What Is Customer Engagement & Why Is It Important?

Customer engagement is an important (but often undervalued) part of business. Simply put, it’s the process of building relationships with customers and creating a two-way communication channel. A good customer engagement strategy helps companies understand what their customers want and need, which in turn can help them improve their products or services.

As technology forces companies to evolve and compete in new ways, customer engagement has become increasingly important. In the past, businesses could get away with simply providing a good product or service and not worrying about customer feedback. But now, with more choices available to consumers than ever before, companies must work diligently to keep their customers engaged and receptive.

In this article, we’ll discuss the benefits of customer engagement, why customers value it, and how businesses can go about engaging their customers effectively.

Why is customer engagement important?

Customer engagement improves nearly every facet of a business.

It leads to more satisfied customers which can increase customer loyalty. Engaged customers are also more likely to buy additional products or services from you, even at a higher price point. Customer loyalty will likely fall when they feel like they are being neglected or their opinions are not being heard.  

Furthermore, customer engagement can help you improve your products and services. By understanding what customers want and need, you can make changes that better meet their needs (a process termed ‘iterative product improvement’). This not only leads to happier customers, but also to increased sales and a stronger competitive advantage.

Finally, customer engagement can help you better understand your customers’ buying patterns and preferences. This type of customer data can be used to create more effective marketing campaigns, as well as to improve your overall business strategy.

In short, customer engagement is important for three primary reasons: it leads to more satisfied customers, improving products and services, and providing valuable insights into your marketing demographic.

How to improve customer engagement

As mentioned previously, customer engagement is crucial for a twenty-first century business. But too often, customer engagement is confused with other similarly named concepts. Customer experience and customer service are two of the most commonly confused terms.

Customer service is the process of interacting with customers after a purchase has been made. This can include handling returns, providing refunds, and addressing any other issues that may arise. Customer service is reactive, meaning that it responds to customer needs that have already been expressed.

Customer experience, on the other hand, is more proactive. It encompasses all aspects of the customer’s interaction with a company, from the time they learn about the product or service to the time they make a purchase and beyond. Good customer experience creates loyalty and advocacy, while a bad customer experience can lead to lost sales and negative word-of-mouth.

Customer engagement is the bridge between customer service and customer experience. It refers to all the actions a company takes to encourage customers to interact with it, whether that’s through social media, email marketing, or simply providing a way for customers to give feedback.

In order to improve customer engagement, you need to understand what it is and how it differs from customer service and customer experience. You also need to know what your customers want and need from you. Once you have a good understanding of both, you can start taking steps to improve each outcome.

Practical ways to improve customer engagement

Some actionable methods you can use to improve customer engagement in your own company include:

1. Customer identification

Segment your customers according to their engagement levels, and identify your most and least engaged customers. This will help you understand the different needs and preferences of your clientele. By knowing your most and least engaged customers, you can tailor your marketing and sales strategies to better engage them.

A simple way to do so is with an automated sentiment analysis tool like Retention360. We offer state-of-the-art artificial intelligence to break down customer feedback and engagement data into actionable insights. These insights can then be used to improve customer engagement using the methods we’ll talk about below.

2. Personalized communication

Personalized communication is key to engaging customers. This can be done in a variety of ways, such as through targeted content, special offers, or even just by addressing customers by their first names. When customers feel that they are being spoken to specifically, they are more likely to respond positively and be more engaged.

Retention360 allows you to personalize your customer communication with our direct response tool. Since your customer information is stored securely in our customer relationship management (CMS) system, you can easily target specific customers with messages that are relevant to them, like their name, buying details, and more.

3. Collecting feedback

Collecting feedback from customers is another great way to gauge their engagement levels. By understanding what customers like and don’t like about your product or service, you can work on improving those areas that are less than satisfactory. This will in turn help to increase customer engagement.

To collect feedback, Retention360 offers a simple ticket system that keeps track of incoming incidents. This tool allows customers to provide feedback about their experience with your product (positive or negative), and also rates their satisfaction on different aspects of the customer journey.

In closing

In short, customer engagement is the process of interacting and engaging with customers in order to understand their needs and wants, and then delivering value that exceeds their expectations. Put simply, it’s all about creating a relationship with your customers whereby they feel valued and appreciated.

There are numerous reasons why customer engagement is so important. Not only does it help you to understand your customers better, but it also allows you to build loyalty and increase sales. Customer engagement also helps to improve your brand image and create a positive buzz around your company.

Ultimately, customer engagement is about creating a mutually beneficial relationship with your customers that results in long-term success for both parties. Once you’ve achieved this, you can be sure that you have a strong foundation for a successful business.

Tony Castiglione

Tony Castiglione