Brands may be aware of the need for customer engagement, but research seen exclusively by Marketing Week reveals too few have taken steps to actively promote it.
Businesses are failing to listen to customers and act on their feedback, according to a study seen exclusively by Marketing Week. In a survey of 130 companies across 11 sectors, the research from Targetbase Claydon Heeley (TBCH) finds that 47% have no formal customer engagement strategy, compared with 44% last year.
TBCH chief executive Steve Grout says this is because too few companies take a holistic approach to collecting and responding to comments from the public. “Many brands do not actually have someone with a total overview of the customer.”
Mark Pearson, chief marketing officer of online stockbroker Selftrade, suggests that marketers lack objectivity when assessing their own performance at communicating with the public. Companies might be taking steps to solicit and respond to feedback, but this does not mean that customers are likely to notice, Grout says.
“I could name lots of brands I have interacted with, but I do not know that I have been hugely ’engaged’ with them,” he adds.
According to the report, several common barriers prevent companies keeping open channels of communication and using them to good effect. The most frequently cited are inefficient systems and processes, named by 47% of companies, workload pressure (38%) and budget (35%).
Last year, 60% of businesses cited budget as a reason for lacking an engagement strategy. Only 11% of companies now name it as the main barrier, putting it fourth in this year’s study.
Nonetheless, budget is undeniably a powerful motivator behind trends in customer engagement, which led to the rise of cheaper methods of communication, according to Grout. “When recession hit two years ago, a lot of brands decided to use email to contact customers. And because email is cheap, they contacted them a lot.”
Indeed, email is the second most commonly used communication channel for the purpose of customer engagement, with two-thirds of companies citing it. However, Grout adds: “From some of the research we have done in the past, people do not see that as a good way for a brand to engage them.”
Top of the list of commonly used communication channels for the purpose of customer engagement are websites, used by 75% of brands, while PR and advertising are joint third, with 57% of respondents claiming that they use these methods.
The high placing of these last two channels might suggest that marketers are failing to link their engagement strategies with the key elements of listening to and acting on customer comments since PR and advertising are more likely to be methods which push out messages to people rather than ones that encourage feedback.
Many companies perhaps still take this one-way ’broadcast’ approach to their customer communications. Grout argues this is a common mistake made by the 51% of companies that make use of social media.
Brands often find themselves overwhelmed by the volume of comments and find it difficult to respond to each directly, he says. “In many cases, there is almost too much information, and brands and companies find it difficult to react to it.”
It is unsurprising, therefore, that companies that use social media to engage with customers prioritise monitoring comments and making company announcements ahead of creating a dialogue, according to TBCH’s research.
However, there is a disparity between larger and smaller companies. Businesses with fewer than 250 employees are more likely to start conversations on social media, with just over a third claiming they do this, compared with a quarter of bigger companies. However, larger firms are more likely to listen and monitor what is being said – 40% say they do this, compared with 28% of smaller companies.
The larger the organisation, the more difficult it is to stay abreast of the number of comments being made and to react nimbly, it appears.
Therefore, Grout says it would be unwise for companies – especially larger organisations – to rely on social media as the sole means of soliciting feedback. “Social media can play a part in an overall engagement strategy, but it is not the only tool and needs to be done in [co-operation] with call centres, retail units and all the other things you can have as touchpoints.”
He adds that the individuals tasked with running social media accounts on behalf of companies are often not trained in customer service, or in a position to resolve issues raised.
Giving the impression of engagement without actually being able to act on customers’ queries could ultimately be more harmful to a brand than making no effort to engage at all, Grout suggests.
The first wave of TBCH’s study took place in 2009 and showed similar differences. Researchers discovered that 78% of companies believe they are “somewhat effective” or “extremely effective” at engaging with customers, but 77% of people said then that they did not feel this kind of connection with a brand.
