Brands fail to follow rules of engagement

New research from agency Targetbase Claydon Heeley (TBCH) suggests that although a majority of marketers are confident they are engaging with their audiences, consumers believe the opposite.

The study, which was carried out through in-depth conversations with 93 senior marketers during December and January, found that 82% claim to have a customer engagement strategy in place and 87% are currently investing in the area.

Meanwhile, 30% of the respondents say they implemented their customer engagement strategy more than two years ago, with 24% investing “heavily” in it. Just 10% claim they are not currently investing in customer engagement and only 6% say they rarely hear about it.

Of the marketers employing engagement strategies, 78% believe their programmes are effective. However, 77% of 1,200 consumers polled by TBCH separately last summer feel that brands are failing to engage with them.

TBCH chief executive Steve Grout reveals: “I was surprised by the high level of marketers who said they had an engagement strategy in place. They are spending money on it and it’s real, but they are not doing it effectively. If customers are saying they don’t feel involved, then they are not really engaged.”

Ineffective customer engagement programmes are causing businesses to miss opportunities to increase revenue and loyalty. Grout says an engagement initiative should not be viewed as a novelty activity that is run alongside a core marketing programme. “Increasing customer engagement by just 1% generates an almost 3% increase in the positive effect on the value that customers deliver to that brand,” he reports.

The marketers polled in the research reveal attitudes that may account for the lack of successful engagement reported by customers. When asked to sum up their company’s approach to customer engagement, 7% solicit customer feedback, 18% carry out two-way customer conversations and 13% keep in regular contact with customers. But just 3% say their schemes revolve around highly personalised communication, although 44% believe such a style of communication is key to driving engagement.

Grout says that regular contact and highly personalised communications are factors that inspire emotional engagement and lead to people choosing brands such as Boots and Marks & Spencer over their rivals. Customers surveyed report that Boots makes them feel rewarded by the brand, while they believe M&S relates best to them.

Grout adds that marketers are too quick to see engagement as something that is executed within the confines of email, with just 10% saying they believe that inviting consumers to participate in a programme is the most effective way to build engagement.

“True engagement is the customer feeling that the brand is reaching out to them with a relevant message and relevant offer,” he says. “A brand has to choose what they do well in and be consistent to drive engagement, such as the Boots reward programme. Customers see it as a commitment to them.”

While consumers think Boots and M&S are doing a good job, a majority of marketers name Apple and Tesco as brands leading the way in customer engagement. Retail as a category is mentioned by 59% of marketers as being the sector to learn from. “Tesco has been praised for delivering relevant, personalised offers, not just as one-offs, but through a proper programme, reacting to individuals based on what they do and like. And this is what turns them into brand advocates. If people don’t feel strongly about you, they won’t recommend you,” Grout notes.

How marketers size up the impact of their engagement activity also offers an insight into why customer engagement schemes are missing the mark. The survey results show a strong tendency to rely on numerical data, with 66% measuring customer retention rates and 63% focusing on sales driven by a campaign.

Less importance is placed on qualitative means of understanding the effect of an engagement programme. While 41% of marketers believe understanding the customer is most effective as a way to drive engagement, just 31% assess the level of campaign interaction and less than 30% take customer referrals into account.

“Qualitative measures are crucial if you want to understand what delights and disappoints customers,” says Grout. “Marketers tend to focus on the hard data to measure the return on investment on a campaign, but few measure emotional brand engagement and this shows up in the difference in the two survey results.”

Although it appears that consumers and brands have very different ideas of what true engagement is, there are some areas where both groups agree. Around half of marketers say freebies and rewards are the least effective methods of driving customer engagement, an attitude that is consistent with results from the customer survey. Grout explains: “This doesn’t necessarily build customer advocacy or retention. It creates a promiscuous consumer who moves from brand to brand depending on which has the best offer. You have to look to create better value to inspire advocacy.”

TBCH’s research also suggests that with the recession only just behind them, marketers are focusing on the quickest and easiest-to-use channels, such as online and email. This leaves brands with too few opportunities to strike up real dialogues with customers that could help create effective engagement. Grout concedes that email can be a useful tool for staying in touch, but says that marketers need to offer more ways for their consumers to respond in order to have a more balanced conversation. There should also be more use of reward programmes as a way to reach people.

“Customer engagement is here to stay, and marketers are attempting to take advantage of it. But such a high percentage say finance is a barrier, with economic pressures producing short-term tactics, so many businesses aren’t really conversing with their customers,” he says. “The winning companies are the ones that are prepared to make an investment in a longer and more consistent engagement strategy. There’s still lots of work needed to help businesses measure and evaluate customer engagement.”

The frontline

David Radford: Group marketing director, LV=

Engagement should be a conversation between equals. The customer chooses when and how they engage with us, whether online, over the phone or whatever. Our role is to facilitate a dialogue and listen.

We use an extensive programme of dialogue, both internally and externally, to inform our engagement strategy. Much of our [financial] business is conducted via intermediaries, so we have programmes to engage with IFAs, brokers and other partners, as well as customers. We have about 3,000 people who talk to customers every day. They represent our principal engagement opportunity and provide feedback on our products and services. We also have an online community where members and customers can engage with LV= and other customers.

We have ongoing qualitative and quantitative research, involving around 20,000 customers each year, to track and explore their views. We beta-test products online, inviting feedback. We also work on how we communicate with customers; our tone of voice is designed to make customers more likely to want to engage with us.

Like the survey says, we see a correlation between more engaged customers and advocates who not only buy more but tell people about their positive experience of LV=. Having high employee engagement scores is also key to increasing customer engagement – we have a clear strategy for this, which is designed to create a better customer experience and resultant sales.

Janet Smith: Clubcard director, Tesco

We see a direct correlation between Clubcard use and customer loyalty. From a customer’s perspective, the Clubcard is a nice extra – a “thank you” for shopping with us – and this makes them feel engaged.

We measure in different ways. We use hard, functional data to measure customer engagement, such as how many total baskets are purchased alongside a Clubcard, and how many customers redeem their Clubcard points.

Personalisation is also a key driver. We send out millions of targeted coupons, with offers tailored towards people’s shopping behaviour. On sign up, people can also tell us information such as whether they are vegetarian.

Qualitative measurement is important to us. We use it frequently as customer insights play a very significant role in tailoring our offers. We use a shopper panel to ask questions about their buying experiences and preferences. We can compare these attitudes to their actual shopping behaviour.

It’s about bringing both quantitative and qualitative together because attitudes don’t always match actual behaviour. A customer might say they would like to buy organic or British-grown food but it doesn’t necessarily mean they will.

Stephen Powell: Head of marketing, Genting Casino Group UK

We gather quantitative data every day and realise gathering data in this way is important. But focus groups take more time and resources to put together, whereas we can very quickly get responses from thousands of esurveys. However, we are also dipping our toes into social media channels such as Twitter and Facebook, which are yielding quantitative feedback and allowing people to feel engaged with us.

We use esurveys tailored to the customer category. For example, it differs if they are a restaurant customer, gaming customer or if they are completely new. If we contact a new customer with an offer within four weeks of their first visit, they are 71% more likely to come back.

We use customer focus groups to dig deeper beyond the standard online survey. We are also embarking on focus groups using non-customers. We want their input into what our next casinos should look like, to get fresh opinions before we make big new investments. So in this way, we are engaging beyond our own direct customer base.

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