Creating a Customer Engagement Metric

More than ever, marketing is under pressure to help acquire and retain customers while operating within tighter budgets. At the same time, customer engagement is emerging as an important concept as customers increasingly interact with companies across many channels. Higher customer engagement is seen as an indication of the emotional connection with the brand which correlates with business success.

A better customer experience is becoming an increasingly important way to differentiate for companies. Customer engagement plays a large role in the overall customer experience. We believe that customer engagement will continue to rise in importance as competition increases and switching costs decrease. With engagement becoming a key behavioral indicator, organizations will need to be able to link points of customer engagement with bottom-line improvements.

An extensive customer engagement survey conducted in 2011 that attracted over 1000 responses found that half of the respondents now classify customer engagement as essential to their organization. These respondents indicated that engagement is an activity that delivers value to both customers and businesses.

This online study and others have examined and confirmed the correlation between enhanced engagement and greater business success. Most organizations have found that active customer engagement correlates with growing income and profit because of the way it makes customers more loyal, generates positive word-of-mouth, and reduces the probability that a customer will switch suppliers. An organization that can positively affect engagement is therefore more likely to see these engaged prospects consider the company’s products making prospects, convert to customers, and purchase more regularly. Even though respondents in these studies recognize the importance of customer engagement, the research found that fewer than half of organizations (42%) have a defined customer engagement strategy in place.

So while many organizations recognize that once you have the attention of customers and prospects, engagement is needed to take the interaction to the next level develop and cultivate consideration and preference. Engagement suggests something more than satisfaction; something with a more emotional component. As a result the methods for measuring engagement vary leaving many organizations to take a ‘know it when they see it’ approach. To measure something we have to be able to define it.

What is Customer Engagement?

Companies addressing customer engagement focus on facilitating interaction between their customers and the organization to create a win/win scenario. Ron Shevlin, an analyst at Aite Group, LLC defines engagement as: ‘Repeated interactions that strengthen the emotional, psychological or physical investment a customer has in a brand.’ Essentially customer engagement is a measure of relationship strength.

The Purpose of Customer Engagement

The purpose of customer engagement strategies is to create a positive and consistent online and offline customer experience. To that end, companies are deploying a number of strategies to improve engagement. These range from developing and implementing efficient and accessible customer service to the use of Web 2.0 and rich media to deepen customer relationships, to building a sense of community around product/services/brand.

Customer engagement initiatives are not discrete projects with a planned end. Rather, they require a continuous stream of interaction that is relevant to the brand and keep customers involved with the brand.

Measuring the Value of Customer Engagement

There is no universal formula for measuring customer engagement or experience. A number of companies, such as Forrester, Aite Consulting (Shevlin), Gallup and have also developed way to measure customer experience and engagement.

For example, Forrester proposes applying four components to create an engagement metric: involvement, interactions, intimacy and influence. Ron Shevlin’s framework uses the following dimensions for thinking about, measuring and improving engagement: product involvement, purchase frequency, service interaction frequency, interaction type, online behavior, and referral behavior. Gallup created an engagement ratio which is based on 11 key attributes ranging from satisfaction and intent to purchase to sense of belongingness and emotional attachment.

In our work, we have found that there are four dimensions of interactions between the company and the customer need to be taken into consideration when measuring customer engagement. These aspects include quantity, quality, breadth and depth of engagement, in addition to a measure of correlation between their pattern of engagement and known stages of the purchasing process. Customers find this approach is particularly well-suited to measuring the impact of virtual interactions as it requires counting and identifying a stream of time-stamped interactions. These values are then combined to produce a synthetic score indicative of the strength of customer engagement by product or any other main focus for the company using online channels.

There are four key dimensions in the VisionEdge Marketing model:

  1. Rating and Ranking of Interaction – Engagement Quality
  2. Number of interactions/intervention – Engagement Quantity
  3. Patterns of Interactions can be associated with different attitude and intent from the customer – Purchase Process
  4. The depth and breadth of involvement can be measured – Engagement Intensity

It has probably become evident that there are numerous approaches. The key is to:

  1. Understand your customers and their buying process
  2. Develop and test a model that will work for you
  3. Consistently track the data and apply you model


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Author:Laura Patterson

Laura Patterson is president and co-founder of VisionEdge Marketing, Inc., a recognized leader in enabling organizations to leverage data and analytics to facilitate marketing accountability and operations, measure and improve marketing performance, develop dashboards, and enhance marketing and sales alignment in order to accelerate revenue and create a competitive advantage. For more information, go to Laura’s newest book, Metrics In Action: Creating a Performance-Driven Marketing Organization, provides a useful primer for improving marketing measurement and performance.

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