According to eMarketer, annual ad spending in the U.S. alone is projected to top $175 billion this year and reach nearly $200 billion by 2017. But if you look for similar numbers around customer engagement, they’re currently hard to find. The majority of brands say in general that customer engagement is a top priority, yet putting their money where their mouth is with planned, actual-number spending projections seems yet to have broadly materialized.
A new report from Gallup, however, shows that planned investments for customer engagement deserve just as much budgeting attention as advertising. The State of the American Consumer Report shows that customers who are fully engaged with a brand represent an average 23% premium in terms of share of wallet, profitability, revenue and relationship growth compared to the average customer. In contrast, actively disengaged customers represent a 13% negative in those same areas.
Gallup defines fully engaged, indifferent and actively disengaged customers as the following:
- Fully Engaged: Customers who are emotionally attached and rationally loyal to a brand, and won’t easily accept substitute products or services.
- Indifferent: Customers who are emotionally and rationally neutral, that have a “take it or leave it” attitude toward a brand’s products or services.
- Actively Disengaged: Customers who are emotionally detached from a brand, and who will switch brands easily if a better or similar product or service is available.
And while marketing, advertising and all departments play a part, it’s customer service that is at the forefront of this all important feeling of engagement. For example, retail banking customers who feel they receive exceptional customer service are 29% more likely to be fully engaged than other customers. And these fully engaged customers bring 37% more revenue per year to their bank compared to disengaged customers.
Hotel guests feel the same way, with fully engaged guests spending 46% more each year than actively disengaged customers. The only problem for hotels: less than half of the customers polled for this Gallup report said their last experience made them feel valued.
Getting Everyone Engaged
Gartner Research defines customer engagement management as the attracting and influencing of customers in order to hold their attention and induce them to participate in a relationship at length. Yet Gartner states, that in most cases, organizations have been actively disengaging with their customers for almost a decade to lower costs (for example, creating IVR paths to make it impossible to talk with an actual human being).
In addition, many employees themselves are becoming increasingly disengaged. Currently, 70% of American workers say they’re either “not engaged” or are “actively disengaged” at work, and less than half of managers (46%), and even less of non-management employees (37%), say they know what their company stands for and what makes it different from competitors.
Yet, according to a Gallup State of the American Workplace report, “when organizations successfully engage their customers and their employees, they experience a 240% boost in performance-related business outcomes compared to an organization with neither engaged employees nor engaged customers.”
How to Get Started on an Engagement Investment
If you look at the numbers in the last paragraph, there’s no time to wait on making engagement a priority. In the report, The Four Attributes of Customer Engagement, Gartner recommends that all organizations (both public and private sector) begin or continue to heavily focus and invest in the following:
- Increasing active customer engagement (creating two-way conversations and opportunities for customer participation) through social, mobile and traditional channel alignment
- Building emotional customer engagement through transparency and trust
- Targeting rational customer engagement through greater customer participation and knowledge availability
- Gaining ethical customer engagement through demonstrated commitment to fairness with employees, partners, customers and community.
This will certainly take some monetary investment, however, so it’s time to start planning, prioritizing and promoting our annual customer engagement budgets just as we currently do with advertising.
