Customer Engagement Report 2008

8/4/2019 Customer Engagement Report 2008

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Customer Engagement Report 2008

E-consultancy / cScape Second Annual Customer Engagement Survey ReportCopyright © E-consultancy.com ltd 2007

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Other relevant E-consultancy reports:

First Annual Customer Engagement Reporthttp://www.e-consultancy.com/publications/customer-engagement-report/

Persuasion Marketing Roundtable Briefing, November 2007 http://www.e-consultancy.com/publications/persuasion-marketing-briefing-2007/

Social Commerce Report 2007 http://www.e-consultancy.com/publications/social-commerce-report-2007/

Usability and User Experience Report 2007 http://www.e-consultancy.com/publications/usability-and-user-experience-report-2007/

Web Design Best Practice Guide http://www.e-consultancy.com/publications/web-design-best-practice-guide/

Second AnnualOnline CustomerEngagement Report2008Published: December, 2007

Produced by E-consultancy in association with cScape

Copyright © E-consultancy.com ltd 2007 – not for distribution to non-subscribers without written permission

http://www.e-consultancy.com/publications/customer-engagement-report/



http://www.e-consultancy.com/publications/persuasion-marketing-briefing-2007/



http://www.e-consultancy.com/publications/social-commerce-report-2007/



http://www.e-consultancy.com/publications/usability-and-user-experience-report-2007/



http://www.e-consultancy.com/publications/web-design-best-practice-guide/













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Table of Contents

1. About E-consultancy ............................................................................4

2. About cScape .........................................................................................4 3. Introduction..........................................................................................6

3.1. Introduction by cScape................................................................................6

3.2. Why Customer Engagement is important ................................................. 7 3.3 The value of online customer engagement.................................................8

3.4 Methodology and Sample ............................................................................ 9

3.4.1 Methodology............................................................................................. 9

3.4.2 Respondent profiles .............................................................................. 9

3.4.3 Geography ............................................................................................ 10 3.3.4 Company turnover............................................................................... 11

3.3.5 Business Sector .................................................................................... 11

4. Executive Summary and Highlights ...............................................12

5. Findings ...............................................................................................15

5.1 Importance and benefits of Customer Engagement .................................15

5.1.1 Has the importance of customer engagement increased?................. 15

5.1.2 Importance of online customer engagement..................................... 16

5.1.3 Benefits of customer engagement....................................................... 17

5.1.4 Interest in customer engagement ....................................................... 19

5.1.5 Describing an engaged customer ........................................................ 21 5.1.6 Ownership of online customer engagement ...................................... 23

5.2 New engagement strategies .......................................................................24

5.2.1 Strategies for engaging with your audience online ........................... 24 5.2.2 Methods of increasing engagement ................................................... 27

5.2.3 Importance of mobile channel............................................................ 30

5.2.4 Achieving engagement through mobile channel............................... 31 5.3 Measurement and research .......................................................................32

5.3.1. Customer data collection .................................................................... 32

5.3.2 Methods of gathering customer intelligence..................................... 33

5.3.3 Metrics for measuring customer engagement................................... 36

5.3.4 Mapping customer touch points......................................................... 37

5.4 Barriers to success ......................................................................................39

5.4.1 Barriers to better online customer engagement ................................ 39 5.4.2 Optimism about the future ................................................................. 41

6. Comment and Analysis – what the experts say ............................42

6.1 Defining the terms of engagement – by Jim Sterne.................................42 6.2 ‘Engagement’ is about me the customer, not you the company – by

Avinash Kaushik ...............................................................................................43 6.3 Social media must be added to the engagement mix – by Andy Beal....44

6.4 Segmentation, segmentation, segmentation – by Dave Chaffey ............45 6.5 The future of engagement is mobile – by Pete Mortensen...................... 47

7. Appendices .............................................................................................49

7.1 Has the importance of customer engagement increased? .......................49 7.2 Ownership of online customer engagement.............................................49





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7.3 Strategies for engaging with audience ......................................................50 7.4 Importance of mobile channel....................................................................51 7.5 Achieving engagement through the mobile channel.................................51

7.6 Customer data collection............................................................................ 52

7.7 Metrics for measuring customer engagement .......................................... 53

7.8 Barriers to customer engagement - companies........................................54 7.9 Barriers to customer engagement - agencies ...........................................56





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1. About E-consultancy

E-consultancy is an online publisher of best practice internet marketingreports, research and how-to guides. E-consultancy, named Publisher of the

Year at the 2006 AOP Awards, also publishes buyer’s guides and has adirectory of 100,000+ third party internet marketing white papers.

Subscribers pay from £195 per year to access the exclusive and highly practicalcontent. E-consultancy also organises regular events, including roundtablesand 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 uniqueusers 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.

http://www.e-consultancy.com/about/

2. About cScape

cScape, the research sponsor, is an award-winning interactive agency and a

certified Microsoft Gold Partner. An emphasis on customer engagementunderpins cScape’s integrated consultancy, creative design and technicaldevelopment services.

The cScape Customer Engagement Unit (CEU), launched in November 2006,is a team of individuals with years of experience in digital marketing andcommunications, 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 businessgoals with the needs and interest of their customers. cScape works with adiverse range of organisations from the corporate, charity and government

sectors.

