Skip to main content

See how CustomerXM works

Watch On Demand Demo

Customer engagement: Everything you need to know

27 min read
What do engaged customers look like, and how do they help your business? Here’s a 20-minute explainer that will have you fully versed in all things customer engagement.


What is customer engagement?

The concept of customer engagement only fully emerged in the digital era. Engagement became more prevalent and more visible as two-way communication between customer and brand developed over online channels. Engagement isn’t only digital, of course – it can also happen in person and through traditional communication channels.

But what exactly do companies and thought-leaders mean when they talk about customer engagement? Well, it varies.

Out on the web, definitions are scattered, but they serve to highlight a few different dimensions of customer engagement.

Customer.com’s definition paints CE as incremental and holistic, something made up of many small interactions, each with an influence on the whole:

Customer engagement is the extent of the relationship a customer has with a brand. It can be strengthened – or diminished – with every interaction. From making a purchase to writing a review to join a loyalty program, the depth of customer engagement increases and becomes more mutually beneficial the more closely a brand can connect with customers’ preferences.

Academic Linda Hollebeek, writing in the Journal of Strategic Marketing, defines it in terms of personal investment:

CBE is defined as ‘the level of a customer’s cognitive, emotional and behavioral investment in specific brand interactions’. Further, three key CBE themes are identified, including ‘immersion’, ‘passion’, and ‘activation’.

Amazon Web Services links engagement with loyalty, and frames it as a business-led activity:

Customer engagement strategy refers to the practices that organizations employ to keep users coming back to their applications. Maximizing customer engagement is vital in today’s digital marketplace, where an ever-increasing number of brands are competing for a finite amount of customer attention.

How do we define it, then?

Customer engagement is the emotional connection between a customer and a brand. Broadly speaking, customer engagement (CE), or customer-brand engagement (CBE) encompasses the customer’s relationship with a business.

When we look at customer engagement we’re exploring the quality of that relationship – positive or negative – how customer participation occurs, and how often it happens.

For most companies, an exploration of the topic will also involve trying to understand how customer engagement relates to the success of the business in terms of sales, loyalty, and whether the customer is a detractor or promoter of the brand. Highly engaged customers buy more, promote more, and demonstrate more loyalty. Providing a high-quality customer experience is an important component of your customer engagement strategy.

Dimensions of customer engagement could include:

  • Longevity: The length of time over which interactions are spread
  • Proactiveness: Whether a customer engages with a brand of their own accord, without prompting
  • Repetition and frequency: Whether the interactions are frequent and similar, or sporadic and varied
  • Context: The situation where interactions happen, for example, post-purchase, during consideration, only when there’s a promotion happening, etc.
  • Volume: How much interaction takes place over the whole customer lifecycle

Free eBook: 10 books every CX leader should read in 2022

Customer engagement, customer satisfaction, and customer experience (CX)

To understand what customer engagement is all about, we have to separate it from a few related concepts.

Customer experience (CX) vs customer engagement

CX describes everything that happens for a customer in relation to a brand, from seeing its billboard ads beside the highway to visiting the bathrooms of a flagship store.

Working on CX is about putting yourself in the customer’s shoes and considering how to provide the best possible experience across all touchpoints.

Customer engagement, however, brings in the customer’s own agency and choice, not just what the brand presents to them. In CE, the customer is seen as an active participant rather than a recipient of an experience. CE explores how they react and respond, how they reach out to you, their relationship to your content and marketing, how they talk about you to others, and whether they promote or detract. Put simply – it’s a dialogue.

Customer satisfaction vs customer engagement

Customer satisfaction and customer engagement might sound like two sides of the same coin, but the overlap between them shouldn’t be taken for granted.

A satisfied customer might not ever become engaged. They could be a lifelong shopper at your hardware depot but never take part in a customer loyalty program, follow the brand on social media, or make a complaint. Likewise, an engaged customer might make few purchases from a luxury department store, but spend hours chatting on a brand-owned forum or interacting with the company’s aspirational posts on Instagram.

