purchase, and social sites pose a real threat if they’re not monitored and harnessed for discussion.Involving customers in a news issue, creating an open forum for discussion and allowing them to ask questions and get aresponse back from the brand will leave a positive customer impression long after the crisis has died down.Customers wantUnderstoodAnd if social sites are where customersAre part of a conversation, not recipients of a messageThen driving customer engagement means:Being ‘people’ not brands in this spaceSocial media changes the rules of conversation, forcing brands engage customers in a way they might find alien (at first).Interacting as people, not brands, in a social space shows customers you understand the medium and respect theirintellect, which in turn builds up customer trust and intimacy.Customers wantOrganisedAnd if social sites are where customersGo as a one-stop-shop for news, information, gossipThen driving customer engagement means:Making it worth their while following youMore and more we’re using Facebook and Twitter as our one stop shop for news, information and gossip. So if you’regoing to hang out there, then customers will need a reason to hang out with you. New product information or trials, specialcustomer offers, exclusives and rewards should be broadcast through these channels. Being quick off the mark will trainyour customers to stay signed up to your feeds/fan page.
  • 16. Your customers have spokenThey told us: • True customer engagement is two-way. • Get it right and drive greater customer value. • Customers play by different rules. • They can act as a guide for behaving socially.How are you going to respond?