Since the launch of the CEU and the world’s first Annual Online CustomerEngagement Survey, cScape has continued to be at the forefront of developingthe concept of engagement. The outcomes of recent high-profile cScape eventsin 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 thoughtleadership events have also informed professional and informal onlinedebates about engagement and persuasive design.

http://www.e-consultancy.com/publications/

http://www.e-consultancy.com/knowledge/whitepapers/

http://www.e-consultancy.com/about/subscription-membership.asp

http://www.e-consultancy.com/knowledge/events/supplier-showcases.asp

http://www.e-consultancy.com/knowledge/training/



http://www.e-consultancy.com/knowledge/training/

http://www.e-consultancy.com/knowledge/events/supplier-showcases.asp

http://www.e-consultancy.com/about/subscription-membership.asp

http://www.e-consultancy.com/knowledge/whitepapers/

http://www.e-consultancy.com/publications/





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cScape was an early adopter of Microsoft SharePoint Server 2007 (MOSS). Weare at the forefront of enhancing the capabilities of Microsoft technologies andof 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 andMarketing Director, to find out more about cScape’s offering, and about futureevents.

http://www.cscape.com

Please contact Theresa Clifford, cScape’s Business Development Director, tofind out more about cScape’s offering. ([email protected])

http://www.cscape.com/

mailto:[email protected]


http://www.cscape.com/





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3. Introduction

3.1. Introduction by cScape

The second Annual Online Customer Engagement Survey attracted over 1,000responses, making it the world’s largest survey on the subject.

This report outlines how customer engagement remains an imperative issuefor organisations, and your answers to the survey provide valuable insightsinto 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 therecent developments in the digital environment are and, perhaps mostimportantly, why they will be significant for you in the near future.

The survey also shows that there are still barriers to achieving effective onlinecustomer engagement. For instance, organisations do not always manage toassign individuals or departments to taking ownership for implementing andmonitoring engagement strategies. This report aims to aid those looking tofurther 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 borne out by the 2008survey results. Indeed, since the publication of last year’s report, the term andconcept of engagement has entered mainstream business consciousness.

Last year I encouraged readers to share their thoughts on the report and sendus examples and stories of their own experiences. In response to that feedback

we have extended this year’s report with thought pieces from some figures inthe digital industry.

The coming year will undoubtedly pose new challenges as we all try tointegrate customer engagement strategies and tactics with our business plans.Personally, I see the continuing rise in social media and mobile technology aspotentially 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 upona deeper psychological understanding of our customers will be an essentialcounter balance to the more bullish marketing practices that have shapedmuch of the digital terrain in the last 10 years.

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, Dave and Steve - to Linus and Ashley at E-consultancy, and to allmy colleagues at cScape, in particular Rob, Theresa, Theo, Lucy, Dave,

Nathalie, Ed and Tom.





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We all hope you find the second Annual Online Customer Engagement Survey Report interesting and useful and that you’ll share your thoughts on itscontent.

Richard Sedley

cScape Customer Engagement [email protected]

3.2. Why Customer Engagement is important

In last year’s version of this report Richard Sedley, the driving force behindthis research, suggested the following definition of ‘customer engagement’:‘ Repeated interactions that strengthen the emotional, psychological or

physical investment a customer has in a brand.’1

This goes to the heart of what customer engagement is about, although thereis still no universally accepted definition around what this subject embraces,or indeed how it should be measured.

But although healthy debate will continue to rage around an exact definitionand best measurement2, what is not under any dispute is the criticalimportance of interacting with customers effectively both online and offline.

Those who have long been talking about the need for a customer-centricapproach and integrated experience across all channels are now very much inthe limelight. They are no longer seen as preaching something which issomehow detached from ‘real’ business numbers containing pound or dollarsigns.

Customer engagement in the context of digital marketing is a particularly fertile area at the moment because the correlation between enhancedengagement and greater business success is often very much in evidence.Online customer engagement is very much part of a bigger, more integratedpicture but has emerged as a fascinating and, to an extent, discrete area of study because of the unprecedented scope the digital environment allows tointeract with customers repeatedly and also to measure that interaction.

Planet Web 2.0 and its omnipresent satellites (i.e. social networks, blogs anduser-generated content) have brought into sharp focus not only the risk of customer dis-engagement but also the tremendous opportunities available tothose who listen and interact effectively. We are now living in world of ‘word-of-mouth on steroids’3, which means that organisations need to work muchharder to make sure that feedback, praise and criticism from all-powerfulconsumers is being both heard and ‘actioned’.

1 This was adapted from a definition given by Ron Shevlin.

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http://www.kaushik.net/avinash/2007/10/engagement-is-not-a-metric-its-an-excuse.html 3 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/







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The most enlightened companies are not just paying lip-service to whatconsumers are saying. They are actually facilitating interaction between theircustomers and changing their organisational processes so that the voice of thecustomer is being heard when products are being designed and services are

being conceived.

When companies get it right, they can rely on their customers to do theiradvertising for them, thereby reducing the need for ad spend and increasingthe amount of money available for customer engagement initiatives whichspan product design, customer services and website improvements. A virtuouscircle if ever there was one.

Linus GregoriadisHead of Research, E-consultancy [email protected]

3.3 The value of online customer engagement

In an era when we are bombarded with information and have access to vastresources via the internet, customer engagement has become essential. E-consultancy and cScape are showing real thought leadership with the AnnualOnline Customer Engagement Report, which can help companies of all sizesand from all industries to understand the potentials, and the pitfalls, of engagement.

We all operate in an increasingly competitive business environment in whichcustomer loyalty is becoming a rarity. Capturing that loyalty has become anart 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 yourengagement arsenal, but the speed of change on the web and the ever-

widening range of technology solutions available can be baffling. This makesthe results of this 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 offlineexperiences customers have with your company are consistent.

Creating these experiences offers a long-term competitive advantage, assuccessfully engaged customers are the “sneezers” - the ones who will talk about your product or service and spread the word on your behalf. They arethe 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


http://blogs.msdn.com/stevecla01










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3.4.3 Geography

The geographical spread of respondents is shown in Figure 2 and Figure 3 below. More than two thirds of company respondents (71%) are based in theUK.

There is slightly more of an international flavour to the agency sample, withmore than 40% of these respondents based outside the UK.

