Cscape annual customer engagement report 2008

Annual Online Customer Engagement Survey

Report 2008

ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2008

E-consultancy is an online publisher of best practice internet marketing reports, research and how-to guides. E-consultancy, named Publisher of the Year at the 2006 AOP Awards, also publishes buyer’s guides and has a directory of 100,000+ third party internet marketing white papers.

Subscribers pay from £195 per year to access the exclusive and highly practical content. E-consultancy also organises regular events, including roundtables and Supplier Showcases, where six suppliers pitch to an audience of pre-qualified buyers at a Central London venue.

E-consultancy has 58,000 registered users and more than 145,000 unique user sessions per month (audited by ABC Electronic).

It is popular among internet professionals because of its time-saving advice and insight.

The company also provides a range of public and in-house training programmes, such as seminars and workshops. www.e-consultancy.com/about

cScape, the research sponsor, is an awardwinning interactive agency and a certified Microsoft Gold Partner. An emphasis on customer engagement underpins cScape’s integrated consultancy, creative design and technical development services.

The cScape Customer Engagement Unit (CEU), launched in November 2006, is a team of individuals with years of experience in digital marketing and communications, design and technology development. cScape combines in-depth research into the science of persuasion with the development of practical online strategies. Our priority is to enable clients to align business goals with the needs and interest of their customers. cScape works with a diverse range of organisations from the corporate, charity and government sectors.

Since the launch of the CEU and the world’s first Annual Online Customer Engagement Survey, cScape has continued to be at the forefront of developing the concept of engagement. The outcomes of recent highprofile cScape events in 2007, including the From User Experience to Customer Engagement conference and The Role of Persuasion in Online Customer Engagement seminar, have filtered through to a wide range of organisations. These thought leadership events have also informed professional and

informal online debates about engagement and persuasive design. cScape was an early adopter of Microsoft SharePoint Server 2007 (MOSS). We are at the forefront of enhancing the capabilities of Microsoft technologies and of using dynamic tools like MOSS to facilitate engagement strategies.

We have an exciting programme of events planned for 2008 and hope you will be able to come along. Please contact Theresa Clifford, cScape’s Sales and Marketing Director, to find out more about cScape’s offering, and about future events. (t.clifford@cscape.com) www.cscape.com

ANNUAL ONLINE CUSTOMER ENGAGEMENT SURVEY REPORT 2008

Annual Online Customer Engagement Survey 2008 Report contents

Introduction

4

The importance of engagement

5

Executive summary

6

Findings Importance and benefits of Customer Engagement

Importance of Online Customer Engagement

Benefits of Customer Engagement

Interest in Customer Engagement

Describing an engaged customer

Responsibility for Online Customer Engagement New Engagement Strategies Strategies for engaging with your audience online Methods of increasing engagement Importance of mobile channel Achieving engagement through mobile channel Measurement and Research

Customer data collection

Methods of gathering customer intelligence

Engagement metrics

Mapping customer touchpoints

8 8 11 11 12 13 14 14 16 17 18 18 18 18 21 21

Barriers to success

Barriers to a better Online Customer Engagement

Optimism about the future

22 22 22

Comments on the findings

Jim Sterne – Defining the terms of engagement

Andy Beal – Social media must be added to the engagement mix

Pete Mortensen – The future of engagement is mobile

Avinash Kaushik – Engaging with the engagement metric

10 16 17 20

Thoughts on Customer Engagement

Dr Dave Chaffey – Segmentation, segmentation, segmentation?

Clare O’Brien – Usefulness: the new language of brand

Theo Papadakis – What is engagement for?

Richard Sedley – The role of persuasion in Online Customer Engagement

Lucy Conlan – What can you do when they disengage?

26 28 30 32 34

ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2008

Our ability to develop a ‘light-touch’ based upon a psychological understanding of our customers will be an essential counter balance to the bullish marketing practices that have shaped much of the digital terrain in the last 10 years.

Introduction The second Annual Online Customer Engagement Survey attracted over 1000 responses, making it the world’s largest survey on the subject.

This report outlines how customer engagement remains an imperative issue for organisations, and your answers to the survey provide valuable insights into the reasons why. The results indicate where the focus for agencies and businesses will be in the next 12 months, how critical you think some of the recent developments in the digital environment are and, perhaps most importantly, why they will be significant for you in the near future.

The survey also shows that there are still barriers to achieving effective online customer engagement. For instance, organisations do not always manage to assign individuals

or departments to taking ownership for implementing and monitoring engagement strategies. This report aims to aid those looking to further develop their engagement strategies.

In the introduction to the 2007 report I predicted that “the process of Customer Engagement will become one of, if not the, central focus for your digital activities in the coming years”. This is certainly born out by the 2008 survey results. Indeed, since the publication of last year’s report, the term and concept of engagement has entered mainstream business consciousness.

Last year I encouraged readers to share their thoughts on the report and send us examples and stories of their own experiences. In response to that feedback we have extended this year’s report with thought pieces by some of cScape’s Customer Engagement Unit consultants as well as comments on the survey results by other key figures in the digital industry.

I see the continuing rise in social media and mobile technology as potentially rich, yet particularly challenging, arenas for customer engagement.

The coming year will undoubtedly pose new challenges as we all try to integrate customer engagement strategies and tactics with our business plans. Personally, I see the continuing rise in social media and mobile technology as potentially rich, yet particularly challenging, arenas for customer engagement. It is on these platforms that the largest gap between engagement and monetisation is at the moment.

I believe the ability to develop and refine a ‘light-touch’ approach based upon a deeper psychological understanding of our customers will be an essential counter balance to the more bullish marketing practices that have shaped much of the digital terrain in the last 10 years.

ANNUAL ONLINE CUSTOMER ENGAGEMENT SURVEY REPORT 2008

Planet Web 2.0 has brought into sharp focus not only the risk of customer disengagement but also the tremendous opportunities available to those who listen and interact effectively.

The importance of engagement Finally, I would like to thank all of those who have invested their time, energy, finances and intellect in this report. Thanks to the contributors - Jim, Avinash, Andy, Pete, Clare and Steve - to Linus and Ashley at E-consultancy, and to all my colleagues at cScape, in particular Rob, Theresa, Theo, Lucy, Dave, Nathalie, Ed and Tom. We all hope you find the second Annual Online Customer Engagement Survey Report interesting and useful and that you’ll share your thoughts on its content.

Richard Sedley cScape Customer Engagement Director r.sedley@cscape.com

There is no universally accepted definition of what customer engagement1 is or how it should be measured, but the importance of engaging customers effectively both online and offline is now surely beyond question.

Advocates of the top-down approach to marketing, versed in the old-school methods of broadcast advertising and complacent in their ability to drown out dissenting voices, have been keeping a very low profile recently.

Conversely, those who have long been talking about the need for a customer-centric approach and integrated experience have come into the limelight because they are no longer seen as preaching something which is somehow detached from ‘real’ business numbers containing pound or dollar signs.

Although Online Customer Engagement is very much part of a bigger, more integrated picture, it has emerged as a fascinating and, to an extent, discrete area of study because of the unprecedented scope the digital environment allows to interact with customers repeatedly, and also to measure

that interaction. The correlation between enhanced engagement and greater business success has never been more instantly apparent.

Planet Web 2.0 and its omnipresent satellites (i.e. social networks, blogs and user-generated content) have brought into sharp focus not only the risk of customer disengagement but also the tremendous opportunities available to those who listen and interact effectively. We are now living in world of ‘word-of-mouth on steroids’2, which means that organisations need to work much harder to make sure that feedback, praise and criticism from all-powerful consumers is being both heard and ‘actioned’.

The most enlightened companies are not just paying lip-service to what consumers are saying. They are facilitating interaction between their customers and also changing their organisational processes so that the voice of the customer is heard at the product design stage.

When companies get things right, they can rely on their customers to do their

advertising for them, thereby reducing the need for ad spend and increasing the amount of money available for customer engagement initiatives spanning product design, customer services and website improvements. A virtuous circle if ever there was one.

Linus Gregoriadis, Head of Research, E-consultancy linus@e-consultancy.com

1

The following, adapted from a definition by Ron Shevlin, was suggested by Richard Sedley for the first Annual Online Customer Engagement Survey report: “Repeated interactions that strengthen the emotional, psychological or physical investment a customer has in a brand.”

2

This phrase was used by Will McInnes of Nixon McInnes at an E-consultancy Social Media roundtable: http://www.e-consultancy.com/publications/social-media-briefing-2007/

ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2008

Executive Summary

More than 1,000 respondents participated in the E-consultancy / cScape Customer Engagement Unit second Annual Online Customer Engagement Survey.

It is clear from this research that more organisations are embracing the concept of customer engagement and recognising this as a key requirement for business success.

The overwhelming majority of company respondents (90%) say that online customer engagement is either ‘essential’ or ‘important’ to their organisations, while three-quarters of respondents (77%) say that its importance has increased in the last 12 months.

The numerous benefits of customer engagement explain why there is an increased focus on this subject. The most frequently cited benefits for organisations implementing customer engagement initiatives over the last 12 months are ‘improved customer loyalty’ and ‘increased revenue’.

Companies are getting better at realising that they need an integrated approach which embraces all the channels used by their customers. ‘A consistent online and offline customer experience’ is seen as ‘essential’ or ‘very important’ by 86% of organisations.

There is also evidence that more companies are actually taking steps to deliver a more integrated experience. Since the first Annual Customer Engagement Report, published at the end of 2006,

there has been a significant improvement in the number of organisations who are either ‘very advanced’ or ‘quite advanced’ at mapping customer experiences in order to identify different touch points.

A consistent online and offline customer experience is rightly perceived to be very important. However, ‘efficient and accessible customer services’ are seen as even more important strategies. For many companies, customer engagement is still more about getting the basics right than adopting Web 2.0 tools and technologies.

That is not to say that Web 2.0 tools and technologies are not playing an important role in the customer engagement process.

On a tactical level, the most commonly used methods of engagement are blogging sites, video-sharing sites and social networking. Widgets are very much on the radar, with more than a third of organisations planning to use both webbased and desktop-based widgets and applications.

Expectations are already building around the role of the mobile channel as a tool for engaging customers in the near future, with two thirds of company respondents (64%) saying that this will be ‘essential’ or ‘important’ for customer engagement in the next three years.

The respondents, including 456 ‘in-house’ respondents and 438 agency respondents, completed an online survey over a five-week period in September and October 2007.

ANNUAL ONLINE CUSTOMER ENGAGEMENT SURVEY REPORT 2008

Methodology and Sample Figure 2

Figure 1

Figure 3

Company: Respondents by geography

What type of organisation do you work for?

Agency: Respondents by geography

Part of an in-house team (client-side): 45.42% (456) External agency: 43.63% (438)

UK: 70.82% (216)

UK: 58.8% (157)

Europe (non-UK): 8.2% (25)

Europe (non-UK): 13.48% (36)

Other: 10.96% (110)

North America: 12.46% (38)

North America: 13.86% (37)

Other: 8.52% (26)

Other: 13.86% (37) Automotive: 1.31% (4) Charity: 5.88% (18) Consultancy / Marketing Services: 3.27% (10) Entertainment: 4.58% (14) Financial Services (including insurance): 17.32% (53) FMCG / CPG: 1.63% (5)

More than 1,000 respondents participated in the online survey over a five-week period in September and October 2007. E-consultancy and cScape would like to thank those who took the time to complete the questionnaire. Information about the research, including the survey link, was emailed to E-consultancy’s user base.

