CX insight Magazine

January 2020

Why Customer Engagement Is Critical For the Modern Business

By: Edward Kowalski of Sutherland

For lasting brand loyalty, a strong customer engagement strategy is key. Customer engagement involves creating interactions that anticipate customers’ needs and ensuring that they are supported at every stage of the buyer’s journey. In increasingly competitive markets, it’s critical for enterprises to build personal connections with their customers.

Many businesses view growth through the lens of new customer acquisition; however, customer retention is the backbone of any sustainable growth model. In fact, improving retention rates by just 5% can raise profits by 25% to 95%, according to Harvard Business Review. Moreover, investing in new customers costs between 5 and 25-times more than retaining existing customers. Customer acquisition costs are higher than ever before, increasing by nearly 50% over the past five years for both business-to-business (B2B) and business-to-consumer (B2C) companies. Increasingly, customer retention is linked to effective customer engagement.


Why Is Customer Engagement Important?

Companies that prioritize customer engagement can increase cross-sell revenue by 22% and upsell revenue by 13% to 51%, according to Constellation Research. A strong customer engagement strategy is no longer a value-add for your business; it’s now mission-critical. Here are three ways that effective customer engagement provides value to businesses:


    1. Ensures that your business is customer-centric 

Customer engagement enables companies to find more innovative ways to meet customer expectations. According to Salesforce, 89% of customers want companies to understand their individual demands and necessities. Additionally, 75% assume that enterprises will be able to predict their expectations. Customer engagement plays a critical role in customer experience management by creating a consistent nurture to feedback loop. For instance, some enterprises include emails in their marketing automation workflows to assess whether customers have had poor user experiences. Other brands post polls on their social media channels to get real-time data about customer sentiment.


    1. Builds human-centered brand relationships

Successful customer engagement goes beyond mass marketing emails with upsell calls-to-action. It requires brands to build relationships and experiences that are more human and authentic. To do this, they must put themselves in their customers’ shoes to understand their needs, motivations and pain points. Salesforce reports that 84% of customers believe that being treated like a human, not a metric, is key to driving repeat business. An example of this in practice is writing custom responses to customers who comment on social media posts. Another approach is to highlight customer insights and experiences by posting user-generated content on a corporate blog – any tactic to make the brand experience more personal.


    1. Fosters a seamless omnichannel experience

With more channels and opportunities to engage with customers than ever before, some companies make the mistake of spreading themselves across too many social channels – regardless of relevance to their audience. In contrast, others utilize too few channels, leading to missed opportunities. A strategic omnichannel approach is required. Organizations should only invest in channels that are driving engagement and value with their target audience, whether that is on podcasts, social media, SMS, or others. The goal for strong customer engagement is to make every brand touchpoint feel as seamless and low-effort as possible.


How to Build a Winning Customer Engagement Transformation Strategy 

There’s a disconnect between consumer and brand perception of successful customer engagement transformation. New research from Targetbase Claydon Heeley shows that 77% of consumers believe that brands are not effectively engaging with them. In contrast, 78% of marketers report that their engagement strategies are working. Enterprises must take steps to more effectively engage in customer relationship management. The following five tips can help your company build a winning customer engagement strategy that fosters brand loyalty:


    1. Optimize for personalization. 

Customers are more than twice as likely to consider personalized offers to be important. For this reason, customer engagement is strongest when customer interactions are tailored to an individual’s specific desires. This level of customization is now relatively simple thanks to the impressive amount of customer data that enterprises generate on a daily basis. This access to customer data creates opportunities for organizations to determine which engagement tactics are most effective. Building out a customer journey map is also helpful for analyzing customer behavior and crafting a tailor-made customer experience for each individual.


    1. Keep context in mind. 

Context is key for a successful consumer engagement strategy. If brands don’t use the right engagement channel in the right way or at the right time, their plans can easily backfire. For instance, an engagement campaign that’s successful on social media may not perform well in an email. When deciding how to engage with customers, brands must consider the audience and timing for every campaign. For example, an awareness campaign with a goal to improve brand sentiment may heavily leverage display advertising to drive broad reach. However, a B2B lead generation campaign may focus more on LinkedIn ads and account-based marketing (ABM) to more effectively reach a very specific audience with targeted messaging and goals.


    1. Eliminate silos. 

According to Salesforce, 73% of consumers will dismiss a brand based on an inconsistent experience across channels. To deliver the seamless experience that consumers are searching for, enterprises need to integrate data from each customer engagement platform into a single hub. For instance, Petco implemented a customer relationship monitoring (CRM) tool to automatically import social media messages across platforms into a single system. This allows Petco to ensure that no comments are missed and to improve the overall customer experience.


    1. Leverage the power of artificial intelligence (AI).

AI applications, such as chatbots and virtual assistants, enable brands to drive real-time customer engagement. Additionally, as more customers begin to use new digital tools in their daily lives, they will expect brands to use them too. In fact, according to a study on AI and the workplace, 56% of customers want to purchase from innovative companies that are leveraging AI and other new technologies. AI is beneficial for customer engagement because it reduces effort while increasing efficiency for both the brand and the customer. Chatbots are one of the more effective ways to efficiently improve the customer experience. You can download our whitepaper detailing everything you need to know about leveraging chatbots for business impact here.


    1. Determine key performance indicators (KPIs).

Before a campaign is launched, brands should identify success metrics, or KPIs, to evaluate impact. Real-time data gives companies insight into what customer engagement tactics are working and what needs to be optimized to drive more impact across the overall customer experience.

Companies should keep in mind that KPIs will differ across channels. For instance, a KPI for an email campaign might be a 5% click-through rate, while the KPI of a social media post might reach close to one million, based on previous benchmarks. KPIs and customer data can be analyzed using tools within experience management software, which provide a holistic view of engagement performance. Consistent monitoring and analysis of customer engagement KPIs are critical to make smart, data-informed decisions.


Strong Customer Engagement Drives Exceptional Customer Experiences 

According to Gartner, 64% of people consider customer experience more important than the price of a product or service. Forrester also reports that businesses with a strong customer experience strategy have 1.7-times higher customer retention rates, a 1.9-times greater return on spend, and 1.6-times higher customer satisfaction scores. Strong customer engagement is vital to creating a great customer experience that cultivates loyalty and builds long-term relationships. With an engagement strategy in place, enterprises can provide their customers with unique, personalized experiences that give them a competitive advantage in the marketplace.

Edward Kowalski
Edward Kowalski
AVP, Retail Strategy, Sutherland


Sutherland creatively discovers, humanistically designs, analytically develops, and seamlessly deploys digital customer experience transformation solutions. Learn more at www.sutherlandglobal.com.