Cscape Customer Engagement Report 2009-3rd edition

3rd Annual Online Customer Engagement Survey

Report 2009

3rd Annual Online Customer Engagement Survey

Report 2009

3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Those organisations able to grasp the changes in our customers’ behaviour and psychology, while placing an emphasis on delivering increased value, will be able to reap the rewards of customer engagement.

Introduction Welcome to this, the Third Annual Online Customer Engagement Survey Report.

This year the survey was translated into four different languages and attracted the largest number of participants ever with nearly 1300 companies and supplier agencies taking the survey. This makes it the biggest survey of its type anywhere in the world.

Half of you now classify customer engagement as essential to your organisation and your answers indicate that an increasingly large number of you understand customer engagement as an activity that delivers value to both customers and businesses. After all this is the defining feature of engagement, its true value lies in the development of mutually beneficial relationships.

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This year’s report provides insights into the way companies and agencies are continuing to use the online space to develop stronger and more intimate bonds between our organisations and our customers. A year ago we might all have accurately predicted that email newsletters would remain a staple technique for improving online customer engagement, but far fewer might have predicted that 13% of companies would look to be investing in micro-blogging utilities like Twitter.

There have been a number of constants across the years that the survey has been running but this report is published into a very different world than the previous ones. The shadow of a credit crunch in 2007/2008 has already turned into full blown recession in some countries and the impact of international economic woes are predicted to reach well into the next decade. The instability that the market economy creates for all organisations means that it is increasingly difficult to think beyond the short term and even the best laid business plans can be unhinged at a moment’s notice.

If we assume that sensitivity to price is the sole, or indeed the most important motivating quality, we will have missed the more subtle interaction between the changing economic environment and our customer’s psychology.

So what is the role for customer engagement within this climate?

To effectively engage we must endeavour to understand and provide relevance and this year’s report provides insights into how we are targeting and segmenting our customers, as well as what methods we are using to learn how our customers are changing in this new world.

Nearly 50% of you recognise that sensitivity to price will be a key customer behaviour in the coming year. But if we assume that it is the sole, or indeed the most important motivating quality, we will have missed the more subtle interaction between the changing economic environment and our customer’s

psychology, and ultimately their behavioural patterns. For example, in previous economic downturns escapism made the cinema, gambling and cosmetics relatively ‘recession proof ’. Will they continue to be or will alternative forms of escapism predominate?

What role will the expanding secondhand market online play and how can we take advantage of this? As tightened purse strings encourage conservative purchasing how will a recessionary focus on the family unit express itself online?

In our First Online Customer Engagement Report published in 2006 I made the point that “customer engagement is the best measure of current and future performance; an engaged relationship is probably the only guarantee for a return on your organisations’ or your clients’ objectives”. I still hold this to be true.

Indeed in a troubled economy the emphasis on engagement is one of the few activities that can deliver value to both customer and business alike, over both the short and the long term.

3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

E-consultancy is the leading source of independent advice and insight on digital marketing and ecommerce.

Their reports, events, online resources and training programmes help a community of over 75,000 registered marketers make better decisions, build business cases, find the best suppliers, look smart in meetings and accelerate their careers.

E-consultancy is an award-winning online publisher of reports covering best practice, user experience benchmarking, market data and supplier selection aimed at internet professionals that want practical advice on all aspects of e-business.

E-consultancy also operates a highly popular training division, used by some of the world’s most prominent brands for staff education, both in-house and via public courses. We provide training across all areas of digital marketing and at all levels from one day courses to diplomas to Masters in Digital Marketing.

In addition, we host more than 100 events a year, such as The Online Marketing Masterclass, regular Supplier Showcases and Roundtables, an annual Future of Digital Marketing event, Digital Cream and a range of social events.

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 E-consultancy site now attracts 175,000 unique users per month where they access research, read the blog and take part in discussions in the forums. And as a portal to the digital marketing community, E-consultancy members can also link up with other members and digital suppliers through our directories, as well as find a new job or new digital talent using the job listings.

The cScape Customer Engagement Unit (CEU), launched in November 2006, is a team of individuals with decades of experience in digital marketing and communications, design and technology development.

Some of E-consultancy’s client-side members include: Google, Yahoo, MSN, MySpace, BBC, BT, Shell, Vodafone, Yell.com, Dell, Oxfam, Virgin Atlantic, TUI, Barclays, Carphone Warehouse, IPC Media, Deloitte and Touche, T-Mobile and Estée Lauder.

Join E-consultancy today to learn what’s happening in digital marketing – and what works.

Call us to find out more on +44 (0)20 7681 4052 or contact us online. e-consultancy.com

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cScape combines in-depth research into the science of persuasion with the development of practical online engagement strategies. Our priority is to enable clients to align business goals with the needs and interests of their customers. cScape works with a diverse range of organisations from the corporate, charity and government sectors.

The CEU has continued to grow over the last year and has now developed an international base of partners. This allows the CEU to provide wider services to global companies, many of whom have contributed to the success of the survey this year.

