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'Customers almost expect smart brands to use data to help them'
'Customers almost expect smart brands to use data to help them'

Customer engagement is not a passing fad but an essential business practice. And customers have come to expect it, writes Targetbase Claydon Heeley's Steve Grout

Sorry for the reminder, but as you’ve probably noticed it’s been a tough couple of years with recession biting hard.

As with every downturn, there have been winners and losers. But however you’ve weathered the storm, most marketers will be familiar with increased calls to evaluate their activity. In particular, finance officers and procurement departments have been demanding ever-improving ROI.

But amid all the gloom, at least one marketing trend has firmly taken root – ‘customer engagement’. To many, it’s nothing more than the latest catchphrase from an industry drawn to jargon.

To set the record straight, we ran two pieces of research. We surveyed 1200 customers of leading UK brands to understand how they value the brands they buy or have a relationship with, and the impact their feelings have on their value as customers*. We then conducted 10 in-depth interviews with senior brand marketers, and a further piece of online research with 80 of them**.

Not just a fad
We discovered that customer engagement is far more than a passing trend. In fact, it’s financially critical for every brand. For starters, our work shows that increasing customer engagement by just 1% generated a disproportionately positive effect on the customers’ value to a brand of 3%. So it’s not just ‘nice to do’.

One of the most confusing issues surrounding customer engagement is settling on a definition of what exactly it is. Our research showed multiple descriptions from both consumers and clients, but our view is that engagement exists when a customer regularly purchases, interacts with and recommends a brand. So there is a scale and a strength that can be measured.

At TBCH, we do this in a number of ways, including a proprietary system called Customer Relationship Value, which includes both hard and soft measures. It calculates the customer’s value to a brand, and vice versa. Of course, consumers don’t talk about it in this way. But they do talk about the brands they feel strongly about and recommend them to others.

Many global brands were shown to be doing a good job of building engagement – Marks & Spencer, Google, Apple and Boots, among others (see below). Boots’ customer-driven strategy is based on hard transactional data, alongside soft data, that drives consistent engagement. Its Advantage Card is a success because it sits at the core of the business, rather than a bolted-on afterthought.

Online or in-store, the loyalty card is a central part of Boots’ overall marketing strategy and clearly drives high levels of engagement, loyalty, and advocacy.

But few companies are operating real and successful engagement programmes. In fact, while 82% of clients are running
engagement strategies, and a majority of companies are investing ‘somewhat’ or ‘heavily’ in their programmes, three -quarters of customers do not feel engaged with the brands they regularly buy from.

Getting it right
One of the key drivers for successful engagement is creating customer insight.This doesn’t mean any old data – it’s essential to create a clear strategy up front to decide what data is valuable, what exists already and what needs to be collected.

The key data sources are transactional – ideally purchase data – but equally useful are behavioural data sources (including web analytics) and attitudinal data. Segmentation can help to focus on important groups of customers.

It’s critical to connect other customer touchpoints, too. A fuller picture can be created with data from call centre contacts, surveys, retail interactions and so on. Consumers know it’s possible for this data to be collected and a personal profile created. They expect smart brands to connect this data and use it to help them. This is when customer insight is really put at the heart of engagement.

At the same time, it is critical to get the technology right. In the past, the cost of setting up and managing the technology was prohibitive. Now there are lots of affordable platforms available. Companies like Unica, Oracle, Neolane and MSS have products at different price points. They allow a brand to hold and connect different data sets to build a single customer view and real customer insights to help drive relevant communications.

One trend we have seen is chief technology officers and marketing directors working more closely to ensure that their brand has the right technology to support the customer strategy. It has not always been this way.

Customer engagement is real and we believe it’s here to stay because successful companies are starting to harness technology and data to get it right. Customers are getting more savvy and almost expecting it, so it’s likely to become a land grab.

Successful brands will have to compete in the area of customer engagement to maintain their sales and profits against their competitors.

Don’t get left behind.

*TBCH 2009 Customer Engagement Survey in conjunction with fast.MAP
** TBCH 2010 Client Survey on Customer Engagement in conjunction with MSS


Steve Grout is UK CEO of Targetbase Claydon Heeley



AND HERE'S THE PROOF THAT IT WORKS

Customer engagement sounds nice to have, but can you measure its effectiveness? Yes, you can. Customer Relationship Value is Targetbase Claydon Heeley’s method for doing just that.

According to our customer survey, a small increase in customer engagement has a disproportionately positive effect on the value a brand sees from that customer.

Leading businesses clearly understand this, our survey shows (see graph, below). Boots, Marks & Spencer (M&S) and Google were the brands shown to be leading the way, although their success can be put down to different factors.

Boots’ high score for the emotional engagement element of ‘makes time to reward me’ propelled it into the top three.

The key to a successful rewards strategy, as Boots has proved, is ensuring that it is brand-appropriate and has measureable targets.

M&S achieved its spot by scoring highly for the emotional element of ‘relates to me best’. Google scored highly for the rational engagement element, ‘best at what they do’.






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 early payback and momentum;

- Choose technology that connects all data sources for multichannel communication;

- Make it integrated. Connect all customer touchpoints, including client-facing staff, call centres and e-commerce sites;

- Use customer rewards consistently and carefully.

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