Articles

How Customer Engagement Impacts Brands (And How to Improve Yours)

A headshot of Kennedy Lukey

by Kennedy Lukey

A colourful cartoon illustration of people experiencing different customer journeys.

Engaged customers are oftentimes the difference between a thriving, successful business and a total bust. These customers do more than buy your products and services, they share your content, recommend you to friends, and are the first to go to bat for you online. Their support means more than just the dollars they spend.

This explains why customer engagement is such a hot topic among marketers and their teams. Read on to learn what exactly customer engagement is, how to improve customer engagement at your organization, and why community should be at the centre of your customer engagement strategy.

What Is Customer Engagement?

Depending on the products or services you sell, customer engagement can look different, but at its core are two main components: relationships and interactions.

Customer engagement is essentially the relationship between any kind of organization and its customers and the whole lifetime of interactions that happen during that time frame.

These interactions can take place in-person or online, but regardless of whether you’re engaging with your customers at your storefront or through social media, every interaction should aim to strengthen the relationship between your brand and the customer.

Learn more: How to Increase Brand Engagement in the Modern Media Landscape

The key to customer engagement is making sure you interact with your customers in a way that resonates and makes sense. While Costco’s free and fresh samples do a great job of engaging the people that are physically in store, it wouldn’t make much sense to try and ship these same items to online shoppers (though, it might be interesting to test how well cooked Bagel Bites travel).

It’s important to not only consider where your customers are interacting with your brand (in-person or online) but also when and at what point they are at in the customer journey (which we will talk about in a little bit). 

To really engage your customers, you have to get to know them first - their tastes and preferences, buying habits, how they want to be communicated with, and, most importantly, what they find valuable. 

Why Is Customer Engagement Important?

Now that we’ve established what customer engagement is, we can take a closer look at why it is so important. 

Customer engagement allows you to offer your customers value beyond just the products and services they purchase. Although your high-quality artisan cheeses (can you tell I’m hungry?) might be enough to get people in the door, you then have to think about what’s going to make people stick around and keep coming back for more. 

Personalized experiences, tailored content, and meaningful interactions deliver higher levels of value, and in return, your customer will provide you with more value as well.

In general, engaged customers will:

  • Spend more & shop more frequently (revenue)
  • Choose you over competitors (loyalty)
  • Recommend your brand to others  (advocacy)
  • Help you build better products and services (co-creation)

Learn more: How to Build a Customer Value Flywheel

Revenue

It should come as no surprise that customers who feel like they’re getting real value from a brand will continue to purchase from them. Studies have shown that engaged customers buy 90% more frequently and spend 60% more per transaction.

A colourful cartoon illustration of two people viewing their customer journey.

This is the clearest example of how generating value for your customers can turn into direct value creation for your brand. 

Loyalty

Not only do engaged customers spend more on your products and services, but they also spend less on your competitors. The same study found that engaged customers were five times more likely to indicate that they would purchase only from that brand in the future. 

Customer engagement and relationship building go hand in hand. When you can prove to your customers that you care about them beyond the money they spend - their needs and interests - you can create sustainable, long-lasting relationships that out-perform transaction-based approaches.

Additionally, outlets like Harvard Business Review have determined that acquiring a new customer is anywhere from 5 to 25 times more expensive than retaining an existing one. Investing in an exceptional customer experience that builds engagement means you need to invest less in marketing and sales. 

Advocacy 

A truly successful business creates customer experiences around their products and services that are so tailored, meaningful, and memorable that their customers begin promoting on behalf of the brand. 

When people genuinely enjoy what your company does, they’ll want their friends and family to share the same experience. This is why word of mouth (WOM) marketing is considered the most valuable form of marketing.

Establishing customer engagement touchpoints that are worth sharing is an effective way of earning this type of marketing while establishing stronger relationships with current customers.

Co-creation 

Increased revenue, loyalty, and advocacy are some of the most common ways engaged customers can benefit your business. An outcome of effective customer engagement that is not talked about enough is the ability to create better products and services with these customers. 