Since the launch of the CEU and the world’s First Annual Online Customer Engagement Survey, the idea of customer engagement has been widely adopted by companies and

agencies alike. cScape continues to be at the forefront of developing the concept of engagement, with the book Winners and Losers in a Troubled Economy; how to engage customers online to gain competitive advantage published in early 2008 and a continual programme of thought leadership events which have informed professional and informal online debates about engagement and persuasive design. cScape is also a Microsoft SharePoint Server 2007 (MOSS) Centre of Excellence and has an award-winning design team.

We have an exciting programme of events planned for 2009 and hope you will be able to come along. Please contact Sarah Woodbridge to find out more about events, the Customer Engagement Unit and cScape’s other services (s.woodbridge@cscape.com +44 (0)20 7689 8800).

Find out more about cScape cscape.com Join the debate customer-engagement-network.com

3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

3rd Annual Online Customer Engagement Report 2009 Introduction

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Executive summary and highlights

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Methodology and sample

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Findings

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Customer engagement strategy

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Importance of customer engagement

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Do you have a defined customer engagement strategy?

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Interest in customer engagement

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Behaviour of an engaged customer

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Mapping customer experiences

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Customer engagement and the troubled economy Impact of the economic downturn

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Customer data collection

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Changing customer behaviour and attitudes

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Tactics and Initiatives

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Ways of improving engagement and areas of investment

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Areas of increased interest

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Mobile marketing to enhance customer engagement

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Segmentation of audience to identify quality customers

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Issues around customer engagement and key principles Barriers to better online customer engagement

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Key principles of customer engagement

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Migration of marketing budgets

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Comments on the findings Andy Beal – Customer engagement takes center stage in economic downturn

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Jim Sterne – Online marketing working. Senior managers sleeping

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Pete Mortensen – When the customer talks back

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Ian Jindal – Sustaining profitability in a challenging retail climate

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Martha Russell – Engagement pinball

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Eric Peterson – We (still) need a standard measure for engagement, perhaps more than ever!

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Becky Carroll – Creating customer engagement on their turf

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Matthew Bailey – Striking a balance

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Stéphane Hamel – When engagements rhymes with commitment

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Alex Smith – Invest in the right blend

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Thoughts on customer engagement Lucy Conlan – Tread carefully – the customer is not always right

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Clare O’Brien – It’s a meatball sundae Jim, but not as we know it

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Hugh Gage – Meeting expectations is the first step to engaging with your customers

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David Dodd – Can rich content mean rich customer experience?

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Richard Sedley – Can I tell you a story?

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Amanda Davie – But I still haven’t found what I’m looking for

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Lynda Rathbone – Oh the humanity!

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Dave Chaffey – Learning to slice and dice

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Survey partners

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3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Those organisations able to grasp the changes in our customers’ behaviour and psychology, while placing an emphasis on delivering increased value, will be able to reap the rewards of customer engagement and will be best placed to emerge winners from the current economic situation, those that can’t have a lot to lose.

It just remains for me to thank all those who made this the most successful survey to date.

Thanks to everyone who participated. To Linus and Aliya at E-consultancy. To our partners who promoted the survey around the globe: Patrick, Lance, BJ, Ria, Theo and AnneKathrine. To our contributors: Amanda, Jim, Andy, Pete, Clare, Alex, David, Hugh, Dave, Becky, Ian, Eric, Lynda, Stéphane, Matthew and Martha. And finally to my colleagues at cScape: Sarah W, Magda, Sarah B, Tom, Steven, Lucy, Theresa and Rob. We hope you find the Third Annual Customer Engagement Report interesting and useful and that you’ll share your thoughts on its content.

“Why the focus on customer satisfaction and not sales?”

Andy Beal, p13

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

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3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Executive summary and highlights

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3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Executive summary and highlights

Customer engagement is widely seen as a way of deepening and enriching a product or service offering and a method for gaining customer insight.

The Third Annual Online Customer Engagement Report is based on a survey of 1,291 respondents carried out in September and October 2008.

Customer engagement is also widely seen as a way of deepening and enriching a product or service offering and a method for gaining customer insight.

Whilst the importance of customer engagement is widely acknowledged, the research found that fewer than half of organisations (42%) have a defined customer engagement strategy in place.

At a time of economic crisis, organisations need to be clear about how customers are modifying their behaviour and how this could impact them.

It is clear that whilst companies understand that customer engagement is important, many are still unsure about how to implement a coherent and practical plan of attack.

Tellingly, less than half of respondents (41%) said that the deteriorating economic climate had resulted in a greater focus on customer engagement.

The essence of customer engagement is seen as being about creating relationships which result in value both for customers and for organisations. Asked about their organisation’s interest in online customer engagement, 38% of respondents said that it was about increasing long-term customer value while 34% said that it was about increasing value delivered to the customer.

Sensitivity to price is the type of customer behaviour which responding organisations feel that they will most likely need to address over the next 12 months. Nearly half of companies surveyed (48%) said that this would be a behavioural trait which was significant for them next year.