Respondent profiles The vast majority of survey respondents work either for in-house teams (i.e. ‘client-side’ organisations), or for external agencies (including consultants and technology suppliers). For the purposes of this report, this distinction is abbreviated to companies (including not-for-profit organisations) and agencies.

In total, 456 company respondents took part in the survey, compared to 438 agency participants. Company respondents were asked to comment in respect of their own organisations, while agencies were mostly asked to comment in terms of a typical client.

Gaming: 0.65% (2)

Figure 4

Company: Respondents by business sector

Healthcare: 1.63% (2) Pharmaceuticals: 0.98% (3) Automotive: 1.31% (4)

Property: 0.98% (3)

Charity: 5.88% (18)

Public sector: 6.21% (19)

Consultancy / Marketing Services: 3.27% (10)

Publishing: 8.17% (25)

Entertainment: 4.58% (14)

Retail: 11.76% (36)

Financial Services (including insurance): 17.32% (53)

Telecoms / Mobile phones: 5.23% (16)

FMCG / CPG: 1.63% (5)

Travel: 6.86% (21)

Gaming: 0.65% (2)

Utilities & Energy: 0.98% (3)

Healthcare: 1.63% (2)

Other manufacturing: 2.94% (9)

Pharmaceuticals: 0.98% (3)

Other: 19.61% (60)

Property: 0.98% (3) Public sector: 6.21% (19)

ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2008

Importance and benefits of Customer Engagement Importance of Online Customer Engagement Advocates of customer engagement will be heartened to learn that organisations are typically taking the idea of customer engagement more seriously than they were a year ago. More than three-quarters of companies (77%) say that its importance has increased in the last 12 months [Figure 5].

A similar proportion of agencies (75%) say that it has become more important for their clients [Figure 6].

The evidence suggests that those championing customer engagement within organisations are being listened to. Just a handful of respondents say that its importance has declined and only a fifth of company respondents say that its importance has remained the same (18%).

Findings

Continuing with the theme of the increased prominence of customer engagement within organisations, half of company respondents (50%) now regard the online dimension of this discipline as ‘essential’ to their organisations, with a further 40% saying that it is ‘important’ [Figure 7]. This again shows how most organisations are taking steps to address this area, although there are 8% of companies treating this only as a ‘nice-to-

have’. Less than 1% of respondents say this is ‘not important’.

From the perspective of agencies [Figure 8], the proportion of companies who regard this area as essential is closer to a third (38%). Agencies also report a higher number of organisations treating this as a nice-to-have (16%). However, it is encouraging that agency responses also point to a high level of significance being attached to customer engagement, with 82% saying that it is either essential or important to their clients (compared to 90% of companies).

The evidence suggests that those championing customer engagement within organisations are being listened to.

ANNUAL ONLINE CUSTOMER ENGAGEMENT SURVEY REPORT 2008

Figure 5

Company: Has the importance of online customer engagement changed for your organisation over the last 12 months?

Figure 7

Company: How important is online customer engagement for your organisation?

Increased: 76.54% (274)

Essential: 49.72% (178)

Remained the same: 18.44% (66)

Important: 40.22% (144)

Declined: 1.12% (4)

Nice to have: 8.38% (30)

Don’t know / Not relevant: 3.91% (14)

Not important: 0.84% (3)

More than three-quarters of companies (77%) say that the importance of customer engagement has increased in the last 12 months.

Don’t know / Not relevant: 0.84% (3)

Figure 6

Agency: Has the importance of online customer engagement typically changed for your clients over the last 12 months?

Figure 8

Agency: Typically, how important is online customer engagement for your clients?

Increased: 75.45% (249)

Essential: 37.76% (125)

Remained the same: 19.7% (65)

Important: 43.81% (145)

Declined: 0.91% (3)

Nice to have: 16.01% (53)

Don’t know / Not relevant: 3.94% (13)

Not important: 1.81% (6) Don’t know / Not relevant: 0.6% (2)

COMMENT

Jim Sterne

Figure 9

Defining the terms of engagement The E-consultancy / cScape second Annual Online Customer Engagement Report highlights a serious problem for marketing today; the lack of clarity in the way we define basic terms.

In particular, the varying responses to the survey question “Which best describes an engaged customer for your organisation?” gave an excellent - and disturbing - indication of how little we agree on the terms. Different respondents identified “Recommends product, service or brand”, “Converts more readily” and “Purchases regularly” as their most trustworthy guideposts to engagement.

Engagement measurement can and should involve taking into account prospective customers as well as those who have already purchased.

For us web analysts, engagement is much more of an immediate metric: Are website visitors or mobile content consumers engaged at-the-moment? How do you determine and measure this sort of engagement in order to increase it? Such questions are imperative.

This became apparent at a recent panel discussion about engagement, which I and a number of other web analytics professionals participated in. We spent a good deal of time

10

kicking around a definition and were finally in agreement that an engaged customer is one who participates and provides feedback.

Quick conversion, repeat purchases and recommendations are indicators of customer loyalty, and they are all desirable outcomes of engagement. Engagement measurement can and should involve taking into account prospective customers as well as those who have already purchased.

We have to ask ourselves questions like “Is our advertising engaging?”; “Is our website actively pulling people deeper into a relationship with the brand so

that they might become customers?” We should look at measuring and boosting participation and feedback activities in order to boost conversion, repeat purchases and recommendations.

This rendition of the Annual Online Customer Engagement Survey brings to light that there is a great deal of education yet to be done, even among the cognoscenti. Why am I so intent on nailing this “engagement” term to the wall? Because tens of thousands of pounds are being spent in pursuit of this elusive objective. Soon this figure will run into the millions, but agencies risk writing proposals for clients to sign off without either side ever being sure what is actually being sold or bought. It seems that defining the terms is more important than ever.

Company: How has your organisation benefited from customer engagement initiatives in the last 12 months?3 Improved customer loyalty: 43.22% (153) Increased revenue: 43.22% (153) Increased profits: 14.41% (51) Bigger market share: 15.82% (56) Improved employee satisfaction: 9.04% (32)

Jim Sterne produces the eMetrics Marketing Optimization Summit and is the Founding President of the Web Analytics

Association. He is an international consultant who focuses on measuring the value of the web as a medium for creating and strengthening customer relationships. Jim has written eight books on using the internet for marketing and was named one of the 50 most influential people in digital marketing by Revolution magazine.

Enhanced public image: 28.25% (100) Reduced marketing costs: 23.73% (84) Reduced customer service costs: 15.82% (56) Improved business predictability: 8.47% (30)

Figure 10

None / Not relevant: 17.51% (62)

Agency: How have your clients’ organisations benefited from customer engagement initiatives in the last 12 months?3 Improved customer loyalty: 58.23% (191) Increased revenue: 52.13% (171) Increased profits: 29.27% (96) Bigger market share: 17.07% (56) Improved employee satisfaction: 11.59% (38) Enhanced public image: 32.93% (108) Reduced marketing costs: 22.56% (74) Reduced customer service costs: 15.85% (52) Improved business predictability: 10.06% (33) None / Not relevant: 7.01% (23) 3

Methodology note: respondents could check up to three options

ANNUAL ONLINE CUSTOMER ENGAGEMENT SURVEY REPORT 2008

Benefits of customer engagement

There is not yet a significant realisation that companies can take important steps towards guaranteeing their future performance by achieving certain levels of customer engagement.

The growing importance of customer engagement is perfectly understandable when one considers the gains enjoyed by organisations as a result of initiatives in this area.

Survey respondents were asked to indicate three ways in which their companies had benefited from customer engagement initiatives in the last 12 months. It can be seen that ‘improved customer loyalty’ and ‘increased revenue’ are the most widely reaped benefits [Figures 9 and 10].

The prominence of these two benefits shows how customer engagement is intrinsically linked with tangible business objectives for most companies, i.e. improved customer acquisition and retention with a view to increased income and profit.

Improved customer loyalty means reduced loss of business through churn and increased word-of-mouth marketing.

It is very significant that improved customer loyalty is a benefit as widely acknowledged as increased revenue. This shows that the traditional, almost exclusive focus on short-term revenue increases is beginning to be displaced by other priorities and a less blinkered approach. There is now much greater understanding that marketing initiatives can have targets that relate to profitability indirectly. For example, improving customer loyalty as a goal of implementing customer engagement will in turn have a positive impact on profits.

It can be seen that ‘improved business predictability’ was the least reported benefit of customer engagement. While companies are recognising that customer loyalty is an important benefit, there is not yet a significant realisation that companies can take important steps towards guaranteeing their future performance (i.e. improving business predictability) by achieving certain levels of customer engagement and loyalty.

Figure 11

Company: Which of the following best describes your organisation’s interest in online customer engagement?

Strengthening emotional investment in your brand: 21.23% (76) Reducing acquisition costs and increasing conversions: 31.56% (113) Deepening and enriching your product or service offering: 32.68% (117) Adjusting to the increased importance and power of the customer: 14.53% (52)

From the agency viewpoint, the most widely seen benefit from customer engagement is improved customer loyalty, with 58% of respondents saying that this has been an important benefit for their clients.

More than half of agencies (52%) say that increased revenue is a top-three benefit.

Interest in Customer Engagement All four of the attributes of customer engagement shown in Figure 11 resonate with significant numbers of company respondents, illustrating how customer engagement has a positive impact across a wide range of areas.

‘Deepening and enriching your product or service offering’ is the primary interest for a third of company respondents (33%), very slightly ahead of ‘reducing acquisition costs and increasing conversions’ (32%).

It is significant that those respondents who regard their company’s primary interest in customer engagement to be

Figure 12

Agency: Which of the following best describes your organisation’s interest in online customer engagement?

Strengthening emotional investment in your brand: 18.37% (61) Reducing acquisition costs and increasing conversions: 31.33% (104) Deepening and enriching your product or service offering: 32.23% (107) Adjusting to the increased importance and power of the customer: 18.07% (60)

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ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2008

about the cost of acquisition and number of conversions are outnumbered by those who are interested primarily in enhancing the customer experience and deepening relationships. This shows that organisations are learning to value other customer behaviours and actions rather than just looking at the purchase.

About a fifth of companies (21%) are primarily interested in ‘strengthening emotional investment in [their] brand’, while 15% say that customer engagement is most importantly about ‘adjusting to the increased importance and power of the customer’ [Figure 11].

It is encouraging that customer engage­ment is seen by less than a sixth of responding organisations in the rather more negative context of having to adjust to the increased power of the customer. Customer engagement is more likely to be seen as an opportunity to connect with customers rather than as a damage-limitation tactic.

It is striking how closely the agency responses match the company responses in terms of the percentages for each description. Agencies are slightly more likely than companies to single out ‘adjusting to the increased importance and power of the customer’ and slightly less likely to highlight ‘strengthening emotional investment in a brand’.

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Describing an engaged customer

Engagement is more likely to be seen as an opportunity to connect with customers rather than as a damagelimitation tactic.

Survey respondents were asked to give up to three descriptions of what best describes an ‘engaged customer’. The most widely given description was that this type of customer ‘recommends product, service or brand’.