The concept of collaborating with your brand’s users is called co-creation. Engaged customers know your products best, making them the ideal people to help you improve your offerings. Not only do these customers want to help you create better products because it means they can enjoy those products themselves, but also because your engagement efforts have made them feel like they have a stake in your brand.

Customer Engagement, Experience, and Journey

Before we dive into how customer engagement, customer experience, and the customer journey are all connected, we first need to define what a customer journey is.

Effective customer engagement goes beyond transactions and traditional customer service. Customer engagement ensures your brand is adding value at every touchpoint along the customer journey, across channels, and is tailored to unique preferences. It’s no longer enough to serve your customers generic ads, sell them a product, and send them on their way. This also allows you to identify how, when, and where your customers are interacting with your brand, giving you the opportunity to segment users based on their purchasing preferences and habits.

The customer journey is the outline of these experiences that you adjust based on what you see happening in real life.

Amanda Moloney, Director, Client Engagement

Our Director of Client Engagement, Amanda Moloney, defines customer engagement as “everything your team does to make sure the customer is getting the most out of your products and services'' and that the customer journey is “more of the outline of these experiences that you adjust based on what you see happening in real life.” She emphasizes the importance of learning from your customers and constantly improving each touchpoint along the customer journey to match their preferences.  

How to Improve Customer Engagement

While every business might have a slightly different approach to customer engagement, there are a few sure-fire ways to improve your customer engagement strategy.

A colourful cartoon illustration of someone experiencing a bad customer journey.

Community

We mentioned earlier that successful customer engagement strategies include effectively engaging your customers at multiple touchpoints along the customer journey before, during, and after their purchases. One of the best ways to achieve this level of comprehensive engagement is to build a community around your brand. 

Learn more: What Is an Online Community? Everything you need to know

Communities are created by brands to engage their customers on an ongoing basis. Often online, they provide brands with the space to connect with their customers and biggest fans, share important information, encourage co-creation, and give customers exclusive access to the brand they love. 

Learn more: 10 Examples of Online Communities from Brands You Love

Communities help support every stage of the customer journey. New customers can ask questions and read reviews before committing to a purchase, current customers can discover new and more efficient ways of using products, and brand fans can share their knowledge easily and be rewarded for doing so. 

Ultimately, building a customer community is one of the most effective ways to tap into the four benefits of engaged customers that we mentioned earlier (increased revenues, loyalty, advocacy, and co-creation).

Learn more: Why the customer experience journey needs community

If you’re not ready to dive into the world of online communities just yet, there are several other ways you can start improving customer engagement for your brand. 

Personalization

Personalized content and experiences are the simplest ways to communicate to your customers that you listen to them and take action, inherently letting them know you care. 

Personalization goes beyond adding your customers’ name to an automated email. It is about delivering the right type of content, at the right time, in the right place. Does this customer respond best to blogs or videos? Do they read their emails in the morning or at night? Do they even check their email to begin with or would a text be more effective? 

Learn more: 4 big steps to engagement marketing

These are all things to consider when establishing your customer engagement strategy and will allow you to form deeper connections with your customers because you’re meeting them where they are on their own terms. 

An online community is a great way to build these catered experiences, as Groups allow members to be segmented manually or automatically based on their characteristics, and your brand is able to serve these folks personalized content.

Encourage & Reward

It might seem like a no-brainer, but in order to improve customer engagement, you should be encouraging and rewarding customers for their engagement. 

This might look like identifying super users and giving them behind-the-scenes access to an upcoming launch, compensating customers for writing reviews and sharing user-generated content, and launching campaigns that get your customers involved in business processes. 

Online communities make it easy to encourage and reward customers that are actively engaged and participating. Gamification allows you to assign badges, prizes can be given to challenge winners, and community members can earn status and praise from other customers. 

Effective customer engagement comes down to the value you are adding for your customers, and where you are adding that value.

Learn more: How to Drive Member Engagement

Two Successful Customer Engagement Examples

Whether you are a brand that sells colourful square blocks or durable spray paints, there’s a customer engagement strategy that is certain to deliver value for both you and your customers. 