Other report highlights Email newsletters are the tactic most likely to have driven a tangible improvement in customer engagement, with 59% of respondents saying that their organisations will increase their spending in this area.

Despite the relative novelty of micro-blogging utilities such as Twitter, it is interesting to note that 7% of companies say they have improved their customer engagement through this channel.

Despite the growing importance of customer empowerment, only 13% cite participation in innovation and design as an important customer attribute.

Only 5% of companies have a customer engagement strategy which embraces the mobile channel.

Lack of resources continues to be a major barrier to successful customer engagement, although encouragingly, slightly fewer companies now find this to be a major problem compared to last year (52% compared to 60% in last year’s survey).

Just under a third of companies (31%) say that problems with technology are a significant barrier to cultivating better customer engagement.

Areas associated with Web 2.0 and social media such as user ratings & feedback (41%), user-generated content (37%), blogging (36%) and brand presence on social networks (36%) are also expected to attract significant sums of investment even though it is not always easy to track return on investment (ROI) in some of these areas.

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3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

The value of the survey In a time when the internet is rapidly taking over traditional media, there is no question that online customer engagement is essential. Over the past few years, cScape has taken great strides towards becoming thought leaders in the field of engagement, helping companies of all sizes recognise and understand the benefits of online customer engagement to their business.

Over the past three years the Annual Online Customer Engagement Survey has shown that recognition of customer engagement has been rising steadily. In this current economic climate, companies are finding that their online strategy will be vital in keeping their customers engaged. Increasing long-term customer value and providing them with quality rather than quantity will be of highest importance.

Finding a way to speak to your customers on a more individual level will mean greater satisfaction and loyalty.

There is a whole range of possibilities to engage your audience online. From social networks to user generated content to rapidly expanding mobile technologies, there are more and more ways to reach your customers.

Many of these are still largely untapped, and are perfect opportunities to invest in for a long-term competitive advantage.

“It’s time to rally the troops and bring the fight to the C-Suites.�

Jim Sterne, p14

The most valuable customers you can have are those who know you have made an effort to speak to them directly, and will happily recommend your product/service to their friends, colleagues and family.

Scott Dodds General Manager Small and Midmarket Solutions and Partners Group Microsoft

Methodology and sample

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3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Methodology and sample Methodology

Geography

Almost 1,300 respondents took part in an online survey1 over a five-week period in September and October 2008.

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

Survey participants came from E-consultancy’s user base, through our network of partners, clients and agencies and via promotion across a range of social media.

The majority of respondents are based in the UK although there are also significant numbers of respondents from the United States, the rest of Europe and beyond.

Figure 2

Company (client-side or in-house): In which country/region are you based?

Base – all client-side respondents

UK: 70.91% (273) Europe (outside UK): 9.61% (37)

The agency sample is slightly more global, with 37% of these respondents based outside the UK. The survey was available in four languages: English, Spanish, Greek and Chinese; in an attempt to make this research as global as possible.

North America: 9.61% (37) China: 1.04% (4) Other: 8.83% (34)

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, we have carried out separate analysis for both these groups and the distinction is abbreviated to company (including not-for-profit organisations) and agency.

Figure 1

Figure 3

Agency (including consultants and technology suppliers): In which country/region are you based?

What type of organisation do you work for?

Base – all respondents (1291)

Base – all agency respondents

Part of an in-house team (client-side): 44.54% (575)

UK: 63.05% (256)

External agency / supplier / consultant: 45.39% (586)

Europe (outside UK): 11.08% (45)

Other: 10.07% (130)

North America: 14.53% (59) China: 0.99% (4) Other: 10.34% (42)

In total, 575 company respondents took part in the survey, compared to 586 agency participants. Company respondents were asked to comment in respect of their own organisations, while agencies were asked to comment in terms of a typical client.

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E-consultancy uses Clicktools for its online surveys.

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3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Company turnover Figure 4 shows the range in the size of participating organisations, as defined by company turnover. Approximately a third of respondents (29%) work for companies with annual revenues of £10 million or less.

Figure 4

Company: What is your annual company turnover?

Figure 6

All respondents: In which business sector is your organisation?

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Under £1 million: 11.08% (42)

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£1 -£10 million: 17.68% (67)

39% of those companies taking part have a turnover of more than £50 million, of whom nearly a third of respondents work for companies with a turnover in excess of £150 million.

£10-£50 million: 12.40% (47)

Ch

£50-£150 million: 9.23% (35)

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>£150 million: 29.55% (112)

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Not relevant / don’t know: 20.05% (76)

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FM

Agency respondents typically work for smaller organisations, with 45% of them representing agencies with a turnover below £1 million [Figure 5].

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H 20

Automotive: 1.30% (5) Charity: 5.71%(22)

Business sector The best represented sectors are financial services, retail, travel and publishing [Figure 6].

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Figure 5

Agency: What is your annual company turnover?