There were respondents from an array of countries, including India, China,Lebanon and Finland, making this a truly global survey.

Companies (‘client-side’ or ‘in-house’)

Figure 2

Agencies (including consultants and technology suppliers)

Figure 3





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3.3.4 Company turnover

Figure 4 shows the range in the size of participating organisations. Excludingthose respondents who ‘don’t know’ their annual revenue (or for whom thisquestion is not relevant), around a third of respondents work for companies

with a turnover of £10 million or less. About half of those companies takingpart have a turnover of more than £50 million.

The best represented sectors are financial services, retail and publishing[ Figure 5 ]

Figure 4

3.3.5 Business Sector

Figure 5





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4. Executive Summary and Highlights

More than 1,000 respondents took part in the E-consultancy / cScape second Annual Online Customer Engagement Survey. It is clear from this researchthat more organisations are embracing the concept of customer engagementand recognising this to be a key requirement for business success.

The overwhelming majority of company respondents (90%) say that onlinecustomer engagement is either ‘essential ’ or ‘important ’ to their organisations,

while three-quarters of respondents (77%) say that its importance hasincreased in the last 12 months.

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

Companies are getting better at realising that they need an integratedapproach which embraces all the channels used by their customers. ‘ Aconsistent 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 delivera more integrated experience. Since the first Annual Customer EngagementReport, 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 seenas an even more important strategic priority. For many companies, customerengagement is still more about getting the basics right than adopting Web 2.0tools 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. It is just taking time formany businesses to work out what they should be doing and how they shouldgo about implementation.

At 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 both

web-based and desktop-based widgets and applications.

Expectation is already building around the role of the mobile channel as a toolfor engaging customers in the near future, with two thirds of company

respondents (64%) saying that this will be ‘essential ’ or ‘important ’ forcustomer engagement in the next three years.





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

This is a summary of the report findings:

Importance and benefits of Customer Engagement

• Half of company respondents (50%) say that online customerengagement is ‘essential ’ to their organisations, with a further 40%saying that it is ‘important ’.

o This shows how seriously customer engagement is being taken by organisations although there are 8% of companies treating thisonly as a ‘nice-to-have’ . Less than 1% of respondents say this is‘not important ’. More than three-quarters of companies (77%) say that the importance of online customer engagement has increasedin the last 12 months.

• ‘ Improved customer loyalty’ and ‘increased revenue’ are the most widely reaped benefits from online customer engagement initiatives over thelast 12 months.

• Survey respondents were asked to indicate up to three descriptions of what best describes an ‘engaged customer ’. The most widely given

description was that this type of customer ‘recommends product, serviceor brand’ . Some 59% of company respondents and 63% of agency respondents said this was a top-three attribute.

New engagement strategies

• Survey respondents were asked about the most important strategies forengaging with an audience online. ‘ Efficient and accessible customer services’ came out on top. This was seen as essential by 45% of respondents and as very important by a further 41%.

o The next most essential strategy is a ‘consistent online and offlinecustomer experience’ – something which 39% of companies see asessential and 47% see as very important.

o The joint-third most important strategies for engaging with anaudience online are deemed to be ‘building a sense of communityaround product / services / brand ’ and ‘compelling and persuasivecopy’, both said to be essential by 35% of respondents.

• Blogging and video-sharing sites are the methods most commonly beingemployed to engage with an audience online, with 21% of company

respondents using each of these tactics.





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o These are the tactics most commonly being planned by companies:

1) Web-based widgets / badges / gadgets 39%*2) Blogging sites 36%3) Desktop-based applications / widgets/ gadgets 35%

Joint 4) Social networks 32%Joint 4) Social news sites / bookmarking 32%

* Percentage of company respondents planning to use tactic

• Around two-thirds of company respondents (64%) believe that the mobilechannel will be ‘essential’ or ‘important’ for customer engagement in thenext three years. But around a third believe that engagement via thischannel is a ‘nice-to-have’ or ‘not important ’.

o ‘ Ease of use’ is seen as the most important factor for successful

engagement through the mobile channel, with just under threequarters of company respondents (74%) rating it as one of the fivemost important criteria.

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

Measurement and research

• Web analytics are regarded as the most essential method for gatheringintelligence for improving customer engagement. More than half of

company respondents (57%) say web analytics are ‘essential ’ for thispurpose and a further (34%) say they are ‘important ’.

o Feedback from customer-facing staff and usability testing are thetypes of intelligence next most likely to be viewed as essential fordriving better customer engagement.

• Just under half of responding organisations have dedicated metrics formeasuring online customer engagement. A further 46% ‘would like to’have these metrics. According to agencies, only a third (34%) or clientstypically have metrics especially for this purpose.

Barriers to online customer engagement

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

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





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5. Findings

5.1 Importance and benefits of Customer Engagement

5.1.1 Has the importance of customer engagement increased?

Advocates of customer engagement will be heartened to learn thatorganisations are typically taking the idea of customer engagement moreseriously 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 6].

A similar proportion of agencies (75%) say that it has become more importantfor their clients [ Appendix 7.1].

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

Companies Figure 6





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5.1.2 Importance of online customer engagement

Continuing with the theme of the increased prominence of customerengagement within organisations, half of company respondents (50%) now

regard the online dimension of this discipline as ‘essential ’ to theirorganisations, with a further 40% saying that it is ‘important ’. This againshows how most organisations are taking steps to address this area, althoughthere 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 whoregard this area as essential is closer to a third (38%). Agencies report a highernumber of organisations treating this as a nice-to-have (16%). However, it isencouraging that agency responses also point to a high level of significance

being attached to customer engagement with 82% saying that it is eitheressential or important to their clients (compared to 90% of companies).