Some 59% of company respondents and 62% of agency respondents said this was a top-three attribute [Figures 13 & 14].

A customer’s propensity to recommend a product, service or brand is an excellent metric for organisations to measure because it shows the level of goodwill a customer exhibits towards a brand, and can be more closely correlated with business performance than their ‘satisfaction’. Satisfaction is an inferior metric because it doesn’t give a very good indication as to whether a customer will exhibit the right behaviours. For example, someone may be satisfied but that may not stop them defecting to a competitor.

Companies are increasingly recognising that they need their customers to become advocates of their brand in an age where the voice of a happy or disgruntled customer can be amplified like never before.

Surprisingly, only a quarter of company respondents (27%) say that ‘providing feedback regularly’ is among the topthree best descriptions. Some of the most enlightened organisations are systematically using customer feedback to inform their strategy around the design of products and services.

Figure 13

Company: Which of the following best describes an engaged customer for your organisation?4 Purchases regularly: 36.34% (129) Provides feedback regularly: 26.76% (95) Recommends product, service or brand: 59.44% (211) Participates in innovation and design: 11.27% (40) Participates in online communities or support groups: 32.39% (115) Is less focused on price: 23.38% (83) Is more tolerant of mistakes: 6.76% (24) Converts more readily: 44.51% (158) Other: 6.48% (23)

Figure 14

Agency: Which of the following best describes an engaged customer?4 Purchases regularly: 28.27% (93) Provides feedback regularly: 31% (102) Recommends product, service or brand: 62.92% (207) Participates in innovation and design: 22.49% (74) Participates in online communities or support groups: 31.31% (103) Is less focused on price: 29.18% (96) Is more tolerant of mistakes: 9.12% (30) Converts more readily: 44.68% (147) Other: 4.56% (15)

4

Methodology note: respondents could check up to three options

ANNUAL ONLINE CUSTOMER ENGAGEMENT SURVEY REPORT 2008 Sales: 16.76% (60) Marketing: 70.95% (254) Communications: 21.23% (76) Web / Digital team: 58.66% (210)

Similarly, there are still too many companies taking a top-down approach of building something without due consideration as to what customers actually want.

Only 11% of respondents cite ‘participation in innovation and design’ as a key attribute, a figure which does not do justice to the size of the opportunity.

Responsibility for Online Customer Engagement Figures 15 & 16 clearly show that the marketing department is the part of the business most likely to be directly responsible for online customer engagement, closely followed by the web / digital team. Only a quarter of respondents say that senior management is directly responsible.

Generally speaking, successful customer engagement involves co-operation and integration between a range of departments and disciplines. Senior managers may not have to be directly responsible for the ‘online’ part of the equation but it is certainly crucial that they buy into the concept and give their full backing to any initiatives which are in place.

Figure 15

Customer service: 20.11% (72)

Company: Who is directly responsible for improving online customer engagement in your organisation?5 Operations: 7.82% (28)

Successful engagement involves co‑operation and integration between a range of departments and disciplines.

Sales: 16.76% (60)

IT: 16.48% (59)

Marketing: 70.95% (254)

Senior management: 24.86% (89)

Communications: 21.23% (76) Web / Digital team: 58.66% (210)

No specific department / individual responsible for this: 4.19% (15) No-one is responsible: 1.12% (4)

Customer service: 20.11% (72)

Other: 6.15% (22)

Operations: 7.82% (28) IT: 16.48% (59)

Sales: 22.49% (74)

Senior management: 24.86% (89)

Marketing: 75.38% (248)

No specific department / individual responsible for Communications: 26.75% (88) this: 4.19% (15) No-one is responsible: 1.12% (4) Web / Digital team: 47.72% (157)

Figure 16

Other: 6.15% (22)

Customer service: 23.4% (77)

Agency: Who is typically directly responsible for improving online customer engagement in your clients’ organisations?5 Operations: 9.42% (31)

Sales: 22.49% (74)

IT: 14.29% (47)

Marketing: 75.38% (248)

Senior management: 29.79% (98)

Communications: 26.75% (88) Web / Digital team: 47.72% (157)

No specific department / individual responsible for this: 6.69% (22) No-one is responsible: 1.82% (6)

Customer service: 23.4% (77)

Other: 2.74% (9)

Operations: 9.42% (31) IT: 14.29% (47) Senior management: 29.79% (98) No specific department / individual responsible for this: 6.69% (22) No-one is responsible: 1.82% (6) Other: 2.74% (9) 5

Methodology note: respondents could check multiple items

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ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2008

New Engagement Strategies Strategies for engaging with your audience online Figure 17 shows a range of strategies or approaches for achieving online customer engagement and how they are related by company respondents in terms of importance.

‘Efficient and accessible customer services’ are seen as essential by 45% of respondents, and as very important by a further 41%. Amid all the talk in recent months about the use of Web 2.0 and rich media to deepen customer relationships, it is a bump back down to earth in light of reliable customer services still being seen as the most important strategy for customer engagement.

The next most essential strategy is a ‘consistent online and offline customer experience’ – something which 39% of companies see as essential and 47% see as very important. There is an increased recognition of the need for an integrated approach across different channels. We will see later in the report that companies are getting more proficient at mapping customer experiences in order to identify different touch points.

The joint-third most important strategies for engaging with an audience online are deemed to be ‘building a sense of community around product / services / brand’ and ‘compelling and persuasive copy’, both judged as essential by 35% of respondents.

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The concept of building a sense of community is perhaps the only one of these four top strategies which can be deemed to be a pure-blooded Web 2.0 form of engagement.

The majority of respondents believe that ‘soliciting user-generated content’ and ‘participation on social networking sites’ are only a ‘nice-to-have’ or ‘not important’.

Some 43% of respondents say that UGC on their websites is essential or very important but that figure drops to only 21% for participation on networking sites.

It is surprising that less than half of company respondents view UGC as essential, given the well documented advantages of features such as ratings and reviews on a website. It is something of a paradox that advocacy is the most widely perceived behavioural trait of an engaged customer, and yet the majority of companies have not prioritised the solicitation of UGC. Participation in social networking is well down on the priority list even though the importance of building a sense of community is widely acknowledged. At the moment, many organisations are wondering what to do with social networks, whether they should get involved and, if this is appropriate, how they should make their presence felt. Companies are still adjusting to the idea that a web presence is not just about having a destination website, but also a presence on third party websites, for example social networks.

Figure 17

Company: Which of the following do you feel are central to engaging with your audience online?

100 80 60 10040 80

20 60 40

0

A

B

C

D

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A Consistent online and offline Customer Experience Very Essential B Frank and open communications on products / services important A Consistent online and offline Customer Experience 38.80% (123) 47.00% (149) user-generated and open communications on productscontent / services B CFrankSoliciting 27.90% (89) 49.84% (159) C Soliciting user-generated content 12.54% (40) 30.41% (97) Participation on social networking sites, e.g Facebook & LinkedIn D D Participation on social networking sites, e.g Facebook & LinkedIn 4.09% (13) 17.30% (55) experiences experiences E EPersonalised 21.14% (67) 37.54% (119) Personalised F Communicating corporate social responsibility 9.12% (29) 30.50% (97) Communicating a sense of communitycorporate around productssocial / servicesresponsibility / brand G FBuilding 34.91% (111) 34.28% (109) audience fears of usingof thecommunity digital channels around products H GAllaying 18.67% /(59) 41.77% (132) Building a sense services / brand I Efficient and accessible customer services 45.45% (145) 41.07% (131) Allaying audience fears of using the digital channels H J Compelling and persuasive copy 34.69% (111) 51.88% (166) I Efficient and accessible customer services J Compelling and persuasive copy

Very important (123) 47.00% (149) Not Don't know (89)important 49.84% (159) 3.15% (10) 0.63% (2) (40) (97) 2.51% (8) 30.41% 0.00% (0) 17.55% (56) 0.94% (3) (13) 17.30% (55) 39.62% (126) 2.20% (7) 6.62% (21)37.54% 0.32% (1) (67) (119) 17.61% (56) 1.57% (5) (29) 30.50% (97) 5.66% (18) 0.31% (1) 17.09% (54)34.28% 2.53% (8) (111) (109) 2.19% (7) 0.31% (1) (59) 41.77% (132) 0.63% (2) 1.56% (5) (145) 41.07% (131) (111) 51.88% (166)

Essential 38.80% Nice to have 27.90% 10.41% (33) 12.54% 19.75% (63) 38.56% (123) 4.09% 36.79% (117) 34.38% (109) 21.14% 41.19% (131) 9.12% 24.84% (79) 19.94% (63) 34.91% 10.97% (35) 18.67% 11.25% (36) 45.45% 34.69%

10.4 19.7 38.5 36.7 34.3 41.1 24.8 19.9 10.9 11.2

ANNUAL ONLINE CUSTOMER ENGAGEMENT SURVEY REPORT 2008

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Figure 19

Company: Which of the following does your organisation use to increase online customer engagement?

Agency: Typically, which of the following do your clients use to increase online customer engagement?

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A Social networks (e.g. Facebook) 19.03% (59) No plans to Currently use Plan to use use (66) B Video-sharing websites (e.g. YouTube) 21.29% A Social networks (e.g. Facebook) 19.03% (59) 31.94% (99) 38.06% (118) Audio-sharing websites (42) websites (e.g.

YouTube) (e.g. iTunes) BC Video-sharing 21.29% (66) 28.71% (89) 13.77% 37.42% (116) websites (e.g. iTunes) CDAudio-sharing 13.77% (42) 16.39% (50) 13.86% 53.77% (164) Image-sharing websites (e.g. Flickr) (42) D Image-sharing websites (e.g. Flickr) 13.86% (42) 18.15% (55) 54.13% (164) Social news sites / bookmarking (e.g. Digg) (49) news sites / bookmarking (e.g. Digg) E E Social 16.17% (49) 31.68% (96) 16.17% 38.28% (116) sites (e.g.sites Blogger, My Telegraph) F F Blogging 31.41% (98) Blogging (e.g.

Blogger, My Telegraph)21.47% (67) 35.58% (111)21.47% (67) G Social knowledge sharing (e.g. Wikipedia, Yahoo Answers) 16.56% (51) 31.49% (97) 38.64% (119) Social knowledge sharing (e.g. Wikipedia,14.61% Yahoo (45) Answers) (51) based applications / widgets / gadgets HGDesktop 34.74% (107)16.56% 37.99% (117) widgets / badges / gadgets I HWeb-based 17.57% (55) 38.98% (122)14.61% 30.35% (95) Desktop based applications / widgets / gadgets (45) I Web-based widgets / badges / gadgets 17.57% (55)

Plan to use 31.94%

Don't know /not relevant 28.71% 10.97% (34) 16.39% 12.58% (39) 16.07% (49) 18.15% 13.86% (42) 31.68% 13.86% (42) 11.54% (36) 35.58% 13.31% (41) 31.49% 12.66% (39) 13.10% (41) 34.74%

38.98%

(99) (89) (50) (55) (96) (111) (97) (107) (122)

Don't know Currently use Plan to use /not relevant E F G H I networks (e.g. Facebook) A Social 30.07% (83) 35.87% (99) 38.06% (118) 10.97% (34) Don't know No plans to Currently use Plan to use /not relevant use websites (e.g.