Consultancy / Marketing Services: 3.64% (14)

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Entertainment: 5.19% (20) Financial services: 15.06% (58) FMCG / CPG: 1.56% (6)

Under £1 million: 45.14% (181) £1 -£10 million: 29.93% (120)

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£10-£50 million: 8.23% (33) £50-£150 million: 2.74% (11) 20 >£150 million: 4.74% (19)

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5

Healthcare: 1.56% (6) Pharmaceuticals: 0.52% (2)

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Not relevant / don’t know: 9.23% (37) 15

Gaming: 0.26% (1)

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Automotive: 1.30% (5)

Property: 0.52% (2)

Charity: 5.71%(22)

Public Sector: 5.71% (22)

Consultancy / Marketing Services: 3.64% (14)

Publishing: 8.83% (34)

Entertainment: 5.19% (20)

Retail: 12.99% (50)

Financial services: 15.06% (58)

Telecoms / mobile phones: 4.16% (16)

FMCG / CPG: 1.56% (6)

Travel: 9.35% (36)

Gaming: 0.26% (1)

Utilities & Energy: 1.30% (5)

Healthcare: 1.56% (6)

Other manufacturing: 3.38% (13)

Pharmaceuticals: 0.52% (2)

Other: 18.96% (73)

Property: 0.52% (2) Public Sector: 5.71% (22) Publishing: 8.83% (34)

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Retail: 12.99% (50) Telecoms / mobile phones: 4.16% (16) Travel: 9.35% (36) Utilities & Energy: 1.30% (5) Other manufacturing: 3.38% (13)

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3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Findings

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3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Findings Customer engagement strategy Importance of customer engagement

Figure 7

Company: How important is customer engagement to your organisation? (2008)

Figure 7 shows that customer engagement continues to be of key importance, with slightly more respondents saying that it is essential than last year. The overwhelming majority of client-side respondents say that customer engagement is important (35%) or essential (52%) to their organisations.

Essential: 52.27% (242) Important: 34.77% (161) Nice-to-have: 11.45% (53) Not important: 1.30% (6) Don’t know / not relevant: 0.22% (1)

Only 1% of respondents feel that it is not important, reflecting the growing shift towards putting the customer at the heart of business strategy.

From the agency perspective, approximately 84% of agencies (compared to 82% last year) feel that customer engagement is essential or important, emphasising the underlying message that customer engagement continues to be a critical component of organisational strategy.

The overwhelming majority of client-side respondents say that customer engagement is important (35%) or essential (52%) to their organisations.

From the agency perspective, approximately 84% of agencies (compared to 82% last year) feel that customer engagement is essential or important.

Do you have a defined customer engagement strategy?

Figure 8

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

Essential: 43.27% (196) Important: 40.62% (184) Nice-to-have: 13.47% (61) Not important: 2.21% (10) Don’t know / Not relevant: 0.44% (2)

Whilst the importance of customer engagement is widely acknowledged, less than half of organisations (42%) have a defined customer engagement strategy in place. It is clear that whilst brands understand that customer engagement is important, many companies are still unsure about how to implement a coherent and practical plan of attack.

From the agency point of view, fewer than a third (just 26%) say that their clients have what they would call a defined customer engagement strategy in place, suggesting a difference of opinion between companies and agencies about what constitutes a defined strategy in this area.

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COMMENT

Figure 9

Company: Does your organisation have a defined customer engagement strategy?

Yes: 42.30% (195) No: 51.41% (237) Don’t know / not relevant: 6.29% (29)

Less than half of organisations (42%) have a defined customer engagement strategy.

Figure 10

Agency: Do your clients typically have a defined online customer engagement strategy?

Yes: 26.00% (117) No: 68.44% (308) Don’t know / not relevant: 5.56% (25)

Andy Beal Customer engagement takes center stage in economic downturn Over the last 12 months, a lack of budget and time (45%) was cited as the biggest barrier to starting a customer engagement campaign.

Ironically, as budgets have tightened further – ahead of tougher economic times – those same businesses are increasing their focus in this area, with 41% naming the worsening economy as the catalyst for spending more resources on customer engagement.

It is worth noting exactly which channels businesses have the most faith in to help them achieve their customer engagement goals. While 37% of respondents plan to invest in blogging, user-generated content, and social networks, it’s email newsletters that will receive the greatest investment (59%) over the coming year. Not that other channels aren’t valuable at building customer engagement, it’s simply a case that email marketing shows the highest ‘tangible improvement’ in customer engagement – with 69% of respondents able to measure a benefit from the use of email. Perhaps this is more of a statement about the effectiveness of measuring customer engagement using social media, than a statement about social media itself.

Ensuring customers are satisfied with their experience is the most important metric to follow over the coming months.

So what data points will businesses find most valuable in measuring the success of their customer engagement efforts? Not surprisingly, almost 47% of respondents favour ‘customer satisfaction’ as the most important metric to measure – easily beating the 37% who keep a close eye on the actual transactions that take place on their web site. Why the focus on customer satisfaction and not customer sales? As customer purse strings are tightened all around the world, few companies will have the luxury of reporting increases in customer sales. Instead, ensuring customers are satisfied with their experience is the most important metric to follow over the coming months. Those companies that can keep their customers happy during these difficult times will be well placed to enjoy tremendous growth, once our economy starts to recover.