Companies Figure 7

Agencies Figure 8





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5.1.3 Benefits of customer engagement

The growing importance of customer engagement is perfectly understandable when one considers the gains being enjoyed by organisations as a result of

initiatives in this area.

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

The prominence of these two benefits shows how customer engagement isintrinsically linked with tangible business objectives for most companies.

It is very significant that improved customer loyalty is a benefit as widely acknowledged as increased revenue. This suggests that the traditional, almostexclusive focus on short-term revenue increases is beginning to be displaced

by other priorities and a less blinkered approach. There is now much greaterunderstanding that marketing initiatives can have targets that relate toprofitability indirectly. Improving customer engagement and loyalty will havea positive impact on revenue and profits in the long run.

These are the perceived benefits of customer engagement, as reported by companies:

Joint 1) Improved customer loyalty 43%*Joint 1) Increased revenue 43%

3) Enhanced public image 28%4) Reduced marketing costs 24%

Joint 5) Bigger market share 16%Joint 5) Reduced customer service costs 16%

7) Increased profits 14%8) Improved employee satisfaction 9%9) Improved business predictability 8%

* Percentage of responding companies ranking as one of three top benefits resulting from customer engagement initiatives in the last 12 months.

It can be seen that ‘improved business predictability’ was the least reported benefit of customer engagement. There is not yet a significant realisation thatcompanies can take important steps towards ensuring their futureperformance (thereby improving business predictability) by working towardstarget levels of customer engagement and loyalty.





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Companies Figure 9

Methodology note: respondents could check up to three options

From the agency viewpoint [ Figure 10], the most widely seen benefit fromcustomer engagement is improved customer loyalty, with 58% of respondentssaying 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.

Agencies Figure 10






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5.1.4 Interest in customer engagement

For both companies and agencies, there is no clear consensus about what bestdescribes their organisations’ interest in online customer engagement [ Figure

11 and Figure 12]. This is perhaps not surprising given that there is nostandard definition about what customer engagement is or what its benefitsare.

All four of the attributes of customer engagement shown in Figure 11 resonate with significant numbers of company respondents, illustrating how customerengagement 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 about the cost of acquisition andnumber of conversions are outnumbered (very slightly) by those who areinterested primarily in enhancing the customer experience and deepeningrelationships. This shows that organisations are learning to value customer

behaviour and actions beyond just the sale or transaction.

About a fifth of companies (21%) are primarily interested in ‘strengtheningemotional investment in [their] brand ’, while 15% say that customerengagement is most importantly about ‘adjusting to the increased importanceand power of the customer ’.

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

None of these definitions is right and none of them is wrong. What is strikingis how closely the agency responses [ Figure 12] closely mirror the company

responses in terms of the percentages for each description. Agencies areslightly 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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Companies Figure 11

Agencies Figure 12





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5.1.5 Describing an engaged customer

Survey respondents were asked to give up to three descriptions of what bestdescribes 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 63% of agency respondents said this was a top-three attribute [ Figure 13 and Figure 14].

A customer’s propensity to recommend a product, service or brand is anexcellent metric for organisations to measure because it shows the level of goodwill exhibited towards a brand, and can be more closely correlated with

business performance than their ‘satisfaction’. Satisfaction is an inferiormetric because it doesn’t give such a good indication as to whether a customer

will exhibit the right behaviour. For example, someone may be satisfied butthat 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 ordisgruntled customer can be amplified like never before.

This is the ranking of the attributes of an engaged customer:

1) Recommends product, service or brand 59%*2) Converts more readily 45%3) Purchases regularly 36%4) Participates in online communities or support groups 32%

5) Provides feedback regularly 27%6) Is less focused on price 23%7) Participates in innovation and design 11%8) Is more tolerant of mistakes 7%

* Percentage of respondents indicating that the attribute is one of the top three best descriptions

Surprisingly, only a quarter of respondents (27%) say that ‘ providing feedbackregularly’ is among the top-three best descriptions. Some of the mostenlightened organisations are systematically using customer feedback toinform their strategy around the design of products and services.

Similarly, there are still too many companies taking a top-down approach of building something without due consideration to what customers actually want. Only 11% of respondents cite ‘ participation in innovation and design’ asa key attribute, a figure which does not do justice to the size of theopportunity.

Figure 14 shows how agencies responded to this question.





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Companies Figure 13


Agencies Figure 14






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5.1.6 Ownership of online customer engagement

Figure 15 shows clearly 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-operationand integration between a range of departments and disciplines. Seniormanagers may not have to be directly responsible for the ‘online’ part of theequation but it is certainly crucial that they are bought into the concept andgive their full backing to any initiatives which are in place.

Companies Figure 15

Methodology note: respondents could check multiple options

Appendix 7.2 shows this information for agency respondents.





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5.2 New engagement strategies

5.2.1 Strategies for engaging with your audience online

Figure 16a and Figure 16b show the most important strategies for engaging with an audience online, arranged in descending order of how likely they areto be perceived as ‘essential ’ by company respondents.

‘ 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 inrecent months about the use of Web 2.0 and rich media to deepen customerrelationships, it is a bump back down to earth to note that reliable customerservices are still seen as the most important strategy for engagement.

The next most essential strategy is a ‘consistent online and offline customer experience’ – something which 39% of companies see as essential and 47% seeas very important. There is an increased recognition of the need for anintegrated approach across different channels. Section 5.3.4 below shows thatcompanies are getting more proficient at mapping customer experiences inorder to identify different touch points.

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

The concept of building a sense of community is perhaps the only one of thesefour 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 user-generated content (UGC) on their websites is essential or very important but that figure drops to only 21% for

participation on networking sites [ Figure 16b].