B Video-sharing 32.61% (90) 29.71% (82) 37.42% (116) 12.58% (39)YouTube) A Social networks (e.g. Facebook) 30.07% (83) 35.87% (99) 25.36% (70) 8.70% (24) Audio-sharing websites (39) 8.70%24.07% (65) 53.77% (164) (49)iTunes) websites 16.07% (e.g.

YouTube) (e.g.

B CVideo-sharing 32.61% (90) 29.71% (82) 14.44% 28.99% (80) (24) websites 13.86% (e.g. iTunes) C DAudio-sharing 14.44% (39) 24.07% (65) 22.71% 45.19% (122) (44) Image-sharing websites (e.g.

(62) 16.30% 22.71% (62) 54.13% (164) (42) Flickr) D Image-sharing websites (e.g. Flickr) 22.71% (62) 22.71% (62) 42.49% (116) 12.09% (33) Social news sites / bookmarking (55) 14.65% 30.40% (83) 38.28% (116) 13.86% (42) (e.g. Digg) news sites / bookmarking (e.g. Digg) E E Social 20.15% (55) 30.40% (83) 20.15% 34.80% (95) (40) sites (e.g.sites Blogger, My Telegraph) F F Blogging 23.10% (64) (16) Blogging (e.g.

Blogger, (114) 5.78%29.96% (83) 31.41% (98) 11.54% (36)My Telegraph)41.16% (114) 29.96% (83) 41.16% G Social knowledge sharing (e.g. Wikipedia, Yahoo Answers) 23.38% (65) 28.42% (79) 36.69% (102) 11.51% (32) Social sharing (e.g. Wikipedia,22.02% Yahoo (61) Answers) (65) 11.91% 28.42% (79) 38.64% (119) 13.31% (41) basedknowledge applications / widgets / gadgets H GDesktop 34.30% (95) 23.38% 31.77% (88) (33) widgets / badges / gadgets (39)/ widgets / gadgets I HWeb-based 25.82% (71) 36.73% (101)22.02% 27.27% (75) (28) Desktop based applications (61) 10.18% 34.30% (95) 37.99% (117) 12.66% widgets I Web-based 25.82% (71) 36.73% (101) 30.35% (95) 13.10%/ badges (41) / gadgets No plans to

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ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2008 COMMENT

Andy Beal

Social media must be added to the engagement mix The second Annual Online Customer Engagement Survey demonstrates just how important online customer engagement is going to be over the next 12 months. With 90% of businesses indicating that online customer engagement is important—if not essential— to their marketing efforts, and 77% planning to increase their focus on customer engagement, 2008 is shaping up to be the year we start truly to listen to our customers.

Having said that, companies are yet to embrace the importance of social media as platforms for improving online customer engagement. The study reveals that far too many businesses believe that customer engagement is simply a product of customer experience (38%) or is a role for customer service (46%). Only 12% of businesses consider user-generated content essential to improve customer engagement and less than 5% think the same of social networking sites such as Facebook. In fact, at least a third of those polled have no plans to use social media at all in their customer engagement initiatives and only a quarter of companies feel that monitoring social networks is important.

Companies would do well to understand that customer engagement cannot be controlled within their own websites and that they should look to improve their customer interactions outside of their own web properties. With less than 50% of businesses

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having a complete picture of the different touch points with their customers, the majority of companies would be wise to invest time in researching further exactly where their customer interaction takes place. They may well find that blogs, social networks and other social media make up an important part of their customer engagement for 2008.

Companies would do well to understand that customer engagement can’t be controlled within their own websites.

Andy Beal is an online marketing expert.

He is editor of MarketingPilgrim.com, received a nomination for the 2006 “Fast 50” and was named in the Triangle Business Journal’s “40 Under 40”.

Methods of increasing engagement This section looks more specifically at Web 2.0-type tactics and technologies which are increasingly being used by organisations.

The extent to which a variety of methods are being used to increase online customer engagement is shown in Figures 18 & 19.

Blogging and video-sharing sites are the methods most frequently used, with 21% of company respondents using each of these tactics.

The tactic most likely to be on the radar is the use of web-based widgets, with just under 40% of companies saying they are planning this [Figure 18]. Desktopbased applications or widgets are also being planned by more than a third of companies. Widgets are increasingly popular vehicles for engagement because they can give visibility to brands, products and services in an increasingly fragmented online world. In the future, people will be less likely to proactively visit websites but more likely to customise their home pages to pull in relevant information (contained in feeds and widgets).

The figures show that social networking sites are being used or considered by half of company respondents, a finding which is surprising because it was seen in the previous section that the vast majority of respondents regard a strategy of participation on social network sites as either not

Figure 20

Company: How important do you think the mobile channel will be for customer engagement in the next three years?

Essential: 19.57% (63) Important: 44.41% (143) Nice to have: 23.29% (75) Not important: 8.7% (28) Don’t know / Not relevant: 4.04% (13)

Figure 21

Agency: How important do you think the mobile channel will be for customer engagement in the next three years?

Essential: 31.25% (90) Important: 47.57% (137) Nice to have: 17.71% (51) Not important: 2.78% (8) Don’t know / Not relevant: 0.69% (2)

COMMENT

Pete Mortensen

The future of engagement is mobile important or a nice-to-have. It seems that many organisations are engaging with social networks without really being convinced about their value.

Importance of mobile channel It is well documented that the mobile channel has been heralded as The Next Big Thing, but that it has so far failed to take off in the way that has long been anticipated.

Will 2008 finally be the year when mobile marketing hits its tipping point?

Around two-thirds of company respondents (64%) believe that the mobile channel will be ‘essential’ or ‘important’ for customer engagement in the next three years. Around a third feel that engagement via this channel is a ‘nice-to-have’ or ‘not important’ [Figure 20].

Agency respondents, as a group, see mobile as more important for customer engagement. Just under a third of responding agencies say it is essential (31%) compared to 20% of companies. Only a fifth of agencies see this as a nice-to-have or not important [Figure 21].

Is it the case that agencies have been faster to recognise the importance of the mobile channel whereas companies are in denial about the impact this will have?

Around two-thirds of company respondents (64%) believe that the mobile channel will be ‘essential’ or ‘important’ for customer engagement in the next three years.

In recent years, companies have come to terms with the idea that they should be acquainted with their customers. The Online Customer Engagement Survey Report, makes it apparent, however, that the debate is still wide open on how best to meet this goal.

The surge of social media has created tremendous opportunity for new kinds of customer interactions, but I think it remains an open question how widely applicable such technologies will become for companies.

Are people ready to turn over their activities offline, online and via mobile to every company they do business with?

Companies around the globe, including many that have responded to this survey, are intrigued by such opportunities. Yet it’s also clear that a very small proportion is ready to let employees blog about their business, in spite of the success of experiments at Microsoft and a few other pioneers.

That said, I think that the mobile is the most fascinating new medium for engaging customers since the dawn of the internet.

Mobile phones are beloved, intensely personal devices. People trust them, they feel in control of them and, though mobile phones have invaded our personal lives, the communications they bring us are generally welcome.

This is not the case, however, with advertising, particularly that of the junk

Mobile phones are beloved, intensely personal devices. People trust them, they feel in control of them and, though mobile phones have invaded our personal lives, the communications they bring us are generally welcome. mail variety. Email was also once a beloved medium, until blocking spam became a critical value. Because people enjoy such close relationships with their mobile phones, the potential persuasive powers of these devices are extremely high. On the other hand, companies looking to the mobile space as a tool for marketing and customer connection must walk a fine line between engagement

and (perceived) exploitation or invasion of privacy to a degree never seen in the past.

If the mobile becomes a haven of computer viruses, spam advertising offers and customer feedback surveys, people will shut down and cease engagement. Successful players will find ways to offer value-added services that build their brands, make their customers’ lives better, and don’t look anything like advertising.

Google’s suite of mobile applications meets these ends extraordinarily well.

As a final thought, let me just urge readers of this report to remember that people and their moods are more than just abstractions on a page or bits on a computer.

The number of companies reporting the use of ethnographic shadowing techniques is incredibly low compared to other forms of

customer engagement tactics, even though meeting people in their actual lives is the only way to get a full picture of who they are.

A number of compelling technologies have emerged recently that make it possible to meet and engage customers in new and exciting ways. None of them, however, should be seen as a replacement for real empathy. No matter what else you’re engaging in, go out,

meet and understand people as they really are. Then use the other tools to help figure out what you observed in their lives really means and, moreover, how your company can profit by improving the lives of ordinary people.

Pete Mortensen is a blogger, journalist and consultant based in San Francisco. He co-edits the Wired Magazine-affiliated Cult of Mac blog and is the communications lead for innovation strategy firm Jump Associates.

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ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2008

Measurement and Research “We should not simply design ‘mobile sites’ that are replications of the corporate website. This would be similar to what happened in 1996 when everyone put their printed brochure online.”

“The customer must feel as though he or she is in control and is benefiting. When customers sense they are being used, they switch off.”

Steve Jackson, Satama

Nicholine Hayward, Clinic

Achieving engagement through the mobile channel The critical success factors for obtaining customer engagement through the mobile channel are shown below [Figure 22]. ‘Ease of use’ is seen as the most important factor, with just under three quarters of company respondents (74%) rating it as one of the five most important criteria.

The next most important factors are deemed to be ‘website optimisation for mobile’ (58%) and ‘speed of downloads’ (51%).

Figure 22

Company: Which of the following do you feel are important for obtaining customer engagement through the mobile channel?

Permanent connectivity: 28.48% (90) Ease of use: 73.73% (233) Device size: 15.19% (48) Devices are with us at all times: 23.42% (74) Ability to personalise devices and services: 32.91% (104) Contextual messaging (messaging relevant to location): 29.11% (92) Interactive software: 15.19% (48) Emotional attachment to devices: 15.51% (49) Lower costs: 39.24% (124) Privacy and security: 42.09% (133) Speed of downloads: 51.27% (162) Website optimisation for mobile: 57.91% (183)

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Methodology note: respondents could check up to three options

Customer data collection

Methods of gathering customer intelligence

The extent to which different types of customer data are being collected by organisations is shown below [Figure 23]. There is a thirst for more data across the board, with customer satisfaction, purchasing history and customer praise in particular being more widely measured now than they were a year ago.

For many companies, the problem is not so much collecting data as knowing what to do with it. An organisation can have all the data in the world, but without an understanding of what this means to their business it is useless.

Web analytics is regarded as the most essential method for gathering intelligence to improve customer engagement [Figure 25 and 26]. More than half of company respondents (57%) say web analytics are ‘essential’ for this purpose and a further (34%) say they are ‘important’.

Feedback from customer-facing staff and usability testing are the next most essential types of intelligence for better customer engagement, with just over two thirds of responding organisations saying that each of these methods is ‘essential’ (35% and 34% respectively).

The most enlightened organisations are combining data from different channels in order to build their understanding of the customer experience. For example, it can be instructive to examine customer satisfaction survey results in the context of which parts of the website customers have interacted with.

It can be seen that both quantitative and qualitative information sources play important parts in gathering customer intelligence. For example, web analytics data can be invaluable but sometimes needs to be supplemented with qualitative information about what people are actually saying to help make sense of it.

For many businesses, the missing ingredient is analysis and understanding of the data, which is necessary for producing a framework which leads to actionable next steps and measurable improvements.