Andy is considered one of the world’s leading experts in online reputation management. He is the co-author of Radically Transparent: Monitoring and Managing Reputations Online and founder of online media monitoring service Trackur.com andybeal.com

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COMMENT

Jim Sterne Online marketing working. Senior managers sleeping It’s a love hate relationship. We love the technology, we love the results, but we hate the fact that upper management still doesn’t get it.

Jim has written eight books on using the Internet for marketing, produces the eMetrics Marketing Optimization Summit and is Chairman of the Web Analytics Association. emetrics.org

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87% of companies found customer engagement essential or important and 11% thought it would be nice to have. The other four people must work for (fill in your least-liked brand here). But even with 98% agreeing that customer engagement is a good thing, 57% have still not defined their online engagement strategy. We know the house is burning, we just can’t be bothered to call the fire brigade. The fault? Mid-level committees and senior management.

Not knowing how your customers perceive you is almost as bad as not knowing how they acquire those perceptions.

55% of companies don’t know how many touch points they have, ‘need to start’ mapping customer experiences to obtain a single view of the customer or didn’t understand the question. Customer engagement happens through customer touch points. Not knowing how your customers perceive you is almost as bad as not knowing how they acquire those perceptions. The fault? Corporate silos and insulated departments acting independently.

It’s reassuring to see that email is still king (60% anticipate an increase in email spend in the next 12 months). It’s also reassuring to have one’s beliefs confirmed that mobile is still very young (77% don’t do and / or are not planning on doing any mobile marketing). It is nevertheless infuriating that we are so late to the adoption game.

How many more ROI stories, case studies and actual results are required to push past our lack of budgets to do the job decently?

52% said budgets were the problem compared to 31% (the next highest category) who suggested technology was problematic.

It’s time to rally the troops and bring the fight to the C-Suites. This time, it’s not about faith and conviction but about demonstrable results and competitive edge. We now have the means to show how online marketing lifts brand awareness, brings more customers to the table, lowers costs and increases customer satisfaction.

Interest in customer engagement Organisations focus on customer engagement for a variety of reasons, but it is clear from Figure 11 that the essence of customer engagement is about creating relationships which result in value both for customers and for organisations.

Asked about their organisation’s interest in online customer engagement, 38% of respondents said that it was about increasing long-term customer value while 34% said that it was about increasing value delivered to the customer.

Respondents, who were able to check up to three options, were also likely to indicate that customer engagement is a way of deepening and enriching their product or service offering (29%) and a method for gaining customer insight (28%).

Only 2% of responding organisations said a major interest was insulating against a troubled economy. This shows that very few companies are seeing improved customer engagement explicitly as a way of dealing with the economic downturn. This may partly be because companies have not yet been severely affected by the credit crunch, but also because protection against recession is a possible benefit of customer engagement rather than a principal driver of their endeavours in this area.

Long-term customer value also emerged as the benefit of customer engagement most likely to be of interest to agencies’ clients.

Slightly more agency respondents (32% compared to 28% of company respondents) mentioned gaining customer insight as a key reason for their clients’ interest.

Increasing market share was mentioned by 30% of agencies, although this was lower down the list of priorities for responding organisations (cited by 25% of company respondents).

Similarly, the use of customer engagement to increase short-term conversions was cited by just over a quarter of agencies (26%) but only 16% of company respondents.

38% of respondents said that it was about increasing long-term customer value while 34% said that it was about increasing value delivered to the customer.

COMMENT

Pete Mortensen When the customer talks back Figure 11

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

40 35 30 25 20 15 10 5 0 Strengthening emotional35investment in your brand: 24.78% (113) Increasing value delivered to the customer: 33.77% (154) 30 Reducing acquisition costs: 21.05% (96)

25 Increasing short-term conversions: 16.45% (75) Deepening and enriching your product or service offering: 28.95% (132) 20 Adjusting to the increased importance and power of the customer: 10.53% (48) Increasing long-term customer value: 38.16% (174) 15 Gaining customer insight: 28.29% (129) 10 Insulating against a troubled economy: 1.75% (8) Increasing market share: 24.78% (113) 5

Figure 12

Agency: Which of the following* best describe your clients’ interest in online customer engagement?

Years from now, I think we’ll look back and remember 2008 as the year when big business realised that pretending to be interested in its customers wouldn’t cut it anymore. As so often happens with change, it seems that one minute no one understood the point 35 Strengthening emotional investment in their brand: 21.78% (98) of connecting Strengthening emotional investment in your brand: 24.78% (113) directly to consumers, and the next, everyone was doing it.