So customer engagement isn’t the same as customer satisfaction. But customer satisfaction can be an outcome of customer engagement, and it can be a precursor for it too.

What does customer engagement look like?

It’s both general and selective

Your target audience might engage with your business at different levels. For some, it happens at the product level (for example, a new car buyer joining a Mustang owners group on Facebook). For others, it’s at the level of the brand. (Apple enthusiasts may be able to relate to this).

Engagement may be quite abstract – expressing a preference for Visa or Mastercard, for example – or highly specific, such as visiting a particular store branch in their region because it’s better managed and more welcoming than others.

It’s online and offline

Your customer engagement strategies will also vary on and offline, depending on the kind of offering a business provides. In a traditional model, where sales are discrete events and products and services are used away from the point of sale, engagement may not happen at all. In a situation where products and services may be supplied and consumed online, engagement with the brand happens as a matter of course.

It’s sometimes integrated with product use

It may in some cases be indivisible from the product or service itself. In these cases, the question is not whether or not the customer engages but how meaningful those engaged moments are.

Here are a few examples of what engagement might look like in practice.

1. Making a complaint

A dissatisfied customer reaches out to give feedback or ask for a problem to be remedied. Whether they complain in a public forum or approach you via email, can be a telling measure of a customer’s loyalty and sentiment towards your brand. Notably, if a customer cares enough to complain, the stakes are high and there’s a valuable opportunity to close the experience gap and win their loyalty by taking steps to meet their expectations.

2. Responding to marketing with a comment on Facebook

An engaged customer seeing an ad for a product they’ve recently bought may add a comment along the lines of “this is the thing I was telling you about, Sandra!” or “bought three of these, no idea how to use them”. It’s a word-of-mouth moment that reflects positively or negatively on both the customer and the brand – a form of social proof.

3. Reviewing on a third-party site

A customer waits for hours on hold to a utility company, and while the minutes pass, leaves a one-star review on a site like ReviewCenter or TrustPilot. In this scenario, the customer is a detractor of the brand, but unlike the social media example, they are not sharing their opinion with friends and family in their sphere of influence but doing it anonymously.

4. Participation in loyalty programs

A customer signs up for a loyalty card or app which they use to collect points on future purchases. They enjoy collecting points and achieving rewards, which becomes a secondary motivation in itself. They will choose your brand above others because they can collect points with you but not others.

5. Contributing ideas, suggestions, and requests to a brand’s social spaces

A loyal customer comments on your Instagram post asking if and when you’ll be restocking a product they love. They also make contributions like “would love to see this in green!” or “can we please have a gift set with this, the purple, and the blue?”

6. Using online support and customer service

A subscriber to a SaaS platform wants to know how to use the tool to solve a specific problem. Unable to find the answers in the product’s knowledge base, she contacts customer service via live chat to ask for advice and is referred to a product specialist who answers her question. This is an example of someone engaging deeply with a service they’ve paid for, and having a better experience as a result.

Some individuals become engaged with a brand to the extent that it’s part of their lifestyle or belief system. Large and long-standing consumer brands like Disney and Coca-Cola have ‘super fans’ whose lives revolve around their attachment to the brand and their collections of products or memorabilia.

Then there are the disengaged customers. They might be positive, like the satisfied hardware store customer we described above. Or they may be negative towards your brand, for example, customers of a competitor who have developed an idea of your products and services only through the lens of someone else’s products and marketing.

Positive Negative
Engaged Fan participating in a loyalty program and collecting extra points for recruiting their friends Angry customer leaving a poor review of your service
Disengaged Loyal customer who buys regularly but has no deeper involvement with your business Competitor’s customer comparing you with their favorite brand on a forum

 

What does better customer engagement mean for your business?

We know that customer engagement is broadly associated with positive business outcomes. A frequently-cited 2010 study by brand research consultants Hall & Partners found that up to two-thirds of a brand’s profits stemmed from effective consumer engagement. Gallup research shows that a fully-engaged customer represents 23% more revenue than average.