It is not just web data and analytics which are crucial for understanding and improving the customer experience. Companies face an on-going challenge in pulling together information from different channels.

ANNUAL ONLINE CUSTOMER ENGAGEMENT SURVEY REPORT 2008

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More than last About the same Less than last Don't know More than last About the same B yearC D E F /not G relevant H year as last year 0 A year as last year Customer complaints A Customer complaints 25.91% (78) 52.82% (159) 6.98% (21) 14.29% (43) A 25.91% (75) 52.82% (130) More than last About the same Less than last Don't know More than last About the same Less than last Don't know year as last year year /not relevant year as last year year /not relevant B Customer praise 33.33% (100) 45.67% (137) A Customer 3.00% (9) praise 18.00% (54)25.91% (75) B Customer 33.33% (87) 14.29%45.67% (116) complaints 52.82% (130) 6.98% (18) (42) Customer complaints 25.91% (78) 52.82% (159) 6.98% (21) 14.29% (43) Purchasing history C praise (111) B Customer 2.32% (7) history 26.82% (81)33.33% (87) C Purchasing (104) 18.00%36.75% (102) praise 45.67% (116) 34.11% 3.00% (11) (46) Customer 33.33% (100) 45.67% (137) 34.11% 3.00% (9)(103) 18.00%36.75% (54) C Purchasing history 34.11% (104) 36.75% (102) 2.32% (6) 26.82% (44) Purchasing history 34.11% (103) 36.75% (111) 2.32% (7) 26.82% (81) Customer satisfaction Customer satisfaction D 39.40% (119) 45.36% (137) 3.31% (10) 11.92% (36) D 39.40% (108) 45.36% (102) D Customer satisfaction 39.40% (108) 45.36% (102) 3.31% (6) 11.92% (45) Customer satisfaction 39.40% (119) 45.36% (137) 3.31% (10) 11.92% (36) Customer feedback on competitors' products feedback on competitors' products E feedback (58) 39.93%36.91% (110) E Customer 3.69% 39.93% E Customer (106) feedback on(11) competitors' products or services (119) 19.46% (70) or services 36.91% (106) 19.46% 3.69% (7)(70) 39.93%36.91% (76) Customer on competitors' products or services 19.46% (58) or services 36.91% (110) 19.46% 3.69% (11) (119) F Customer-generated ideas for products / services 27.87% (86) 37.70% (91) 3.93% (14) 30.49% (75) Customer-generated ideas for products / services 27.87% (85) 37.70% (115) 3.93% (12) 30.49% (93) Customer-generated ideas for products / services Customer-generated ideas for products / services F 27.87% (85) 37.70% (115) 3.93% (12) 30.49% (93) F 27.87% (86) 37.70% (91) G Lifestyle data 21.85% (90) 34.44% (87) 6.95% (11) 36.75% (72) Lifestyle data 21.85% (66) 34.44% (104) 6.95% (21) 36.75% (111) Lifestyle datavalues and beliefs Lifestyle datavalues and36.75% personal beliefs 15.82% (71) 35.69% (96) 21.85% 4.71% (10) (82) (66) 43.77%34.44% (104) H Data6.95% (21) (111) Gon customers' (90) 43.77%34.44% (87) DataG on customers' personal 15.82% (47) 35.69% (106) 21.85% 4.71% (14) (130) customers'43.77% personal values H Data on customers' personal values and beliefs 15.82% (47) 35.69% (106) 4.71% (130)and beliefs H Data on(14) 15.82% (71) 35.69% (96) B

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COMMENT

Avinash Kaushik

Figure 25

Engaging with the engagement metric Creating engaging experiences online is important. The results of this survey underscore that. Most of you won’t be surprised that fully 77% of organizations surveyed say that the importance of engagement has increased. Yet the survey results also indicate that, overall, we are struggling to understand what creates an engaging customer experience online and how to measure it.

The reason for this is that customer engagement can mean so many things, each of which is right for someone and wrong for everyone else. Here are my recommendations for increasing your chances of success when you measure engagement: 1 Most companies that measure “engagement” have not applied due diligence to identifying what success means for their online presence. In absence of that hard work they fall into measuring engagement, and end up attempting to measure something that is hard to action or that will rarely improve the bottom line. Don’t do that.

2 Think very carefully about what you are measuring if you do try to measure engagement. If engagement to you is repeat visitors by visits then call it Visit Frequency, don’t call it engagement. Don’t sexify, simplify.

3 If you want to measure “engagement” then think of new and more interesting ways

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Company: In the last 12 months which of the following methods of gathering customer intelligence have you found most useful for engaging your customers online?

to do so. Go beyond the simple / complex formulas on top of just your click data; remember engagement at its core is a qualitative feeling. Think different.

For maximum success and improved actionability, your engagement metric should be easy to understand and “instantly useful” (just looking at it will give you clues as to what is wrong and needs to be fixed).

If you measure customer engagement and after 60 days have not taken action from the results then it is time to burn and start again.

“Action or go home”, that’s your slogan.

Let me take off my analytics hat and share a pet peeve…

A majority of survey respondents asked what an engaged customer is indicate these responses: makes repeat purchases, recommends company services, participates in community / forums, provides feedback, converts readily, and is less focussed on price.

I read this with a great deal of sadness because it shows that companies and marketers are only thinking of what to get out of me, the customer. Then they execute, and fail.

How about we flip the model: What do I, the customer, get out of your engaging experience? Only by building on this assumption will you be successful.

Engagement is not about you, it is about me.

100 80 Avinash Kaushik is author of the blog Occam’s Razor (www. kaushik.net/avinash), which focuses on Web Analytics & Web Research, and of the book Web Analytics: An Hour A Day (www.snipurl.com/ wahour).

He is also the Analytics Evangelist for Google.

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Very important know Very A Focus Groups, Customer interviews 18.52%Not (55) Don't 41.75% (12 Essential Nice to have important /not relevant important Focus Customer interviews 18.52% (55) 41.75% (124) 20.88% (62) 4.04% (12) 14.81%22.49% (44) Online panels B Groups, 7.27% (21) (65 Online panels 7.27% (21) 22.49% (65) 34.60% (100) 8.30% (24) 27.34% (79) online search practices C Monitoring 29.35% (86) (10 Monitoring online search practices 29.35% (86) 36.52% (107) 18.43% (54) 2.05% (6) 13.65%36.52% (40) Shadowing customers (ethnography) 3.10% (9) 14.48% (42) 32.76% (95) 12.76% (37) 36.90% (107) Shadowing customers (ethnography) D 3.10% (9) 14.48% (42 Offline customer surveys 15.65% (46) 36.39% (107) 23.47% (69) 8.16% (24) 16.33% (48) Online customer surveys 26.37% (77) 42.12% (123) 16.44% (48) 2.40% (7) 12.67% (37) E Offline customer surveys 56.86% (170) 34.11% (102) 4.01% (12) 15.65% (46) 36.39% (10 Web analytics 0.33% (1) 4.68% (14) Usability testing 34.35% (101) 34.01% (100) 14.97% (44) 2.04% (6) 14.63%42.12% (43) Online customer surveys F 26.37% (77) (12 Feedback from customer-facing staff 35.31% (107) 40.92% (124) 12.87% (39) 0.33% (1) 10.56% (32) Direct through the online channel 31.10% (93) 42.14% (126) 12.37% (37) 1.67% (5) 12.71%34.11% (38) Webfeedback analytics G customer 56.86% (170) (10 Online social network monitoring 7.61% (22) 18.69% (54) 32.87% (95) 15.57% (45) 25.26% (73) H Usability testing 34.35% (101) 34.01% (10 I Feedback from customer-facing staff 35.31% (107) 40.92% (12 J Direct customer feedback through the online channel 31.10% (93) 42.14% (12 K Online social network monitoring 7.61% (22) 18.69% (54 A

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ANNUAL ONLINE CUSTOMER ENGAGEMENT SURVEY REPORT 2008

Figure 26

Agency: In the last 12 months which of the following methods of gathering customer intelligence have your clients typically found most useful for engaging their customers online?

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Engagement metrics Just under half of the responding organisations have dedicated metrics for measuring online customer engagement [Figure 27].

A further 46% ‘would like to’ have these metrics. According to agencies, only a third (34%) of clients typically have metrics especially for this purpose [Figure 28].

Figure 27

Company: Do you have dedicated metrics for measuring online customer engagement?

Yes: 48.87% (152) No, but we would like to: 46.3% (144) No, we don’t think it is important: 1.93% (6) Don’t know / Not relevant: 2.89% (9)

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Mapping customer touch points

Since last year’s Customer Engagement Report, there has been a statistically 100 significant improvement in the number of organisations who declare themselves 80 20 either ‘very advanced’ or ‘quite advanced’ 60 at mapping customer experiences in order to identify touch points to gain a single Figure 28 40 0 A B C D E F G H I J K view of the customer.

Agency: Do your clients have dedicated metrics for measuring 20 Some 46% of organisations are now online customer engagement?

Don't know Very either very or advanced Not compared 0 Essential Nicequite to have important A B C D E F G H I J K /not relevant important to 35% last year. Last year, just under a know Very A Focus Groups, Customer interviews 18.53%Not (48) Don't 40.93% (106) 25.10% said (65)that ‘they 3.47%need (9) 11.97% (31) Yes: 34.07% (92) Essential Nice to have important /not relevant important quarter (24%) to Customer interviews A Focus 18.53% (48) 40.93% (106) 25.10% (65) 3.47% (9) 11.97%28.13% (31) Online panels B Groups, 12.50% (32) (72) 31.64% (81) 11.33% (29) 16.41% (42) start doing this’, compared to only 16% No, but we would like to: 50.74% (137) B Online panels 12.50% (32) 28.13% (72) 31.64% (81) 11.33% (29) 16.41% (42) online search practices C Monitoring 24.32% (63) (107) 4.25% (11) 11.20% (29) online search practices C Monitoring 24.32% (63) 41.31% (107) 18.92% (49) 4.25% (11) 11.20%41.31% (29) this year.18.92% Agencies(49) also report a marked D Shadowing customers (ethnography) 7.00% (18) 19.46% (50) 34.63% (89) 12.06% (31) 26.85% (69) No, we don’t think it is important: 9.26% (25) Shadowing customers (ethnography) D customer 7.00% (18) (50) 34.63% (89) 12.06% (31) 26.85% (69) surveys E Offline 13.69% (36) 37.64% (99) 28.14% (74) 7.98% (21) 12.55%19.46% (33) improvement.