Increasing value delivered to the customer: 28% (126) Increasing value delivered to the customer: 33.77% (154) 30 Just consider how laughable it would have been a year ago if Reducing acquisition costs: 21.56% (97) Reducing acquisition costs: 21.05% (96) I had proclaimed that the biggest breakthrough in online customer 25 engagement would be the tax preparation Increasing short-term conversions: 26.22% (118) company H&R Block Increasing short-term conversions: 16.45% (75) launching a Twitter feed. Or how unlikely it would have looked to predict and enriching their product or service offering: 22.22% (100) Deepening and enriching your product or service offering: 28.95% (132) Deepening that a source of a turnaround at Starbucks would come from a high-tech 20 to the increased importance andhave powerannounced of the customer: 10.67% (48) suggestion box. Could anyone without smirking that Adjusting to the increased importance and power of the customer: 10.53% Adjusting (48) companies outside of the technology sector would not only create social Increasing long term customer value: 32.67% (147) 15 Increasing long-term customer value: 38.16% (174) networking strategies, but that they would become essential components Gaining customer insight: 31.78% (143) to their competitive approach?

Gaining customer insight: 28.29% (129) 10 Insulating against a troubled economy: 6.00% (27) Insulating against a troubled economy: 1.75% (8) The driving force here is the eroding effectiveness of traditional advertising. an always-on world, multi-million dollar spots on TV don’t Increasing marketInshare: 29.56% (133) 5 Increasing market share: 24.78% (113) have anywhere near the power that a zero-budget viral video could.

Improved employee satisfaction: 3.78% (17) Improved employee satisfaction: 5.48% (25) People have learned to tune out ads that are imposed upon them, and 0 Enhanced public profile: 18.89% (85)connect with them. What we are seeing in seek out corporate ideas that Enhanced public profile: 19.96% (91) the slow emergence of electronic connections between producers and Strengthening emotional investment in their Reduced customer service costs: 18.00% (81) Reduced customer service costs: 17.98% (82)brand: 21.78% (98) consumers is the dawning realization that the best way to build customer Increasing value delivered to the customer: 28% (126) Improving predictability: (35) new products – is to really loyalty business – and discover ideas7.78% for great Improving business predictability: 5.48% (25) Reducing acquisition costs: 21.56% (97) understand who customers are as people.

Other: 1.78% (8) Other: 2.85% (13) Increasing short-term conversions: 26.22% (118) In other words, these electronic seedlings that have grown up into Deepening and enriching their product or service offering: 22.22% (100) mighty oaks in the last year are a starting point and a call to action.

Adjusting to the increased importance and power of the customer: 10.67% (48) H&R Block has very rapidly become a beloved brand online because its Increasing long term customer value: 32.67% (147) tax specialists are now available to help anyone with their tax questions Gaining customer insight: 31.78% (143) free of charge. Now, just imagine what the company could do if it really knew what was going on in the lives of the people asking beyond what Insulating against a troubled economy: 6.00% (27) they can fit into a 140-character tweet.

Increasing market share: 29.56% (133)

Improved employee satisfaction: 5.48% (25) 0 Enhanced public profile: 19.96% (91)

Improved employee satisfaction: 3.78% (17)

Reduced customer service costs: 17.98% (82)

Reduced customer service costs: 18.00% (81)

Improving business predictability: 5.48% (25)

Improving business predictability: 7.78% (35)

Other: 2.85% (13)

Other: 1.78% (8)

* Respondents could check up to three options

Enhanced public profile: 18.89% (85)

Pete is the communications lead for Jump Associates and is the co-author of Wired to Care: How Companies Prosper When They Create Widespread Empathy from FT Press. jumpassociates.com

Business today is reconnecting with people in ways big and small to propel through the tough economic times we find ourselves in. They would do well to focus increasingly more on the big. Because in a few years, you might look up, and see that everyone else is doing it too.

15

COMMENT

Ian Jindal Sustaining profitability in a challenging retail climate Retail appears a simple business, in which the extent of a customer’s ‘engagement’ can be measured by their spend with you.

The challenge – especially in the current climate – is conversion: converting browsers to purchasers (without simply ‘buying their customer with ever-deeper discounts’), and thereafter purchasers to retained, profitable customers.

Ian is a consultant, corporate advisor and publisher, focusing upon eCommerce in retail and publishing. ianjindal.com

There is a fundamental trinity at the heart of ecommerce: product, price and service.

No sales are possible if you don’t have an appropriate product for a customer. Once the product is presented, the customer will balance price and service promise (for example, preferring a slightly more expensive ‘in-stock’ item to a piece of out-of-stock ‘vapourware’, or the implied reliability of a multichannel retailer with a reputation and return-to-store).

Customer engagement: wrapping your activities around a conception of a profitable and sustained interaction.

So much for the first purchase. The second purchase will be driven by the same criteria, but with the important overriding consideration of ‘performance’. Did the product match its claims? Was your service level as promised? How did your team deal with queries? Did follow-up marketing match the tone and offer to the customer’s experience, expectations and desires?

16

Here we have the difference between old-school marketing (persuading the customer to empty your warehouse) and customer engagement (wrapping your activities around a conception of a profitable and sustained interaction). customer engagement should inform the design and operation of every facet of your activities – from planning through ‘conversion’ to reactivation, or ‘continuing service’, as we should term it.

