The key to measuring customer engagement

In an experience-based, customer-centric world, it’s no secret that customer engagement is key to success. After all, highly engaged customers are up to 3 times as valuable as those who are disengaged.

And research from Gallup found that engaged customers represent a 23% premium when it comes to profitability, share of wallet and lifetime value. Understanding customers’ level of engagement, then, is a great barometer for the success of your marketing.

Unfortunately, knowing that engagement matters is only the first step. The real challenge is working out what true engagement looks like in the so-called Age of the Customer – and how to measure it effectively. (Another challenge, of course, is how to actually engage customers – but that a topic for another post).

Redefining Customer Engagement

Most marketers would agree that customer engagement now goes beyond traditional factors such as email opens or Facebook likes. But what does constitute engagement often seems less clear – and that makes measuring it near-impossible.

In statistics like the one above, ‘engagement’ has come to refer to an emotional connection with a business or brand – on-going attention and interest born of positive emotional experiences.

And that’s certainly measurable in a wide-ranging, in-depth, scientific study. But how do you quantify emotional engagement in your customer base, with regard to your day-to-day marketing activity?

Emotion, engagement and loyalty – connecting the dots

Before we look at measuring engagement, it’s worth defining what this word actually means for businesses today, and how it relates to loyalty.

True engagement involves an emotional response towards the brand – it’s not just about how often the customer interacts with the brand, but how they feel about those interactions, and about the brand itself. It’s about the relevance of each interaction, the positive experience of doing business with your organisation – and the emotions this creates.

These are the emotions that drive loyalty.

Loyalty is about the customer’s larger relationship with a brand – whether the customer trusts and likes the organisation. In fact, a survey from Rare Consulting found that those two factors – trustworthiness and likeability – were more important to the brand-customer relationship than factors like price or features.

While an engaged customer won’t necessarily be a true brand “loyalist”, loyal customers should always be engaged. Over time, engaged customers are more likely to become loyal – as they experience positive emotions toward the brand again and again, this translates into a deeper connection.

Therefore, in a world where the intangible factors like trust trump tangible ones, marketers must look beyond clicks, shares or even renewal rates to determine whether customers are truly engaged. That doesn’t mean we need to scrap these traditional engagement metrics entirely – we just need a new way of looking at them.

To effectively measure customer engagement – and improve it – businesses must:

1. Seek a holistic view of customer engagement – cumulatively, across touchpoints
2. Set customer interactions in context, with other metrics such as sentiment and loyalty

An omnichannel approach to engagement

Marketers – across industries – tend to measure engagement in a similar way: by channel. They’ll look at overall email click-through rates, assess the interactions with the images and copy on product pages, and track logins to the business’ loyalty app.

But these measurements, in isolation, simply tell you whether a particular piece of content was interesting to a certain group of customers at a certain time. And while that’s useful information for your content team, it doesn’t necessarily mean that your customer base as a whole is engaged – or even that the customers who were interested in that piece of content have interacted with your brand anywhere else.

Let’s consider Rachel, a customer who logs into a fashion retailer’s loyalty app fairly often. She’s not particularly tied to the brand, but sometimes the app has good deals and she’s a bit of a bargain-hunter – besides, she needs something to do while she’s waiting for the train.

So once a week, she logs in to the app and has a browse. She rarely opens the retailer’s marketing emails, doesn’t follow them on social media and only shops occasionally. You’d be hard pressed to call Rachel a truly engaged customer.

And yet, Rachel and a hundred other customers like her are counted towards the loyalty app’s engagement stats each month. And sure, all of these people are interacting with some of the brand’s content – but only a portion of them are truly engaged.

The solution, then, is to put the customer, rather than the channel, back at the heart of engagement. This means that each interaction a customer has with your brand should be measured relative to the individual, not just the channel where the activity occurred. Each “engagement” should be tied to the customer and stored within their ‘profile’ or ‘record’ in your CRM / marketing database.

From there, you’ll want to compile these interactions into a cumulative engagement “score”. There are various formulas out there to help you calculate this, though you’ll likely want to tweak them to suit your business. (The right software can make this process faster and easier – find out how).

As you build up a record of your customers’ activity across channels and over time, you’ll develop a far more accurate picture of who’s truly engaged.

Putting engagement in context

So let’s say you have an engagement score for each customer – one that takes into account all of their interactions with your brand across each of your key touchpoints – and even a view of overall engagement across your base. Is that ‘job done’?

Not quite… Engagement is about the emotional connection your customer has with your brand, and how those intangible feelings translate into real interactions – in other words, when we measure engagement we’re observing what a customer’s relationship with the brand looks like in practice.

The challenge is that many of the behaviours you’d expect of an engaged customer can be exhibited by disengaged customers, too.

For example, you’d expect an engaged customer to renew their subscription service when the time comes. But that doesn’t mean that all customers who renew their service are loyal – I’m not loyal to my broadband provider, for instance, but I know that switching will require a lot of time and effort, so I let my service renew. Sometimes convenience, thriftiness or even laziness can manifest as positive engagement.

That’s why an engagement score needs to sit alongside other metrics – namely sentiment. This pulls in the emotional aspect, which the rational outputs of engagement can miss. For example, customers who appear engaged but have chronically low sentiment may not be very connected to your brand at all.

It’s also a good idea to consider what behaviours might set your loyal customers apart from those who are simply engaged – things like brand advocacy, referring a friend to the loyalty program, etc. – and formulate a score for this as well.

You can then combine all of these metrics to provide greater context for each. For example, overlaying the overall engagement score of your customer base with their loyalty score might reveal that most of your engaged customers have not yet made the leap to loyal advocates – something you may want to address in your next campaign.

This sort of insight is essential to understanding the true effectiveness of your marketing activity and identifying potential issues (like low engagement or loyalty), before they become too damaging.

Of course, accessing this sort of insight can be easier said than done – which is why we built ELVIS. This unique algorithm monitors and calculates your customers’ engagement, loyalty, value, influence and sentiment scores automatically, every day. Find out more >