F Online customer surveys 22.87% (59) 46.12% (119) 21.32% (55) 3.10% (8) 6.59% (17) Offline customer surveys E 13.69% (36) 37.64% (99) 28.14% (74) 7.98% (21) 12.55% (33) G Web analytics 47.73% (126) 30.30% (80) 12.12% (32) 3.03% (8) 6.82% (18) Don’t know / Not relevant: 5.93% (16) H Usability 3.80% (10) 11.03%46.12% (29) Online customer surveys 27.00% (71) 37.64% (99) 20.53% (54) F testing 22.87% (59) (119) 21.32% (55) 3.10% (8) 6.59% (17) I Feedback from customer-facing staff 27.59% (72) 41.00% (107) 19.16% (50) 1.92% (5) 10.34% (27) through the online channel 28.57% (76) J Direct 46.24% (123) 14.29% (38) 2.26% (6) 8.65% 30.30% (23) Webfeedback analytics G customer 47.73% (126) (80) 12.12% (32) 3.03% (8) 6.82% (18) K Online social network monitoring 7.78% (20) 27.63% (71) 33.07% (85) 14.01% (36) 17.51% (45) H Usability testing 27.00% (71) 37.64% (99) 20.53% (54) 3.80% (10) 11.03% (29) I Feedback from customer-facing staff 27.59% (72) 41.00% (107) 19.16% (50) 1.92% (5) 10.34% (27) J Direct customer feedback through the online channel 28.57% (76) 46.24% (123) 14.29% (38) 2.26% (6) 8.65% (23) K Online social network monitoring 7.78% (20) 27.63% (71) 33.07% (85) 14.01% (36) 17.51% (45)

40

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ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2008

Barriers to success Barriers to a better Online Customer Engagement Figure 29 shows the biggest barriers to online customer engagement from the perspective of company respondents.

‘Lack of resources (budget and time)’ is the biggest barrier to success - regarded as a great barrier by 60% of responding organisations. Lack of resources was also deemed to be the most significant problem in the previous survey, when two thirds of respondents indicated that it was a great barrier ‘to a magnificent customer experience’.

The next most significant issues are ‘complexity or organisation’ and ‘organisational incoherence, culture or (lack of ) will’, regarded as great barriers by 42% and 38% of organisations respectively.

As was the case last year, there are differences in how much company respondents and agency respondents see different issues as major barriers.

Organisational incoherence, lack of skills / experience and lack of senior management

buy-in are seen as a great barrier by close to half of agency respondents [Figure 27].

The percentage of company respondents regarding these as major barriers is significantly less – a 12% difference for organisational incoherence and a 21% difference for both lack of skills and for lack of senior management buy-in.

A ‘focus on short-term benefits’ and ‘lack of, or difficulty proving, the business case’ are also more likely to be bigger problems in the eyes of agency respondents than they are for company respondents.

Company: Which of the following barriers to cultivating better online customer engagement have you faced in the last 12 months?

100 80 100 60 80 60

Optimism about the future Figures 31 and 32 shows a high level of optimism around the potential for engaging customers online. Just under half of company respondents (46%) are ‘very optimistic’ and a further 45% are ‘quite optimistic’. Only 7% are ‘not very optimistic’ and less than 2% declare themselves ‘doom-laden’.

91% of company respondents and 89% of agency / supplier respondents are ‘optimistic’ about the potential for engaging customers online.

22

Figure 29

40 20 0

40 20 0

A

A B

B C

C D

D E

E F

G

F

G

H

I

H J

I

J

K Great barrier

K

A Lack of resources (budget and time) 59.54% (181) Great barrier33.00%Small barrier B Lack of methodology or framework (98) culture or (lack of) will(181)37.97% C of Organisational Lack resources (budgetincoherence, and time) 59.54% 33.22%(112) (101) Lack methodology or framework 41.08%(32) (122) in finding supporting agencies 33.00% (98) 10.81% D of Difficulty Organisational incoherence, culture or (lack of) will 37.97% (112)42.42% 34.92%(126) (103) of organisation E Complexity Difficulty in finding supporting agencies 10.81% (32) 33.45% (99) F Customers or product unsuitable 10.51% (31) Complexity of organisation 42.42% (126) 31.99% (95) Lack of skills / experience / understanding G Customers or product unsuitable 10.51% (31) 26.76% 37.29%(80) (110) with technology H of Problems Lack skills / experience / understanding 26.76% (80) 35.33% 48.49%(106) (145) or difficulty proving, ROI / business case (106)28.76% I Lack Problems withof, technology 35.33% 41.67%(86) (125) Lack or difficulty proving, ROIbenefits / business case 28.76% (86) 31.21% 39.80%(93) (119) on short-term J of,Focus Focus short-term benefits 31.21% (93) 24.32% 42.28%(72) (126) of senior management buy-in K onLack

A B C D E F G H I J K Lack of senior management buy-in

24.32%

(72)

37.50%

(111)

Small barrier 33.22% (101) Not a barrier 41.08% (122) 34.92% (103) 7.24% (22) 25.93% (77) 33.45% (99) 27.12% (80) 31.99% (95) 55.74% (165) 37.29% (110) 25.59% (76) 48.49% (145) 52.20% (154) 41.67% (125) 24.75% (74) 39.80% (119) 23.00% (69) 31.44% (94) 42.28% (126) 26.51% (79) 37.50% (111) 38.18%

(113)

7.24 25.9 27.1 55.7 25.5 52.2 24.7 23.0 31.4 26.5 38.1

ANNUAL ONLINE CUSTOMER ENGAGEMENT SURVEY REPORT 2008

Figure 30

Figure 31

Agency: Which of the following barriers to cultivating better online customer engagement have your clients faced in the last 12 months?

Company: How optimistic do you feel about the potential for engaging your customers online?

Very optimistic: 46.13% (143)

100

Quite optimistic: 44.84% (139)

80

Not very optimistic: 6.77% (21) Doom laden: 1.61% (5)

100 60

Don't know / not relevant: 0.65% (2)

80 40 60 20 40

0

20 0

A

A

B

B

C

C

D

D

E

E

F

F

G

H

G

I

H

J

I

J

Figure 32

K Great barrier

K

A Lack of resources (budget and time) 54.96% (144) B Lack of methodology or framework (102) Great barrier39.08% Small barrier C Organisational incoherence, culture or (lack of) will 50.19% (130) Lack of resources (budget and time) 54.96% (144) 37.02% (97) in finding supporting agencies 39.08% (102)18.22% D ofDifficulty Lack methodology or framework 44.44%(47)(116) Complexity of organisation E 43.31% Organisational incoherence, culture or (lack of) will 50.19% (130) 37.07%(110) (96) Difficulty in finding supporting 18.22% (47) 12.89% 36.43%(33)(94) or productagencies unsuitable F Customers Complexity 43.31% (110)48.48% 38.19%(128) (97) skills / experience / understanding G Lackofoforganisation Customers or product unsuitable 12.89% (33) 39.45% H Problems with technology 24.81% (65)(101) Lack of skills / experience / understanding 48.48% (128) 39.02% (103) I Lack of, or difficulty proving, ROI / business case 39.15% (101) Problems with technology 24.81% (65) 50.38% (132) on short-term benefits J of,Focus Lack or difficulty proving, ROI / business case 39.15% (101)44.83% 43.80%(117) (113) Lack of senior management buy-in K on Focus short-term benefits 44.83% (117)45.21% 40.61%(118) (106)

A B C D E F G H I J K Lack of senior management buy-in

45.21%

(118)

34.10%

(89)

Small barrier 37.02% (97) 44.44% (116) Not a barrier 37.07% (96) 8.02% (21) 36.43% 16.48% (94) (43) 38.19% 12.74% (97) (33) 45.35% (101) 39.45% (117) 18.50% (103) (47) 39.02% 47.66% (122) 50.38% (132) 12.50% (33) 43.80% (113) 24.81% (65) 40.61% 17.05% (106) (44) 34.10% 14.56% (89) (38) 20.69%

Agency: Thinking about the majority of your clients how optimistic do you feel about the potential for them to engage their customers online?

Not a barrier 8.02% 16.48% 12.74% 45.35% 18.50% 47.66% 12.50% 24.81% 17.05% 14.56% 20.69%

(21) (43) (33) (117) (47) (122) (33) (65) (44) (38) (54)

Very optimistic: 39.18% (105) Quite optimistic: 49.63% (133) Not very optimistic: 10.45% (28) Doom laden: 0.37% (1) Don't know / not relevant: 0.37% (1)

(54)

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ANNUAL ONLINE CUSTOMER ENGAGEMENT SURVEY REPORT 2008

Thoughts on customer engagement

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ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2008

Dr Dave Chaffey

Segmentation, segmentation, segmentation?

By differentiating your audiences you can deliver more relevant and effective online messaging to customers.

In light of the rapidly growing number of digital channels competing for our attention, the question of how to measure and achieve online engagement is becoming more pressing. So it is a promising sign that digital marketing bloggers have been buzzing lately about opportunities to gauge engagement for different types of online business.

Research analysts and commentators have defined frameworks, indices and measures to help marketers assess their engagement effectiveness.

The need for segmentation The need to differentiate between customer segments has not been properly addressed in the discussions around online engagement.

These segments can be assessed online through web analytics, transaction history and/or email marketing responses. A more granular approach to assessing customer engagement is more actionable and therefore more powerful.

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It is a promising sign that digital marketing bloggers have been buzzing lately about opportunities to gauge engagement for different types of online business.

For customer acquisition, it is useful to breakdown online engagement by the source or referrer of the visitor. For example, how engaged are visitor segments for different digital channels such as paid and natural search, affiliates and display ads? You can also drill down further to see engagement for different search terms.

The latest versions of web analytics tools such as Google Analytics or Visual

Sciences make segmentation much more straightforward. You can use measures such as bounce rate, duration on site or the number of conversion goals achieved for each referrer.

This is a great way of assessing the quality of traffic and to refine promotional tactics.

Focusing on search behaviour and touch points You should also review engagement with a brand through search behaviour. This will fluctuate according to the success of different marketing campaigns, but you should look for long-term and seasonal trends compared to competitors using audience research tools such as Hitwise which can be used to compare online engagement between brands. Within

your own analytics you can assess number of searches including: • URL search • Brand name searches • Brand plus product searches A bigger challenge going forward is measuring engagement across multiple touch points through online acquisition; in other words, assessing the contribution of different digital channels such as paid search, display ads and affiliates. Many media agencies or in-house teams are developing their own solutions because the tools of the analytics companies are not appropriate.

Engagement through retention can be a struggle since analytics data sets are not usually integrated with customer profile or response data – although analytics tools such as Core Metrics do have this capability. Some are solving this problem through integrating data into a data warehouse which combines web analytics data, customer profiles, customer satisfaction, customer advocacy as well as campaign response and transactional

data. For larger organisations, the data warehousing approach is increasingly used as a way to obtain a holistic view of customer engagement and then to use a right-touching approach to deliver customised messages.

Siloed systems have complicated data integration But this requires a tremendous amount of system and data integration. With email marketing, for instance, software has to be developed to trigger a personalised email when a new customer is added to the database and then to close the loop by

ANNUAL ONLINE CUSTOMER ENGAGEMENT SURVEY REPORT 2008

The need to differentiate between customer segments has not been properly addressed in the discussions around online engagement.

adding response data back into the data warehouse. Similarly, with personalised web pages the data warehouse must be integrated with the content management system to serve customised messages in personalised containers across a site. Then, the number of views and clicks on this personalised message must be tracked at a customer level and finally added back to the customer database.

I believe this situation has developed because of the siloed systems created for managing web interactions – from content management systems, email broadcast systems, site visitor data collection systems and web analytics systems. There have been many mergers and acquisitions between vendors, but retro-integrating siloed systems often leads to a disintegrated tool.

The problem is compounded since we are still no closer to a standardisation of

Engagement through retention can be a struggle since analytics data sets are not usually integrated with customer profile or response data.

formats for tagging or exchanging web analytics or email response data (other than the standard web log file data) or APIs to share data between applications. This means that changing the system used to assess engagement is a major project.