It is surprising that less than half of company respondents view UGC as atleast very important, given the well documented advantages of features suchas ratings and reviews on a website5. It is something of a paradox thatadvocacy is the most widely perceived behavioural trait of an engagedcustomer, and yet the majority of companies have not prioritised thesolicitation of UCG.

Participation in social networking is well down the priority list even thoughthe importance of building a sense of community is widely acknowledged. At

5 See also E-consultancy’s Social Commerce Report 2007http://www.e-consultancy.com/publications/social-commerce-report-2007/





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the moment, many organisations are wondering what to do with socialnetworks, whether they should get involved and, if this is appropriate, how they should make their presence felt. Companies are still adjusting to the ideathat a web presence is not just about having a destination website, but also apresence on third party websites, for example social networks.

Appendix 7.3 shows the exact percentages for company and agency respondents in terms of whether they view these particular strategies asessential, very important, nice-to-have or not important.

At a glance, these are the top five most essential strategies for engaging anaudience online. The corresponding percentages for agency respondents areshown in red.

1) Efficient and accessible customer services 43%* 46% 2) Consistent online and offline customer experience 39% 37%

Joint 3) Building a sense of community 35% 21% Joint 3) Compelling and persuasive copy 35% 30% 5) Frank and open communications 28% 31%

* Percentage of respondents reporting that strategy is ‘essential’ for engaging with audience online





26

Which of the following do you feel are central to engaging with

your audience online?

0%

10%

20%

30%

40%

50%

60%

Efficient and

accessible

customer

services

Consistent

online and

of fline Customer

Experience

Building a sense

of community

around your

products /

services / brand

Compelling and

persuasive

copy

Frank and open

communications

on your

products /

services

Essential

Very

important

Nice to

have

No t

important

Which of the following do you feel are central to engaging with

your audience online?

0%

10%

20%

30%

40%

50%

Personalised

experiences

Allaying

audience f ears

of us ing the

digital c hannels

Soliciting user-

generated

content for your

w ebsite

Communicating

your

organisation's

corporate social

responsibility

Participation on

social

netw orking

sites, e.g

Facebook &

LinkedIn

Essential

Very

important

Nice to

have

No timportant

Companies Figure 16a

Importance of strategies for engaging an audience online (part 1)

Sample: 324

Companies Figure 16b

Importance of strategies for engaging an audience online (part 2)

Sample: 324





27

5.2.2 Methods of increasing engagement

This section looks more specifically at Web 2.0-type tactics and technologies.The extent to which a variety of methods are being used to drive onlinecustomer engagement is shown in Figure 17a and Figure 17b, arranged in

order of how commonly they are being employed.

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

These are the five most commonly used tactics [ Figure 17a]:

Joint 1) Blogging sites 21%*Joint 1) Video-sharing sites 21%

3) Social networks 19%4) Web-based widgets / badges / gadgets 18%

5) Social knowledge-sharing 17%

* Percentage of company respondents using tactic

These are the tactics most commonly being planned by companies:

1) Web-based widgets / badges / gadgets 39%2) Blogging sites 36%3) Desktop-based applications / widgets/ gadgets 35%

Joint 4) Social networks 32%Joint 4) Social news sites / bookmarking 32%

* Percentage of company respondents planning to use tactic

It can be seen that 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 planningthis. Desktop-based applications or widgets are also being planned by morethan a third of companies. Widgets are an increasingly popular vehicle forengagement because they can give visibility to brands, products and servicesin an increasingly fragmented online world. In the future, people will be lesslikely to visit websites proactively but more likely to customise their homepages 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 seenin the previous section that the vast majority of respondents regard a strategy of participation on social network sites as either not important or a nice-to-have. It seems that many organisations are engaging with social networks

without really being convinced about the value.

Figure 18 shows the exact percentages for these different tactics according to whether responding organisations are using, planning or not planning toemploy these methods. Figure 19 displays the same information for agency respondents.





28

Which of the following does your organisation use to increaseonline customer engagement?

0%

10%

20%

30%

40%

50%

Blogging sites

(e.g. Blogger,

My Telegraph)

Video-sharing

w ebsites (e.g.

YouTube)

Social netw orks

(e.g. Facebook)

Web-based

w idgets /

badges /

gadgets

Social

know ledge

sharing (e.g.

Wikipedia,

Yahoo

Answers)

Currently

us e

Plan to use

No plans to

us e

Don't know /

not relevant

Which of the following does your organisation use to increase

online customer engagement?

0%

10%

20%

30%

40%

50%

60%

Social new s sites /

bookmarking (e.g.

Digg)

Desktop based

applications /

w idgets / gadgets

Image-sharing

w ebsites (e.g.

Flickr)

Audio-sharing

w ebsites (e.g.

iTunes)

Currently

us e

Plan to use

No plans to

us e

Don't know /

not relevant


Methods used to increase online customer engagement (part 1)

Sample: 310


Methods used to increase online customer engagement (part 2)

Sample: 310





29

Companies Figure 18

Agencies Figure 19





30

5.2.3 Importance of mobile channel

It is well documented that the mobile channel has been heralded as The NextBig Thing, and that it has so far failed to take off in the way that has long beenanticipated. Will 2008 finally be the year when mobile marketing hits its

tipping point?

Without question, mobile affords opportunities which are relevant to many organisations. But how many companies believe that it is important andrelevant for them?

Around two-thirds of company respondents (64%) believe that the mobilechannel will be ‘essential’ or ‘important’ for customer engagement in the nextthree 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 customerengagement [ Appendix 7.4]. Just under a third of responding agencies say it isessential (31%) compared to 20% of companies. Only a fifth of agencies seethis as a nice-to-have or not important.

Is it the case that agencies have been faster to recognise the importance of themobile channel whereas many organisations are in denial about the impactthis will have?

Those specifically interested in customer engagement through the mobilechannel should read Pete Mortensen’s article in Section 6 below.