But don’t take their word for it.

Top-line findings from other businesses can point you in the right direction, but to really understand what customer engagement strategies can mean for your business, it’s necessary to investigate what types of engagement predict what kind of outcomes.

Before you invest in increasing customer engagement, you need to understand how it relates to your business growth. That way you can target your efforts where they are most profitable and maximize outcomes that are sustainable and positive over the long term.

Your goals might be

  • Word-of-mouth marketing
  • Brand strengthening
  • Loyalty
  • Increased sales
  • Better knowledge of your customer

You also need to know what profitable engagement looks like in your specific business, taking into account the amount of variation that’s possible and the benefits you could achieve. For example, does social media sharing go hand in hand with increased loyalty? Do customers who contact you with an issue end up more likely to repurchase after your resolution or less?

Data is the fuel of customer engagement,” according to SAP’s Volker Hildebrand. Engagement, unlike traditional CRM, is something that happens in the moment, much like a person-to-person conversation. For this to happen, the relevant data must be instantly accessible at the moment of connection, giving the customer an effortless experience.

Why do you need a customer engagement strategy?

If you don’t have a customer engagement strategy, you could be missing opportunities to interact with customers and build a relationship with them.

There is no single customer engagement method that works for every company across all industries; however, a sincere focus on empathy, clarity, and simplicity in your dealings with customers and prospects should be the basis for all of your customer engagement activities.

There are many positive customer engagement examples that can be used to model a customer engagement strategy; major brands use everything from funny, responsive social media agents to personalized discounts and offerings to inspire loyalty and affection in their customers.

No matter the approach you take, customer engagement strategies provide you with a solid framework for customer retention that your team – and the wider business – can get behind.

Three steps to smarter customer engagement and increasing customer retention

Step 1. Research

Collect that data. Know what engagement looks like in your unique business. As well as collecting operational data like loyalty program numbers, social shares, likes and comments, and support cases, find out about the context of engagement from your customer’s perspective. Explore what motivates customers to engage with you by collecting experience data from them via surveys, intercepts, and other feedback channels.

Step 2. Analyze

Having explored the kinds of engagement that are happening in your business, the next step is to relate them to business outcomes such as sales, NPS, CSAT, and customer effort scores.

Step 3. Iterate and innovate

Now you’re ready to put your findings into action and close the loop between action, measurement, and results.

Customer engagement strategies for more loyal customers

The kind of customer engagement strategy you choose will depend on your research findings, your resources, and the kind of industry you’re in. It’s also important to consider how to improve customer engagement on a channel-by-channel basis. There’s a big difference between online and offline engagement, for example. How your customer engages also has implications for how you nurture the relationship.

An unengaged but positive customer might respond to invitations to engage that focus on price, value, and ease – ‘join our loyalty program and save 5% on these regular purchases’. A customer who is already heavily engaged could become part of a brand ambassadorship program where they are rewarded for recruiting a friend.

Here are a few ideas for boosting engagement to inspire you for your future customer engagement strategies.

1. Build engagement opportunities into your UX and CX

User experience and customer experience are built from the first interaction customers ever have with your brand. When designing and implementing new or updating existing UX and CX elements, make sure you have engagement in mind. How your user interface looks, sounds, and feels can have a huge impact on how a customer engages with your brand.

Something as simple as a thumbs up / thumbs down button on the bottom of a self-service support article can boost engagement and make a customer feel more involved and listened to. Consider updating your design following feedback to really meet your customers’ needs, and ensure you’re using UX metrics as well as customer engagement metrics to provide a smooth experience on your digital platforms and in your physical spaces.

2. Start a customer loyalty program if you don’t already have one

From fully-fledged tiered points systems to a humble 10-coffee stamp card, customer loyalty programs are a proven mechanism for boosting retention. They are a measurable way of making sure a loyal customer feels appreciated, which helps you to understand your audience better.