Right-touching is not straightforward – but it’s crucial A similar situation exists with most email

marketing packages – it would be valuable to use the reporting systems to assess how engaged different customer segments are with the email channel and how this varies for traditional profile demographics. It is amazing how few email marketing broadcast and reporting packages allow you to easily see the responsiveness of different segments measured as open/clicks/leads/purchases.

While you can see variations in engagement by creating different segments and different broadcasts, there will still be sub-segments that require examination.

So, it is imperative to consider your online engagement strategy. How well are you measuring engagement of different online audiences? How effectively do you close the loop by using this data to deliver more relevant communications? Creating the data and software infrastructure to achieve righttouching will certainly not be straightforward.

But for those who can execute a plan to implement the right infrastructure this can give an excellent opportunity to deliver much more relevant online messaging.

Dr Dave Chaffey is a member of the cScape Customer Engagement Unit and director of Marketing Insights Limited. Dave has been recognised by the Chartered Institute of Marketing as one of 50 “gurus” worldwide who “have shaped the future of Marketing”.

The author of specialist E-consultancy best practice guides on E-marketing tactics like SEO and PPC, Dave has also written a number of best-selling books, including Internet Marketing: Strategy, Implementation and Practice, currently in its third edition. www.davechaffey.com

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ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2008

Clare O’Brien

Usefulness: the new language of brand

Carefully crafting an elaborate marketing message for your company’s website or next email campaign? Forget it. Online persuasion is all about help not hype.

When online, people expect to be doing something. Offline they’re consuming – and that is more passive. So online, if it’s not clear what someone can do immediately, or if they feel prevented from doing what they want to do because a web site or even an email is badly organised, they can get impatient. They can go away.

So, if you want to persuade people to do something online you have to use different persuasive techniques than those that work for you offline. People browsing the web are unlikely to be persuaded by conventional marketing messages because: a) Their opinion about your company or brand will be based on the active experience and not the passive consumption of marketing. b) They won’t be reading marketing messages anyway, because online people don’t spend much time reading.

At my company, Content Delivery & Analysis (CDA), we have a growing conviction that the art of online engagement is about functionality and that an important part of persuasion online is giving people the means to get something done. The skill is in getting

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companies to recognise how their brands can be expressed in these functional ways.

As hard as any organisation tries to use conventional promotional language to engage and persuade online, the most engaging content is stuff that is simply useful and works.

Make the feeling mutual We’ve been working on a ‘Hierarchy of Mutuality’ (see diagram). It’s a model that sketches out how this mutual interest of companies and customers can be met (and measured) online and how page content and the way it is used and expressed is a key part

of the new art of online engagement.

The model marries what a customer looks for during the decision making process with the kind of content and content delivery that produces a satisfactory visit. There’s no magic and no tricks – just plain, visible, accessible information that meets expectations and is useful.

This doesn’t ignore the importance of developing distinctive character, which is found in a word, a phrase, the pacing of dialogue, the combination of visual presentation and questions answered.

As hard as any organisation tries to use conventional promotional language to engage and persuade online, the most engaging content is stuff that is simply useful and works for people. And really useful stuff isn’t always

that exciting and stimulating in a conventional marketing sense. Yet it’s increasingly how brands will be evaluated by people.

From the “wow factor” to the “useful factor” We’ve been interested in the idea of usefulness for a while at CDA. We’re aware that in order to be useful and meet expectations (and therefore be engaging), page content often has to take on a pretty

utilitarian feel. This doesn’t strip it of character in any way. It works in a similar way as a good retail store, organised with signage, recognisable help points, useful and easily found descriptions, helpful point-of-sale material, clear offer statements and responsive staff. Stores like Marks & Spencer and Waitrose work like this but they both retain strong and identifiable characters.

In fact, when someone comes to a website to do something, it is far more like walking into a store than picking up a brochure.

It’s usually marketers who are tasked with making web pages work properly – and they’re trained in the art of demand creation, not demand fulfilment. Web pages need to do both. This is a new and complex thing to get right – a new skill genre.

For example, some time ago we presented a financial services client with some considerably reworked content for a loan product page. Before we got our hands on it, there was a lot of noise upfront telling people what they could do with the product – build a house extension, enjoy a fabulous holiday, drive a new car; aspirational copy.

If people scrolled further down, they could

read facts about the loan. Scrolling a little further (assuming they hadn’t already clicked off the page), the potential customer would come across an “apply now” button.

By the time we’d finished with the page, it looked very different (including ensuring the “apply now” button was visible at first glance).

Based on our research, we know people have little patience with promotional language online and immediately look for what they can do on a page. In this case people had already clicked at least three times to get to the specific product page. So we turned it into something we felt customers were expecting.

We gave people things to do: the ability to easily access practical, useful, decision-making and transaction information. We didn’t talk about holidays or cars.

ANNUAL ONLINE CUSTOMER ENGAGEMENT SURVEY REPORT 2008

Modern web-based businesses need to deploy a much more subtle line of interactive communications. One that’s all about mutual interests.

The client’s reaction? ‘Hmm, yes, it’s good, yes… but it’s not very… erm, well, I suppose I was expecting some sort of… er, wow factor’, they said. They were judging a piece of text designed to give information (the means to buy), written to give confidence in the organisation and product. It didn’t sell a dream. Customers, or would-be customers, needed the useful factor – not the wow factor.

Mutual interests online

Trust

Dialogue / conversation

Develop relationship

Character, style, tone, texture, pace, relevant calls to action

Credibility

Value

Authentication / verification Obvious contact details, business status eg PLC, geographic presence, trust marks, privacy statements, accreditations, testimonies

Access / information Clarity of offer / value, helpfulness, usefulness, efficiency, usability, consistency, evidence of processes that work, visible

CUSTOMERS LOOK FOR

Reassure

Engage

ORGANISATIONS WANT TO

“Wow” is yesterday’s news – online, at least.

To be persuasive online, it’s important to think first about how helpful, supportive and useful online content or processes are for someone who’s expecting to do something. And doing something isn’t restricted to transactions.

Doing something can be as straightforward as finding something out – store opening times, say, or looking up a timetable, finding a location or comparing prices. Being able to do these things successfully is what customers want. That’s good utility. That’s useful. That’s the new wow.

Traditional marketing communications is almost an “us and them” situation. The logic is that if we say it loud and often enough, some of our message will stick! Modern web-based businesses need to deploy a much more subtle

line of interactive communications. One that’s all about mutual interests. People coming to a site want it to work and to work well. A site that achieves this is one that gets the business and generates the kind of “feel-good” factor that brand marketers strive for.

Clare O’Brien is a member of the cScape Customer Engagement Unit and managing director of Content Delivery & Analysis Ltd (CDA), the interactive content consultancy. www.webwordsworking.co.uk

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ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2008

Theo Papadakis

What is customer engagement for?

Your customers need engagement more than you do.

“We need to engage with our customers to improve our conversion, loyalty and retention metrics”, says a keen young marketing consultant in an annual departmental brainstorming session. “Well, yes, I’ve heard that results in good ROI”, says the budget-manager.

“So what technologies shall we invest in?

Blogs, RSS, wiki, social networking or viral?”

The company launches a project scoping exercise, brings in an agency, builds a business case, tests and refines it. The marketing department soon delivers a marvel of customer engagement widgets, which the CEO delights in mentioning to journalists as evidence of his innovative cojones ... until one sceptic visits the cutting-edge community only to discover he is its first and only customer.

The plan went wrong with the budget manager’s first question. Because the hidden assumption was that customer engagement is merely a bolt-on, technical solution for meeting the big, hairy performance target of the year. Engagement strategies can undoubtedly realise such aims – but not if they’re your starting point. This is likely to

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Effective engagements are internalised by us as customers, becoming tradable tokens of our identity, symbols we actively desire to share with our peers to confirm the sensibilities we have in common.

deliver a platform about as authentic and alluring as a nightclub chat-up line.

It only gets worse when the solution is scoped out as a technical device, even an IT resource, rather than as an organisational commitment to forging more valuable relationships with your customer. That fetishism for projects and deliverables is precisely the corporate nightmare we all recoil at when experiencing it from the outside, as customers. It doesn’t require too keen a sense of irony to appreciate why a customer engagement plan developed in isolation from customers might run into trouble. Connect first, then develop.

Start from the customer Any customer engagement strategy that starts from a channel marketing perspective tends to fail because it treats engagement as an add-on to the existing marketing suite rather than as an operational necessity.

In fact, engagement is a priority for your customer.

Valuable customer relationships only form around organisations that demonstrate a rich understanding of its audience members, in ways that touch those members so persuasively that they are keen to experience the relationships again.

Effective engagements are internalised by us as customers, becoming tradable tokens of our identity, symbols we actively desire to share with our peers to confirm the sensibilities we have in common.

To attain that level of engagement, the organisation must first profoundly understand what needs its customers have; then decide which of those needs it makes sense for it to attempt to answer, as a brand; and last but not least, assess those options in light of the capacity available to mobilise departments around consistent delivery of that answer. The web 2.0 vehicle, whatever

form it takes, is merely the “front end” for a much deeper organisational alignment around the customer.

Meaningful relationships Few of us consider ourselves to be part of a determinate community, political or social group, with settled values and predictable discretionary tastes. Instead we participate, with varying degrees of engagement, and for varying periods, in a range of possibly overlapping social groups - only partially identifying with most of the people we get to know there.

ANNUAL ONLINE CUSTOMER ENGAGEMENT SURVEY REPORT 2008

The motto of any would-be customer engager should be: “Ask not what your customer can do for you, but what you can do for your customer.”

This forces us to engage in conscious search behaviour, to construct the networks that were once handed to us by our unchosen communities. Web technologies fit that need perfectly. New parents far from their immediate families for instance can go online to find others who are in a similar position. Online, I can search, find and meet a cycling buddy from my neighbourhood within minutes. Conversely, consider approaching random cyclists on the street and hoping to get along – it just can’t happen offline.

Another consequence is that we come to “know” many more people than was typical in the past. Online social networking allows us to link up with multiple others – those links will be of varying strengths, but there is always a chance that even a weak connection could suddenly prove decisive.

Strength in many weak ties Indeed, weak ties arguably offer the greatest opportunities to receive the kind of information that might lead to a job offer or a rewarding personal relationship: their low

We participate, with varying degrees of engagement, and for varying periods, in a range of possibly overlapping social groups - only partially identifying with most of the people we get to know there.

maintenance requirements allow us to plug in to a mass of sources. Just consider typical Facebook activities where we join multiple online groups and exchange brief messages with a range of people. The expectations of these interactions are lower, but can lead to many more opportunities for making new connections. By contrast, our relatively small network of close ties is much more high maintenance – and more predictable.

Realising the power of weak ties encourages us to extend our networks yet further. Social networking technology helps as it involves onward referrals and searches along multiple dimensions (the book you’re currently reading, your life stage, your physical location), while easing the psychological anxieties associated with offline introductions.

The shopfront of Me B.J. Fogg, of Stanford University’s Persuasive Technology Lab, has observed that groups on Facebook are not especially group-like – we simply use membership for badging ourselves, as a prop to express our identity, a passing solidarity or just sharing a joke. Such devices help us construct and enrich a highly controlled, even narcissistic, performance of

ourselves – a profile – at once satisfying and infinitely, insatiably open to modification.