Behaviour of an engaged customer

The survey response illustrates the rich range of mechanisms and initiatives in this field, but it’s heartening to see a trend towards customer engagement as a way of integrating marketing approaches to a customer and a convergence upon measures such as profit and ROI rather than ‘engagement’ as some end in itself.

Customer engagement can provide a framework to focus activity upon sustained profitability, and in a challenging retail climate one could ask for no better goal.

As Fred Reichheld argues in The Ultimate Question2, the propensity of a customer to make a recommendation provides marketers with a valuable metric which can be correlated to business performance, allowing organisations to view customer recommendation as a driver of growth and profitability. The Net Promoter Score (NPS) is a good example of this.

Participants were asked to indicate up to three attributes of an engaged customer which they considered most important to their organisations over the next year.

The attribute seen as most important is recommends product, service or brand, deemed to be a top-three descriptor by 58% of company respondents and 54% of agency respondents [Figure 13 and Figure 14].

Other attributes of engaged customers regarded as very important are:

• They are more likely to convert more readily (44%)

• They purchase regularly (36%) • They are less likely to switch supplier (30%) Companies are also recognising the importance of engaging in dialogue with their customers. Just over a quarter of respondents (26%) say that participating in online communities and support groups will be an important attribute over the next 12 months, while 23% acknowledge the importance of getting regular feedback.

2

It is clear that Web 2.0 has led to increased customer empowerment and amplified the voice of customer more than ever before. But despite the growing importance of customer empowerment, only 13% cite participation in innovation and design as one of the three most important attributes.

Co-creation (as first coined by C.K. Prahalad to describe collaboration by organisation and customer for the creation of mutual value) provides a lucrative opportunity to drive innovation and creativity, yet it is clear that too many companies are still adopting a top-down approach. Whilst more companies are starting to employ crowdsourcing techniques as a means to drive innovation, this approach has not yet hit the mainstream.

Only 10% of company respondents say that the propensity of an engaged customer to be less reactive to a troubled economy is a key attribute. It seems that not many companies are seeing customer engagement as a crucial attribute for shielding them against the impact of the recession.

On the same theme, 17% of respondents believe that less focus on price is a crucial attribute. Given that many organisations will not want to compete through price-slashing, an alternative strategy is to create sustainable competitive advantage and long-term value by differentiating through the customer experience.

The extent to which companies will actually need to cut their pricing depends on a company’s positioning in the marketplace and the price elasticity of their product or service.

The Ultimate Question by Frederick F. Reichheld. www.theultimatequestion.com/

COMMENT

Figure 13

Company: Which of the following attributes* of an engaged customer are likely to be most important to your organisation in the next 12 months?

60

Purchases regularly: 35.89% (164) Provides feedback regularly: 22.76% (104)

50

Recommends product, service or brand: 58.21% (266)

40

Participates in innovation and design: 12.69% (58) Participates in online communities or support

30

groups: 25.60% (117) Is less focused on price: 17.29% (79)

20

Is more tolerant of mistakes: 5.03% (23) Converts more readily: 43.98% (201)

10

Is less likely to switch supplier: 29.98% (137) Is less reactive to a troubled economy: 10.28% (47)

0

Other: 3.50% (16)

Figure 14

Agency: Which of the following attributes* of an engaged customer are likely to be most important to your clients in the next 12 months?

60

Purchases regularly: 46.99% (211) Provides feedback regularly: 20.49% (92)

50

Recommends product, service or brand: 53.90% (242)

40

Participates in innovation and design: 10.91% (49)

30

Participates in online communities or support groups: 20.94% (94) Is less focused on price: 18.26% (82)

20

Is more tolerant of mistakes: 4.01% (18) Converts more readily: 48.33% (217)

10 0

Is less likely to switch supplier: 37.64% (169) Is less reactive to a troubled economy: 8.24% (37) Other: 1.34% (6)

* Respondents could check up to three attributes of an engaged customer

Martha Russell Engagement pinball A political parody racked up a big score in engagement pinball when Tina Fey portrayed US Republican Vice Presidential candidate, Sarah Palin, on September 26, 2008 on the American comedy show, Saturday Night Live. Overnight, video clips of the comedy skit were posted by both consumers and CBS, generating millions of downloads through YouTube. Like a silver ball shooting through a pinball machine, the fusion of topics, events, and people scored engagement at contact points on television, blogs, social media, email, phone calls, hallway chats, and dinner conversations.

The silver ball must be kept in play by continually providing another round of experiences.

The ‘ball’ hit the payload when 9.7 million people watched the NBC Saturday Night Live skit. Over 25 million YouTube downloads were accompanied by millions of blog postings in the first few days following the TV broadcast. By the time Governor Palin appeared in the Vice Presidential Debate on October 2nd, TV audience for the debate across all channels topped 70 million.