Loyalty programs can also be used as a testing ground for customer engagement initiatives, products, and services you’re thinking of extending to your entire audience. For example, initiating a customer “club” that gets early access to your output means you can get feedback before you send it further afield.

Improve your customer loyalty with our ultimate guide

3. Invite feedback

Let customers know you care what they think and provide plenty of opportunities to be heard.

Online, you could use site intercepts, scoring, or feedback buttons to gather contextual experience data. Make your feedback touchpoints quick and easy to get information on customer satisfaction without disrupting the journey. You can even open the floor to online customer reviews on your website and social media platforms – but ensure that you’re moderating any customer feedback.

Offline? Put a feedback box and some cards by the till, encourage staff to ask customers about their experience, or add a feedback email address to till receipts and promotional flyers. Again, this feedback outreach should be designed with customer service in mind to prevent any negative responses.

4. Model engaged behaviors

Showcase existing engagements with customers in your customer engagement marketing, using storytelling and case studies to illustrate how other customers have contributed and participated. Providing proof points and evidence can help convince new customers of your high quality and inspire customer relationships to form. Much as you ask your customers to recommend you to their contacts, you also need to model the same engagement behavior.

Customer Feedback Resources:

5. Strengthen your brand voice

Customers are more likely to engage with a brand they feel has a strong identity that they can recognize, no matter where they encounter their products or services. By strengthening your brand voice through customer engagement marketing strategies, you can ensure that your existing customers can easily find your brand and engage with you.

Try identifying the key reasons why your fans love your brand through customer feedback and develop your identity accordingly. Customers love your direct service style and easy-to-use products? Simplify your branding and project a sincere and competent persona through your social media channels. Your products are more fun than utility-focused? Make your customer service tone of voice helpful, but light-hearted.

Using your outreach channels to build an emotional connection between your brand identity and your audience is an easy way to increase customer engagement.

6. Try visually engaging video marketing campaigns

Visual customer engagement marketing is key for attracting and retaining your target audience.

Wyzowl’s State of Video Marketing Survey 2021 found 84% of video marketers say this visual medium has helped them generate leads, with explainer videos and social media videos being the most useful tools for engaging customers.

Google has found that when it comes to buying, 63% of YouTube viewers have bought from a brand because they had seen it on YouTube. According to the digital giant, “Video is the new shop window, and it’s one that is always open.”

Engaging video campaigns
Image from Unsplash.com

7. Offer personalization

Using your customer engagement metrics as a guide, you can improve your customer loyalty in the long term, but there are short-term ways to use metrics to improve your audience’s experience. Offering tailored options to your customers when they initially interact with your brand – such as a quick survey on their personal preferences – can help you to immediately guide them towards products and services they’ll love. This, in turn, should lead to better customer retention over time.

8. Focus on human connection

Your customer engagement strategies should feel human. With more than 60% of consumers feeling like brands need to care more about them, engaging customers with marketing and social media efforts that feel emotionally authentic is vital.

For example, during the COVID-19 pandemic, Coors Light noted the situation that many of their customers were going through with a tongue-in-cheek customer engagement campaign around the hashtag #coulduseabeer. Showing that they understood their customers’ feelings at that time meant that their customer engagement marketing resonated emotionally. For 500,000 free beers, the brand connected with customers and developed loyalty.

Focus on human connection - customer engagement
Image from Twitter

9. Use technology to manage customer engagement

Technology can help you empower your team to implement customer engagement strategies without adding unnecessary legwork. As an example, brands such as Netflix and Amazon have perfected the art of hyper-personalization with the use of artificial intelligence (AI). They’re able to deliver viewers suggestions tailored to them, using the data they have on other customer relationships. The “Customers who bought this item also bought” suggestions and “We think you’d like” options show customers you understand their tastes and needs, but your team doesn’t have to individually implement the strategy to personalize customer experiences.

Netflix - managing customer engagement
Image from Netflix.com

Customer engagement metrics

As mentioned previously, there are several ways to measure your customer engagement to get specific metrics and understand which of your strategies are working well.