Companies Figure 20





31

5.2.4 Achieving engagement through mobile channel

The critical success factors for obtaining customer engagement through themobile channel are shown below [ Figure 21]. ‘ 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%).

At a glance these are the six most important criteria from the perspective of company respondents. The equivalent agency figures are shown in red.

1) Ease of use 74%* 65% 2) Website optimisation for mobile 58% 53%

3) Speed of downloads 51% 57% 4) Privacy and security 42% 37% 5) Lower costs 39% 40% 6) Ability to personalise devices and services 33% 34%

* Percentage of respondents citing factor as important for engagement through mobile channel

Appendix 7.5 shows the percentages for agencies.

Companies Figure 21

Methodology note: respondents could check up to five options





32

Which of the follow ing types of customer da ta have you been

collecting online in the last 12 months?

0%

10%

20%

30%

40%

50%

60%

Customer

satisfaction

Purchasing

history

Customer

praise

Customer-

generated

ideas fo r

products /

services

Customer

complaints

L if es tyle da ta C us to m er

feedback o n

competitors'

products o r

services

Data on

customers'

personal

values and

beliefs

More than la s t yearAbout the sam e as last yearLes s than last yearDon't know / not relevant

5.3 Measurement and research

5.3.1. Customer data collection

The extent to which different types of customer data are being collected by organisations is shown below [ Figure 22]. There is a thirst for more dataacross the board, with customer satisfaction, purchasing history and customerpraise in particular being more widely measured now than they were a yearago. It is an encouraging trend to see more measurement of data which isrelated to the voice of the customer.

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 then it isuseless. For many businesses, the missing ingredient is analysis andunderstanding of the data, in order to produce a framework which leads toactionable next steps and measurable improvements.

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

Appendix 7.6 shows this information for companies and agencies with theexact percentages for each type of data.

Companies Figure 22

Types of customer data being collected

Sample: 311





33

5.3.2 Methods of gathering customer intelligence

Web analytics are regarded as the most essential method for gatheringintelligence for improving online customer engagement [ Figure 23a and

Figure 23b]. More than half of company respondents (57%) say web analyticsare ‘essential ’ for this purpose and a further (34%) say they are ‘important ’.

Feedback from customer-facing staff and usability testing are the next mostessential types of intelligence for better customer engagement, with just over athird of responding organisations saying that each of these methods isessential (35% and 34% respectively).

Figure 23a and Figure 23b shows the most important methods arranged inorder of their likelihood of being rated as ‘essential ’ by company respondents.

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

It can be seen that both quantitative and qualitative information sources play an important part in gathering customer intelligence for online customerengagement. For example, web analytics data can be invaluable butsometimes needs to be supplemented with qualitative information about whatpeople are actually saying to help make sense of it.

At a glance, this is the order of importance using combined percentages for‘essential ’ and ‘important ’. The agency figures are shown in red forcomparison.

1) Web analytics 91%* 78% 2) Feedback from customer-facing staff 76% 69% 3) Direct feedback through online channel 73% 75%

Joint 4) Usability testing 68% 65% Joint 4) Online customer surveys 68% 69%

6) Monitoring online search practices 66% 65%7) Focus groups / customer interviews 61% 59%

8) Offline customer surveys 52% 51% 9) Online panels 30% 41% 10) Online social network monitoring 26% 35%11) Shadowing customers / ethnography 18% 26%

* Percentage of respondents indicating that method is either ‘essential’ or ‘important’

Figure 24 shows the exact percentages of company respondents indicating whether each method is ‘essential ’, ‘important’, ‘nice-to-have’ or ‘not important’. Figure 25 shows the same information for agency respondents.





34

In the last 1 2 months w hich methods of gathering customer intelligencehave been m ost useful for engaging your custom ers online?

0%

10%

20%

30%

40%

50%

60%

Web

analytics

Feedback

from

customer-

facing staff

Usability

testing

Direct

customer

feedback

through the

online

channel

Monitoring

online search

practices

Online

customer

surveys

Essential

Important

Nice to

have

No t

important

In the last 1 2 months which methods of gathering customer intelligence

have been m ost useful for engaging your customers online?

0%

10%

20%

30%

40%

50%

60%

Focus Groups,

Customer

interview s

Offline customer

surveys

Online s ocial

netw ork

monitoring

Online panels Shadow ing

customers

(ethnography)

Essential

Important

Nice to

have

No t

important


Importance of methods for gathering customer intelligence (part 1)

Sample: 310


Importance of methods for gathering customer intelligence (part 2)

Sample: 310





35

Companies Figure 24

Agencies Figure 25





36

5.3.3 Metrics for measuring customer engagement

Just under half of responding organisations have dedicated metrics formeasuring online customer engagement (49%). A further 46% ‘would like to’

have these metrics. According to agencies, only a third (34%) or clientstypically have metrics especially for this purpose [ Appendix 7.7] .

The extent to which companies say they are measuring ‘customer engagement’is surprising, given the lack of a universal definition for what this is. We wouldsuggest that many companies are measuring aspects of customer engagement(e.g. recency of visits, frequency of visits, UGC contribution) or somethingrelated to customer engagement (e.g. loyalty or advocacy), but do not have asynthetic metric for ‘customer engagement’ with a variety of weightedcomponents.

It would also be interesting to know the extent to which companies have aform of measurement or metrics which actually lead to something actionable.

See Avinash Kaushik’s words of wisdom in Section 6 for more on this.

Companies Figure 26





37

5.3.4 Mapping customer touch points

Since last year’s Customer Engagement Report, there has been a statistically significant improvement in the number of organisations who declare

themselves either ‘very advanced ’ or ‘quite advanced ’ at mapping customerexperiences and touch points in order to a gain a single view of the customer.