Even when we are not online our profile is interacting: It’s telling visitors what we think is great, asking them what they think of us, if they are interested in us, if they think we are hot ... but above all, it is always on. While you sleep, work, or loaf, someone may encounter your online self, from any of a million different directions – and offer you a job, a date or their friendship.

Starting with the customer The first questions for would be customerengagers should not be “what technology should we deploy?”, nor “how can we engage our audience?”, but instead: “What is it that our customers are currently doing, where are they doing it and what do they want to achieve.” And guess what – the best person to ask is ... your customer.

Theo Papadakis is a marketing consultant in the cScape Customer Engagement Unit.

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ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2008

Richard Sedley

The role of persuasion in online customer engagement There are many elements to a good online customer engagement strategy but maybe none so valuable yet so overlooked as the science of persuasion.

No human has ever lived in such demanding, fast-paced, information saturated and potentially confusing a time as you and I do today. As a result we just don’t have the time, resources or inclination to think that much about the majority of our decisions.

Even when faced with our most important decisions, very few of us are prepared to collect all the available data and sit down to make a totally rational decision. Instead we

make our decisions based on cues – the signs and impressions we gain from context and presentation. We use these cues to take short cuts in the decision the making process, known as decisional heuristics. 1 It is only in this context that we can understand the importance of persuasion.

Persuasion is about creating and shaping these cues. By providing helpful short cuts we can help our visitors to understand the value and credibility of our offering and ultimately encourage them to undertake the actions we desire of them. Online these actions might include: completing a form, clicking a button

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By providing helpful short cuts we can help our visitors to understand the value and credibility of our offering and ultimately encourage them to undertake the actions we desire of them.

and buying a product, returning to visit us or promoting us to friends and colleagues.

Using an understanding of human psychology and cultural specificity we can persuade our visitors to comply with our requests.

Can this mean unethical manipulation?

Possibly!

Is that what I’m advocating? No! It is possible to use persuasion to deceive and manipulate but not as part of a customer engagement strategy. Customer engagement depends on the establishment of a relationship that requires more than a single conversion2. You might be able to fool someone once, or even twice, but in the long run if you’re not able to provide real value to your customers there’ll be no engagement.

To help us maximise the effectiveness of our ethical persuasion in this Web2 world I’ve isolated four pillars of persuasion: 1. Credibility 2. The weapons of influence 3. Persuasion windows 4. Persuasion as a dialogue

Credibility Without credibility there is no persuasion.

Perceptions of credibility can be hard earned with first hand experience over time (earned), created though third party endorsements, reports or referrals (reputed), gained through simple first impressions (surface) and pre-existing in the mind of the perceiver (presumed)3. Many people believe that earned credibility is the most powerful, but each of

the above can be telling and in fact earned can be the easiest to lose through a single negative experience.

An experiment conducted by the online journal Marketing Experiments in February 2007 increased conversion rates by over 12% simply by incorporating two of the credibility types above in a look and feel redesign4. The starting role for persuasion in online customer engagement is to increase credibility in the mind of our customers.

The weapons of influence There are around 60 different persuasive techniques but the in mid-’80s Professor Robert Cialdini 5 distilled them down to six weapons of influence: • Reciprocity • Commitment & consistency • Social proof • Liking • Authority, and • Scarcity While all of the above can be used to persuade and improve conversions three: reciprocity, commitment & consistency, and liking can be immensely powerful tactics within a customer engagement strategy. When used well each has the ability to deepen the customer relationship and encourage sustained interactions.

For example a strategy integrating testimonials and user-generated content can lead to public demonstrations of commitment from customers, making it infinitely more likely that they will interact with you in the future.

ANNUAL ONLINE CUSTOMER ENGAGEMENT SURVEY REPORT 2008

There are key moments within our interactions on and offline where customers are more susceptible to persuasion, where they’re more open to undertaking an action, making a connection or changing an opinion - these are our Persuasion Windows.

Persuasion Windows Persuasion is all about timing. There are key moments within our interactions on and offline where customers are more susceptible to persuasion, where they’re more open to undertaking an action, making a connection or changing an opinion. These are our persuasion windows. If we don’t ask and encourage while the window is open it is likely to be harder to gain a desired outcome later.

It is certainly possible to identify and wait for a persuasion window within normal customer journeys, however the real art is to encourage their opening. There are six recognised scenarios that can lead to the opening of a persuasion window 6: • when you are in a good mood • when your world view no longer makes sense • when you can take action immediately • when you feel indebted because of a favour • immediately after you have made a mistake and my personal favourite • immediately after you have denied a request

The starting role for persuasion in online customer engagement is to increase credibility in the mind of our customers.

Usually thought of as the ultimate in disengagement, the point of refusal in fact momentarily opens a window through which we can connect by offering alternatives and clarifying our online value proposition. Many of the most successful subscription based websites understand the power of refusal and cultivate the opening of Persuasion Windows by explicitly denying access in a way that incentivises non-subscribers while reaffirming subscriber benefits.

Persuasion as a dialogue The essence of digital is interaction. As the medium continues to develop, so we need to recognise that persuasion is a two way process, and that this is something we should embrace within our customer engagement strategies. True customer centricity can only come when we facilitate and embrace the changes that our customers want to make to our products and us.

Probably the best understood example of the dialectics of persuasion is the Amazon system for adapting their recommendations.

By voting on the recommendations that Amazon’s website makes to me I can help

improve those recommendations, improve their sales and my overall experience.

Therein lies the value of persuasion. As the world increases in complexity and our ability to navigate it becomes more fraught with demands, the use of the science of persuasion helps both our businesses and our customers.

And mutual benefit is the foundation of customer engagement.

1 See Petty and Cacioppo’s Elaboration Likelihood Model, 1986 2 My definition of customer engagement is: “Repeated interactions that strengthen the emotional, psychological or physical investment a customer has in a brand (company or product)”, adapted from a definition developed by Ron Shevlin (http://marketingroi. wordpress.com

Richard Sedley is director of the cScape Customer Engagement Unit. www.loopstatic.com

3 BJ Fogg, Persuasive Technology: Using Computers to Change What We Think and Do, 2002 4 Marketing Experiments Compendium: A year of 24 Indepth Online Research Experiments, Volume 1 5 Robert Cialdini, Influence: The Psychology of Persuasion, 1984 6 BJ Fogg, Persuasive Technology: Using Computers to Change What We Think and Do, 2002

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ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2008

It takes a brave and robust email marketer to assess and address poor performance.

Lucy Conlan

What can you do when they disengage?

Email segmentation can help you identify and re-engage the quiet and the shy.

Marketers work hard to acquire and retain customers but sometimes fail to notice those who are a bit quiet or inactive. Even a decade ago it seemed inconceivable that we would have such a wide range of possibilities for communicating with and collecting information on our customers as we do today.

With direct mail, it would not have been financially viable to target dormant customers for instance. Now, much effort can be stacked up even in the early and intermediate stages of the customer relationship.

However, email is often perceived as a low value means of communication and it can be all too easy to just bat out messages to a base of mixed customers. The interested and active ones will respond, so what’s the problem if the rest don’t?

In fact, there are several problems with ignoring unresponsive customers. For instance, it makes it difficult to measure statistics accurately as volumes are swollen with unresponsive segments. Isn’t ignoring

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Isn’t ignoring unresponsive customers the marketing equivalent of bad manners?

unresponsive customers the marketing equivalent of bad manners? Maybe these customers are giving you a clue by not responding. Bad manners in this context could lead to the dreaded scourge of your customers hitting the “spam” button.

The very size of an organisation’s email list can be a political minefield. Senior management love to hear that there is a 6 or 7 figure email list. In the pressure for more sales, the cries of “email everyone” can be heard in many companies. But a large, general, email list is often just ineffective.

It takes a brave and robust email marketer to assess and address poor performance. So what are the traits of disengagement, how do you identify the signs?

It’s worth creating email specific segmentation. First assess the overall performance of your list and then look at the pattern of the worst 5%. Your first metric should be the number of people that open the email. As the parameters will vary according to the frequency of your emails, look at volumes by identifying how much of the file has never been opened at all, then how much that hasn’t been opened in a month, then in a week etc.

Talk differently to the people within the varying segments. If you email them twice a week, try reducing it to once. Throw in a special offer, a prize draw or a survey as alternative subject lines to entice them to open the email.

If this doesn’t work, humour can often reengage the shy ones. I have seen subject lines such as “We haven’t heard from you”, “We still haven’t heard from you”, “Was it something we said?” generate significant open rates from dormant recipients.

Remind customers that they have different choices open to them. Give them the opportunity to change their communication

preferences. If you identify dormant but potentially profitable customers, try sending them a direct mail or giving them a call – it could be that they have just changed email accounts – at the very least talking should allow them to tell you why they’re not engaged.

If you have tried a variety of approaches, then relax and put them with all the other sleeping partners – group the dormant

together and keep them in the loop at an increasingly low frequency. Exclude them from all other activities, and do not include their number when asked for list size. Your list will grow again, and in the meantime just sit back and take the credit for the higher levels of open and clickthrough rates in your results.

ANNUAL ONLINE CUSTOMER ENGAGEMENT SURVEY REPORT 2008

The cScape Customer Engagement Unit (CEU) works alongside clients to help maximise the returns on their digital investment. If you’d like to hear some of our stories, tell us yours, or simply share some ideas, get in touch.

To set up a meeting to discuss your customer engagement strategies, contact Theresa Clifford on t.clifford@cscape.com or call +44 (020)7 689 8800 If you’re a digital specialist or company specialising in online customer Lucy Conlan is a member of the cScape Customer Engagement Unit and a senior marketing manager at the UK’s premier arts centre, the Barbican, where she has been working on Customer Relationship Management and campaign integration activity, including the successful re-launch of the membership scheme.

engagement and would like to have a chat about joining the CEU, contact Richard Sedley on r.sedley@cscape.com or call +44 (020)7 689 8800

www.cscape.com

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ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2008

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Key words: customer engagement user experience actionable metrics personalised experiences persuasive design Microsoft technology marketing intelligence return on objectives

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The value of online customer engagement In an era when we are bombarded with information and have access to vast resources via the internet, customer engagement has become essential. cScape is showing real thought leadership with the Annual Online Customer Engagement Report, which can help companies of all sizes and from all industries to understand the potentials, and the pitfalls, of engagement.

We all operate in an increasingly competitive business environment in which customer loyalty is becoming a rarity.

Capturing that loyalty has become an art form, and the ability to retain customers is the true sign of a successful, customer-led business.

Your company website is undoubtedly one of the most important tools in your engagement arsenal, but the speed of change on the web and the ever-widening range of technology solutions available can be baffling. This makes the results of cScape’s survey all the more useful. It provides substantial insight into how you can turn your website into a must-visit destination, how

you can engage customers in conversation and capture their imagination, and how you can ensure that the online and offline experiences customers have with your company are consistent.

Creating these experiences offers a longterm competitive advantage, as successfully engaged customers are the “sneezers” - the ones who will talk about your product or service and spread the word on your behalf.

They are the most valuable customers you can have.

Steve Clayton Chief Technology Officer of the UK Microsoft Partner Group, and author of the blog A Geek in Disguise: http://blogs.msdn.com/stevecla01