Here are a few metrics that you can use to tailor your customer engagement strategy for better results.

1. Customer loyalty

You can measure customer loyalty with the NPS metric, using a single-question survey that gives you a number from -100 to +100. The higher the Net Promoter Score, the more loyal the customer.

Customer loyalty - customer engagement

2. Customer satisfaction

Your customer satisfaction can be measured using the CSAT method – adding into a survey a variation on this question:

“How would you rate your overall satisfaction with the [goods/services] you received?”

Customer satisfaction in customer engagement

The more satisfied your customers, the more likely it is that they will purchase from you again and become a loyal customer.

Gauge your customer satisfaction with our free Customer Satisfaction Survey template

3. Customer effort

Measuring how hard your customer has to work to get their problems fixed or requests answered is key for making sure customers’ experiences are positives. Customer effort scores measure how hard it is for customers to resolve issues or get answers on a scale of “very easy” to “very difficult”, helping you to improve your customer service. With better customer service, your customers are more likely to return for another purchase.

4. Sales

The easiest metric to measure is likely sales. The more sales of your product or service that occur, the more likely it is that your customers are engaged with your brand. However, sales numbers are not a holistic indicator of what’s working – you don’t know if your product is great but your service is terrible, or if your customers love your brand but don’t love the purchasing process. It should form part of your customer engagement strategy, but sales are not the only metric that matters.

5. Frequency of contact

How often do customers reach out to get in touch? Whether it’s by your customer service email, your phone line, or via social media comments, brands that have engaged customers will likely see higher levels of contact. However, high contact might also be due to negative experiences, so it’s worth making sure it’s the result of successful customer engagement rather than a negative trend.

6. Subscriber numbers

If you’ve set up an email newsletter or a loyalty program, you can measure how engaging your offering is by the number of subscribers you have to your content. Personalization is key for success in this metric – Hubspot found that message personalization is the number one tactic used in customer engagement marketing to improve engagement rates.

7. Customer reviews

Do you have many reviews online for your products and services? No matter how many you have, the ratio should always be more positive than negative. Taking the time to address any issues flagged in negative reviews is a good way to ensure that new and existing customers see that you listen, encouraging more engagement with your brand.

8. Dwell time and repeat visits

Among other factors, how long customers spend on your website or in-store and how often they come back is a very useful metric to understand both how appealing your offering is, but also how well your engagement strategies are working.

9. Social media engagement metrics

Do you inspire regular customer engagement on your social media channels? Evaluating how well you are performing by each social channel’s metrics and overlaying that data with your sales and operational data can help you to judge which approaches are best to engage customers in the future.

Using customer engagement metrics to improve your strategy

There are many ways to improve your customer experience strategy, but using metrics such as the ones mentioned can help you to find tangible evidence of what’s working and what’s not. Best of all, many of these metrics are simple to implement through UX or CX design and can form a cohesive part of your customer journey.

Using industry-standard metrics is helpful to know how you compare to your competitors, but the most important use for metrics is to continually adapt and tailor your customer engagement strategy for better customer satisfaction, higher levels of interaction, and ideally, more sales.

Create a customer engagement strategy with Qualtrics

Customer engagement is often the result of positive customer experiences. Qualtrics – now powered with Clarabridge – helps you capture and analyze data from every customer touchpoint, allowing you to understand which interactions are increasing engagement and which are hurting it. This in-depth analysis of brand loyalty and the customer lifecycle means your customer engagement marketing strategies are more targeted and more effective.

With the insights you gain, you can create a customer engagement model that outlines what kinds of experiences you want to deploy at each stage of the customer journey. Not only that, but with a single platform for all kinds of customer analysis, Qualtrics and Clarabridge give you the wisdom to correct your missteps and plan future customer engagement activities so that you can reap the benefits of fully engaged, loyal customers.

Plan, execute and measure customer engagement with Qualtrics’ comprehensive digital CX software. Try it for yourself now.

Collect data from your customers with a free Qualtrics account