Some 46% of organisations are now either very or quite advanced compared to35% last year. Last year, just under a quarter (24%) said that ‘they need tostart doing this’ compared to only 16% this year. Agencies also report amarked improvement [ Figure 29 and Figure 30]

Companies Figure 27

Companies (figures from previous customer engagement survey)

Figure 28





38

Agencies Figure 29

Agencies (figures from previous customer engagement survey)

Figure 30





39

5.4 Barriers to success

5.4.1 Barriers to better online customer engagement

Figure 31a and Figure 31b show the biggest barriers to online customerengagement from the perspective of company respondents, in descendingorder of their likelihood to be a ‘great barrier ’.

‘ 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 previoussurvey, when two thirds of respondents indicated that it was a great barrier ‘toa 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% or organisations respectively.

At a glance, these are the biggest obstacles facing organisations in their questfor online customer engagement. Percentages for agencies are shown in red.

1) Lack of resources (budget and time) 60%* 55% 2) Complexity of organisation 42% 43% 3) Organisational incoherence, culture or (lack of) will 38% 50% 4) Problems with technology 35% 25% 5) Lack of methodology or framework 33% 39%

6) Focus on short-term benefits 31% 45% 7) Lack of, or difficulty proving, business case 29% 39% 8) Lack of skills / experience / understanding 27% 48% 9) Lack of senior management buy-in 24% 45%

* Percentage of respondents indicating issue to be a ‘great barrier’

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 seniormanagement buy-in are seen as a great barrier by half (or close to half) of agency respondents. The percentage of company respondents regarding theseas major barriers is significantly less – a 12% difference for organisationalincoherence and a 21% difference for both lack of skills and for lack of seniormanagement buy-in.

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

Appendix 7.8 shows all the percentages for company respondents, for this year

and for last year. Appendix 7.9 shows the same data for agency respondents.





40

Which of the following ba rriers to cultivating be tter onlinecustomer e ngagem ent have you faced in the la st 12 months?

0%

10%

20%

30%

40%

50%

60%

Lack of

resources

(budget and

time)

Complexity of

organisation

Organisational

incoherence,

culture or

(lack of) w ill

Problems w ith

technology

Lack of

methodology

or framew ork

Focus on

short-term

benefits

Great

barrier

Small

barrier

Not a

barrier

Which of the following ba rriers to cultivating better online

customer e ngagement ha ve you faced in the last 12 months?

0%

10%

20%

30%

40%

50%

60%

Lack of, or

difficulty proving,

ROI / business

case

Lack of s kills /

experience /

understanding

Lack of s enior

management buy-

in

Diff iculty in

finding supporting

agencies

Customers or

product

unsuitable

Great

barrier

Small

barrier

Not a

barrier


Barriers to cultivating better online customer engagement (part 1)

Sample: 309


Barriers to cultivating better online customer engagement (part 2)

Sample: 309





41

5.4.2 Optimism about the future

Figure 33 shows a high level of optimism around the potential for engagingcustomers online. Just under half of company respondents (46%) are ‘very

optimistic’ and a further 45% are ‘quite optimistic’. Only 7% are ‘not veryoptimistic’ and less than 2% declare themselves ‘doom-laden’ .

Companies Figure 32

Agencies Figure 33





42

6. Comment and Analysis – what the experts say

6.1 Defining the terms of engagement – by Jim Sterne

Jim Sterne produces the eMetrics Marketing Optimization Summit and isthe Founding President of the Web Analytics Association. He is aninternational consultant who focuses on measuring the value of the web as amedium for creating and strengthening customer relationships. Jim haswritten eight books on using the internet for marketing and was named oneof the 50 most influential people in digital marketing by Revolution

Magazine.

The Second Annual Online Customer Engagement Report highlights a seriousproblem 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. Differentrespondents identified ‘ Recommends product, service or brand ’, ‘Convertsmore readily’ and ‘ Purchases regularly’ as their most trustworthy guidepoststo engagement.

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 participated in along with a number of other web analytics professionals. We spent a good deal of time kickingaround a definition and were finally in agreement that an engaged customer isone 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 accountprospective 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 sothat 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 Online Customer Engagement Survey brings to light thatthere 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? Becausetens of thousands of pounds are being spent in pursuit of this elusiveobjective. Soon this figure will run into the millions, but agencies risk writingproposals for clients to sign off without either side ever being sure what is

actually being sold or bought. Defining the terms is more important than ever.





43

6.2 ‘Engagement’ is about me the customer, not you the company – by Avinash Kaushik

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.

Creating engaging experiences online is important. The results of the cScapeCustomer Engagement Survey underscore that. Most of you won’t besurprised that a fantastic 77% of organisations say that the importance of measuring engagement has increased! Yet the survey results also indicate that,overall, we are struggling to understand what creates an engaging customerexperience 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 measureengagement:

• Most companies that measure ‘engagement’ have not applied duediligence to identifying what success means for their online presence.In absence of that hard work they fall into measuring engagement, andend up attempting to measure something that is hard to action or that

will rarely improve the bottom line. Don't do that.

• Think very carefully about what you are measuring if you do try to

measure engagement. If engagement to you is repeat visitors by visitorsthen call it Visit Frequency, don’t call it engagement. Don't sexify,simplify.

• If you want to measure ‘engagement’ then think of new and moreinteresting ways to do so. Go beyond the simple / complex formulas ontop of just your click data; remember engagement at its core is aqualitative feeling. Think different.

For maximum success and improved ‘actionability’, your engagement metricshould 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 actionfrom 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,

http://www.webanalyticshour.com/

http://www.webanalyticshour.com/





44

participates in community / forums, provides feedback, converts readily, andis less focused on price.

I read this with a great deal of sadness because it shows that companies andmarketers 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 besuccessful. Engagement is not about you, it is about me.

