Everyone can agree that customer engagement is important these days. But just how important is it? In Gallup’s 2014 report on the State of the American Consumer, data shows that a fully engaged customer represents a 23% premium in terms of share of wallet, profitability, revenue, and relationship growth compared with the average customer. Furthermore, an actively disengaged customer represents a 13% discount in these categories.
Everyone can agree that customer engagement is important these days. But just how important is it? In Gallup’s 2014 report on the State of the American Consumer, data shows that a fully engaged customer represents a 23% premium in terms of share of wallet, profitability, revenue, and relationship growth compared with the average customer. Furthermore, an actively disengaged customer represents a 13% discount in these categories.
These statistics present businesses with a very appealing opportunity. By transitioning just one customer from indifferent to fully engaged, a business not only increases revenue, but also gains a valuable advocate. Gallup CEO, Jim Clifton, stated it clearly when he explained, “right now, you’re probably doing a maximum of one-third of the business you should be doing with current customers. This means that if you’re doing $20 billion in sales, there’s an additional $40 billion in low-hanging fruit with your current customers, just waiting to be picked.”
The statistics also imply that customer acquisition not only results in less revenue, but also costs more to achieve than customer retention. KISSmetrics recently reported that most companies focus their attention on customer acquisition even though it costs seven times more to acquire them than to retain them!
So how can businesses capitalize on this information?
First, start by categorizing your customers into three groups:
1. Actively disengaged customers are those who are not attached in any way, emotionally or rationally, to your product or service. They are quick to switch brands and very vocal when it comes to their negative experiences.
2. Indifferent customers are neutral and do not feel negatively or positively towards your brand. They will consider buying it if it is readily available but will not search for it if it is not.
3. Fully engaged customers are rationally and emotionally loyal to your brand and will actively seek it out over alternatives. They are brand ambassadors and highly profitable customers.
Next, be sure you have fully defined your value proposition. Consumer confidence and spending is slowly improving after the economic downturn, but consumers are more cautious and demanding than ever. They are more likely to research and choose businesses with a value proposition they feel good about. When they feel connected to a company’s personality and values, they are more likely to become loyal.
Engage your employees and educate them on the customer relationship you would like to achieve: Gallup reported that companies that engage both customers and employees can achieve a 240% boost in performance related business outcomes. By training each employee, regardless of department, to understand the value proposition, businesses can ensure that customer relationships are consistent and focused on engagement.
Then, approach the lowest hanging fruit: the indifferent customers. With a consistent value proposition, the right amount of touches, and proper incentives, businesses can rationally and emotionally convince indifferent customers to become loyal. Engage those customers from every channel with a voice that reflects your business’s drive to provide customers with a meaningful experience.
