Why it’s important and how to improve it, Part I

By Ashlee Nunez, Podium

The following, the first in a three-part series, is reposted with permission from BrandSource partner Podium.

In any business, the goal is to build a profitable enterprise in a competitive marketplace. Businesses must stand out from competitors and be the source of products and services that people choose to consume and use.

However, no business can achieve its goals unless it has new customers that it can then convert into returning customers. Businesses and customers must then maintain a level of engagement to drive loyalty. When businesses engage well with customers, those customers are much more likely to stay and even refer others to the business.

What is Customer Engagement?

Simply stated, customer engagement is the shared emotional connection between a customer and a brand. It comprises the relationship these two parties have, whether the relationship is a positive or negative one.

Another facet of engaging customers is the frequency of the customer’s participation. Customer engagement can happen a single time or can occur sporadically or regularly. The period in which engagement takes place is critical too, as is whether customers are reaching out to the business on their own (and vice versa), or whether they feel compelled to do so in some other way.

Customer engagement is a little different from customer experience. The latter encompasses all the elements that make up a person’s experience with a business, including seeing digital or print ads for your business.

Also related to customer engagement is customer satisfaction. Customer satisfaction is how happy a person is with your business and what you offer. This could include not only the items the customer buys but also how you interact with customers or respond to their needs.

Ironically, a satisfied customer is not necessarily one that engages with your company. For instance, a person can be satisfied with their experience without following your company on Facebook, leaving customer reviews or taking advantage of special offers or promotions. However, good engagement can lead to high customer satisfaction. Similarly, a highly satisfied customer may eventually feel inclined to engage with you more.

Benefits of Customer Engagement

Customer engagement is critical for both the customer journey and your success. There are many advantages to improving engagement — not only one-time interactions but repeated ones as well. The following are some common benefits you can get from these relationships:

Enhanced customer satisfaction and loyalty. It’s one thing to have an occasional customer who comes around every so often or maybe even flip-flops between you and a competitor, but it’s much better to have a loyal customer. A loyal customer loves your products, continually chooses you over other options out there, and will stick with you through thick and thin.

Customer loyalty does even more than this, however. Some customers staunchly promote your business and brand, telling family, friends and co-workers about you. This is an excellent way to expand your customer base and make more money.

Higher customer retention and reduced churn. You’re happy any time a person purchases a product from you or uses your services. But one-time customers don’t help your business grow much. Engagement with customers can lead to better customer retention. Keeping customers means they will return again and again, making them loyal and satisfied.

Good customer engagement can also help minimize customer churn or turnover. This occurs when a customer stops supporting your business and starts using another company for products and services.

Increased customer lifetime value (CLV). Long-time customers mean bigger profits for your company. When a person has a positive engagement with you, is satisfied and is loyal, that customer is more likely to stay with you longer, sometimes throughout their lifetime. This benefits your business and your bottom line. The longer a customer buys from you, the more money you make. Chances are good, too, that lifetime customers increase how much they spend as time goes on.

Word-of-mouth marketing and brand advocacy. When customer engagement is high and effective, some of the most loyal and valuable customers will advocate for you. Some do this through word-of-mouth, while others might even do so through social media channels such as Facebook or Instagram. When someone asks them for a referral for a product or service that you offer, this loyal, engaged customer might think of your business first and highly recommend you.

Addressing customer needs. Another good byproduct of effective customer engagement is that you and your business will have a better understanding of what customers are looking for. Be mindful that customers’ needs and preferences can change over time, sometimes frequently. As you seek and gather feedback and then implement it, you can increase customer satisfaction. Good engagement helps you gain valuable insight into people’s attitudes, behaviors and interests.

Next up: How to develop an effective engagement strategy.

Ashlee Nunez is a blog contributor at Podium, a premiere marketing and communications platform and BrandSource partner that connects local businesses with their customers. Get a personalized demo here.

Upcoming Events