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

Andy Beal is an online marketing expert. He is editor of MarketingPilgrim.com, received a nomination for the 2006 Fast 50 and wasnamed to the Triangle Business Journal's ‘40 Under 40’.

This study demonstrates just how important online customer engagement isgoing to be over the next 12 months. With 90% of businesses indicating thatonline customer engagement is important - if not essential - to theirmarketing efforts, and 77% increasing their focus on customer engagement,2008 is shaping up to be the year we start truly to listen to our customers.

However, companies are yet to embrace the importance of social media as a

platform for improving online customer engagement. The study reveals thatfar too many businesses believe that customer engagement is simply a productof customer experience or is a role for customer service.

Only 12% of businesses believe that user-generated content is essential forimproving customer engagement and less than 5% believe that participationon social networking sites is essential. In fact, significant numbers of responding organisations have no plans to use social media at all in theircustomer engagement initiatives.

Companies would do well to understand that customer engagement cannot be

controlled within their own websites and that they should look to improvetheir customer interactions outside of their own web properties. With only around a third of businesses having a clear picture of the different touchpoints with their customers, the majority of companies would be wise to investtime in researching further exactly where their customer interaction takesplace.

They may well find that blogs, social networks, and other social media makeup an important part of their customer engagement for 2008.





45

6.4 Segmentation, segmentation, segmentation – by Dave Chaffey

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 ‘haveshaped the future of Marketing’. The author of specialist E-consultancy best

practice guides on E-marketing tactics like SEO and PPC, Dave has alsowritten a number of best-selling books, including Internet Marketing:

Strategy, Implementation and Practice, currently in its third edition.

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

In light of the rapidly growing number of digital channels competing for ourattention, 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 engagementfor different types of online business. Research analysts and commentatorshave defined frameworks, indices and measures to help marketers assess theirengagement effectiveness.

The need for segmentation

Yet the need to differentiate between customer segments has not beenproperly addressed in the discussions around online engagement. Thesesegments can be assessed online through web analytics, transaction history and/or email marketing responses. A more granular approach to assessingcustomer engagement is more actionable and therefore more powerful.

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

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

Sciences make segmentation much more straightforward. You can usemeasures such as bounce rate, duration on site or the number of conversiongoals 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 tocompetitors using audience research tools such as Hitwise which can be used

to compare online engagement between brands. Within your own analytics





46

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 multipletouch points through online acquisition; in other words, assessing thecontribution of different digital channels such as paid search, display ads andaffiliates. Many media agencies or in-house teams are developing their ownsolutions because the tools of the analytics companies are not appropriate.

Engagement through retention can be a struggle since analytics data sets arenot usually integrated with customer profile or response data – althoughanalytics tools such as Coremetrics 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, customeradvocacy as well as campaign response and transactional data. For largerorganisations, the data warehousing approach is increasingly used as a way toobtain 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. Withemail marketing, for instance, software has to be developed to trigger a

personalised email when a new customer is added to the database and then toclose the loop by 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 inpersonalised containers across a site. Then, the number of views and clicks onthis 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 formanaging web interactions – from content management systems, email

broadcast systems, site visitor data collection systems and web analyticssystems. 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 formats for tagging or exchanging web analytics or email response data (otherthan the standard web log file data) or APIs to share data betweenapplications. This means that changing the system used to assess engagementis a major project.





47

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 fortraditional 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 cansee 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 relevantcommunications? Creating the data and software infrastructure to achieveright-touching will certainly not be straightforward. But for those who canexecute a plan to implement the right infrastructure this can give an excellentopportunity to deliver much more relevant online messaging.

6.5 The future of engagement is mobile – by Pete Mortensen

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

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 kindsof customer interactions, but I think it remains an open question how widely applicable such technologies will become for companies. Are people ready toturn 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 thissurvey, are intrigued by such opportunities. Yet it’s also clear that a very smallproportion is ready to let employees blog about their business, in spite of thesuccess of experiments at Microsoft and a few other pioneers.

That said, I think that the mobile is the most fascinating new medium forengaging 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, thecommunications they bring us are generally welcome.

This is not the case, however, with advertising, particularly that of the junk mail variety. Email was also once a beloved medium, until blocking spam





48

became a critical value. Because people enjoy such close relationships withtheir mobile phones, the potential persuasive powers of these devices areextremely high. On the other hand, companies looking to the mobile space asa tool for marketing and customer connection must walk a fine line betweenengagement 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 downand 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 likeadvertising. Google’s suite of mobile applications meets these endsextraordinarily well.

As a final thought, let me just urge readers of this report to remember thatpeople and their moods are more than just abstractions on a page or bits on acomputer. The number of companies reporting the use of ethnographicshadowing techniques is incredibly low compared to other forms of customerengagement tactics, even though meeting people in their actual lives is theonly way to get a full picture of who they are.

A number of compelling technologies have emerged recently that make itpossible 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 intheir lives really means and, moreover, how your company can profit by improving the lives of ordinary people.





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7. Appendices

7.1 Has the importance of customer engagement increased?

Agencies

7.2 Ownership of online customer engagement

Agencies

Methodology note: respondents could check multiple options





50

7.3 Strategies for engaging with audience

Companies

Agencies





51

7.4 Importance of mobile channel

Agencies

7.5 Achieving engagement through the mobile channel

Agencies

Methodology note: respondents could check up to five options





52

7.6 Customer data collection

Companies

Agencies





53

7.7 Metrics for measuring customer engagement

Agencies





54

7.8 Barriers to customer engagement - companies

Companies





55

Companies (figures from previous customer engagement survey)





56

7.9 Barriers to customer engagement - agencies Agencies




Agencies (figures from previous customer engagement survey)

Documents

Customer Engagement Report 2008