LEGO

LEGO has earned titles like “world’s most loved brand” and their customers are often more accurately labelled as superfans. But this level of success did not just happen. Instead, it was all thanks to thoughtfully crafted customer engagement strategies that put their customers and the LEGO community at the centre. 

Learn more: How can you drive engagement by aligning brand purpose with customer passion?

LEGO products are used and enjoyed by a diverse range of people from all around the world. When dealing with such an expansive customer base, it is important to recognize that each of these customers will likely have different engagement preferences, which is exactly what LEGO does. Beyond engaging with customers in person at their storefronts or online through social media and e-commerce channels, LEGO also has a series of other significant touchpoints. LEGO CON, LEGO Videos, and Legoland are all examples of different engagement touchpoints that serve to cater to different customer needs and to improve the overall customer experience.

The LEGO Ideas community, filled with over 1.8 MILLION members, serves as the ultimate hub for LEGO fans to connect and share. Members are encouraged to share their own LEGO kit designs and vote on submissions from others. They are rewarded with the opportunity to see the very best ideas come to life as sets they can add to their collections.

Learn more: LEGO Co-creates Crowd Favorites on a Global Scale

Rust-Oleum

Similar to LEGO, Rust-Oleum is a well-recognized brand serving a diverse customer base. But unlike LEGO, Rust-Oleum didn’t always have a direct connection to their customers. Often sold through third-party retailers, Rust-Oleum was looking for a better way to connect and engage their customers. 

Rust-Oleum’s Creator’s Studio community serves as the optimal customer engagement strategy. It allows Rust-Oleum to connect directly with their customers and gives Rust-Oleum customers direct access to the brand they love as well as other people who share a passion for crafting and DIY. Through the community, Rust-Oleum can empower brand advocates, foster loyalty, and source user-generated content and insightful product ideas from the people who use their products the most. 

Learn more: Rust-Oleum Gathers DIY-lovers to Test Products, Gather Insights, and Engage Customers

How to Measure Customer Engagement

Depending on your brand’s approach to customer engagement, how you measure engagement will likely look different, but there are a few metrics that can be applied across the board.

Learn more: The ultimate customer engagement plan

Net Promoter Score (NPS) 

Earlier on we mentioned that one of the ways engaged customers provide business value beyond their dollars spent is by being a brand advocate and recommending your products and services to others.

A colourful cartoon illustration of a woman leaving a five star review.

Net Promoter Score (NPS) is a metric that is used to measure how likely your customer is to recommend your brand to a friend, family member, or colleague. It often appears as a single survey question that asks customers to rank their likeliness to recommend on a scale of 1-10. 

NPS can help brands determine engagement on the basis of brand advocacy and loyalty. 

Purchase Frequency (PF)

Do you remember the stat we shared about how customers who are engaged buy 90% more frequently? 

Well, if engaged customers are known to purchase more often then a great way to measure customer engagement is through their Purchase Frequency (PF). Simply put, this is how often a customer makes a purchase at your store, on or offline. 

Average Order Value (AOV)

One last memory-testing question. How much more do engaged customers spend per transaction?

60%!

This makes Average Order Value (AOV) another excellent way to measure customer engagement. AOV is the average amount a customer spends per purchase and can be easily calculated by dividing revenue by the number of orders placed.

Tracking NPS, PF, and AOV together will give you a good foundation for measuring how engaged your customers are.

Hard Work Pays Off 

Engaged customers are at the heart of every successful business. They are the ones who recommend your products to friends and family, eagerly write online reviews, comment on your posts, and consistently choose your brand over your competitors (even when there is a massive sale). But this level of loyalty does not just happen. It is the result of hard work and a commitment to creating tailored and meaningful experiences for your customers.

The best way to create these types of experiences at scale is to build an online community focused on your brand and the people who love it most. By designing a dedicated space for your brand's biggest fans to connect, ask questions, and learn from others, you’re able to provide more value for your customers while getting more in return. 

Learn more: Why the most valuable customer engagement is happening outside social media

If you are ready to make community a part of your customer engagement strategy, check out our community platform or book a demo.


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