And figures from the research now suggest that the disconnection is unlikely to be because of any misunderstanding about what engagement actually is. The most popular definition given by both brands and consumers is “listening to what customers say and acting on it”. From a list of 10 definitions, 42% of consumers and 53% of businesses say this is the most accurate description of customer engagement, with “product quality” second for both at 18% for businesses and 12% for consumers.
Smaller enterprises perform less well in the study with 61% of companies with fewer than 250 employees saying they have no customer engagement plan.
According to Grout, most brands make some kind of effort to listen and respond to customers, but not always in a coherent or organised way. “They probably have a number of initiatives around this but do not have a company plan,” he says.
This could be because small companies are not equipped to manage call centres, websites, email accounts, social media and other modes of communication with customers, Grout says. “Some companies are just not properly placed to set up all these channels, and they do not actually collect the information. They either do not actively listen, or they do not collect in a way that they can deal with it.”
Greater respect can be earned from customers when companies demonstrate they are addressing customers’ issues, according to Helen Page, managing director of marketing for RBS Group’s UK retail division. “Showing customers that you are listening to them is what is important, and that is one of the first things that customers always say to us first in any piece of research.”
The root-and-branch approach that RBS Group has taken to engagement in the form of its “customer charter” (see The Frontline, page 25) would be ambitious for any organisation to take on, whether large or small. However, it is within the power of any company to demonstrate a joined-up approach to listening to comments and then acting on them.
Customers’ expectations may be high, but their requirements are often simpler than they seem.
53% …of businesses agree that engagement is defined as “Listening to what customers say and acting on it”, compared with 42% of consumers who agree.
75% …of brands use websites to engage with customers.
47% …of companies have no formal customer engagement strategy.
WE ASK MARKETERS ON THE FRONTLINE WHETHER OUR ’TRENDS’ RESEARCH MATCHES THEIR EXPERIENCE ON THE GROUND
Managing director of marketing for retail
We talk to over 400,000 customers a year in a variety of ways – online, on the telephone or in branch. There is no point in us doing business with customers if it is in a way they do not want.
Our customer charter is a way of putting our money where our mouth is and like this research suggests many brands need to improve their engagement of customers. We talked to 30,000 customers and ran a lot of focus groups where we asked: What are the things that are important to you? And what commitments do you want us to make? Once we had got to that point, we went back and presented the commitments to 3,000 people. Obviously we have got to deliver on those.
In terms of satisfaction with how complaints are handled, we have a target of 75% but only got to 57%. They are not easy-to-do things that we are going to change overnight. We have just launched our warts-and-all independent audit, which is on the website, in branches and we have emailed it to our online customers.
There are a number of reasons why we have failed on five of the goals, but it is not good enough, we want to hit all 25 of them. It does focus the business to deliver and it does put the business in the right place. In terms of the PR risk, we knew we needed to change.
We have huge systems and process issues. We have a massive retail transformation programme to fix a lot of that, but even when you cannot do something immediately, it is important to the customer to say that we recognise their issues and are doing something about it.
Chief marketing officer
at online stockbroker Selftrade
What is being talked about in this research is almost a customer engagement committee that is pan-business. I do not think that happens and, as the study suggests, the larger the organisation the harder it is for that type of thing to happen. For smaller companies it is easier in some ways. There, the challenge is having the resource to do it.
If the customer is central to a business, you would naturally be talking to those customers in a variety of ways, which is not so much about having a strategy – it is just the right thing to do.
It is important that you are always looking at ways of trying to create a dialogue. As soon as you put something out there, you expect something to come back.
We do not do an awful lot in social media. What we have done is taken bite-sized steps into it. There is a forum board on Motley Fool, for example, which is a self-trade site. We will go on and we will intervene – not on a one-to-one basis, but if there is a group of people who have an issue we will respond. We encourage people if they have an individual problem to come and speak to us directly.
We have a customer experience committee that tries to pull all of that information in to try and make sense of it, and try to understand where the main issues are for the customer. We can then start to drive the customer experience to work out how to make those elements better.
That is the important thing – not just to observe what customers are saying but to act on it.