The challenges for engagement architects include gaining management support as well as customer attention. Both the Third Annual cScape Customer Engagement Survey and my spring 2008 study of experiential marketing, point to a desire

for marketing efforts to produce personal experiences that give customers knowledge of a brand’s relevance to their life. Both agency and company professionals expect engaging experiences will produce attention, affection and actions that will endure to produce trial and sustain loyalty. The wild cards are the risks. These include the risks of off-target or negative word-of-mouth in consumergenerated-content, as well as uncontrollable and hard-to-control factors in implementing interactive experiences. In truth, engagement scores multiply when customers act on and speak about their involvement. Influence is an active process. Many decision makers want to minimize risks.

It turns out there is no shortcut to trust, loyalty or reputation. However, personal involvement and experiential marketing can provide highscoring plays in the engagement pinball game.

To leverage this, the silver ball must be kept in play by continually providing another round of experiences that sometimes activate the same, sometimes activate new customer contact points. And, importantly, the message must be consistent and relevant in context.

Martha is Associate Director of Media X, and Senior Research Scholar in Human Sciences Technology Advanced Research Institute, at Stanford University. She studies innovation diffusion and digital content as context for associated contact points. mediax.stanford.edu

Competitive marketers who want to play engagement pinball must do more than periodically punch the flippers on the board.

There are many ways to build score. Keeping the ball in play requires understanding the ball (the customer), the board (relative value of available contact points) and, importantly, fast response to keep the play active. All senses must be activated! Relevance is a multiplier.

High score still wins!

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3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Over a third of agencies (35%) report that their clients are not very advanced at mapping customer touch-points.

Figure 15

Mapping customer experiences Figure 15 shows the extent to which companies are mapping customer experiences in order to obtain a single view of the customer.

There hasn’t been a radical improvement since 2006 but the proportion of companies who are either not very advanced or not doing this at all has decreased from 60% to 52%.

But this still remains a problem area for more than half of the organisations surveyed.

Only 3% of companies report that they are very advanced at mapping while 41% say that they are quite advanced.

For a variety of political, cultural and technical reasons, many organisations have struggled to provide a seamless experience for the customer. The ability of some companies to do this well, sometimes because they have started from scratch with the customer at the heart of their proposition, has increased pressure on other organisations to get this right.

Agency responses to this question, show that over a third of agencies (35%) report that their clients are not very advanced at mapping customer touch-points to obtain a single view of the customer, and a further 18% say that they need to start doing this.

18

Customer engagement and the troubled economy

Company: How advanced are you at mapping customer experiences to obtain a single view of the customer?

Very advanced (we know all our customer touch-points): 3.29% (15) Quite advanced (we know most of our customer touch-points): 41.45% (189) Not very advanced (we don’t even know how many touch-points we have): 35.31% (161)

Companies are either taking an ‘ostriches’ or ‘owls’ approach to the current economic climate.

We need to start doing this: 17.11% (78) Don’t know / not relevant: 2.85% (13)

Impact of the economic downturn The sample of organisations surveyed for this report is split in terms of whether they are paying more attention to customer engagement as a result of the economic situation.

Under half of respondents (41%) said that their organisations were now placing more emphasis on customer engagement, but 41% said this was not the case.

It is apparent that companies are either taking an ‘ostriches’ or ‘owls’ approach3 to the current economic climate, with some companies seemingly in denial about the increased importance of customer engagement during a recession.

Figure 16

Agency: Typically, how advanced are your clients at mapping customer experiences to obtain a single view of the customer?

Very advanced (we know all our customer touch-points): 3.29% (15) Quite advanced (we know most of our customer touch-points): 41.45% (189) Not very advanced (we don’t even know how many touch-points we have): 35.31% (161) We need to start doing this: 17.11% (78) Don’t know / not relevant: 2.85% (13)

3

Forward-thinking organisations will need to gain greater insight around how customer behaviour will be shaped by the current economic situation and what they can do to strengthen customer relationships.

Differentiating the customer experience will enable companies to secure sustainable long-term competitive advantage, and this necessitates placing more emphasis on the importance of customer engagement.

www.e-consultancy.com/news-blog/366490/owls-will-beat-the-recession-ostriches-won-t.html

COMMENT

Eric Peterson We (still) need a standard measure for engagement, perhaps more than ever!

Figure 17

Company: Has a worsening economic situation caused your organisation to place more emphasis on customer engagement?

Yes: 40.52% (171) No: 41.71% (176) Don’t know / not relevant: 17.77% (75)

Differentiating the customer experience will enable companies to secure sustainable long-term competitive advantage.

Figure 18

Agency: Has a worsening economic situation caused your clients to place more emphasis on customer engagement?

Yes: 41.19% (180) No: 35.01% (153) Don’t know / not relevant: 23.80% (104)

The fact that Third Annual cScape Customer Engagement Survey reports that 42 percent of companies have a defined online customer engagement strategy is great news but is somewhat troubling given the diversity of opinions regarding how customer engagement should actually be measured. In last year’s survey my good friend, Mr Jim Sterne, commented on the difficulty we have as an industry defining what we mean by the term ‘engagement’ and was spot on. Some of us don’t believe that engagement can be measured at all, others believe engagement is similar to U.S. Justice Potter Stewart’s view on pornography (“I know it when I see it.”), while still others believe that engagement can be measured using a combination of qualitative and quantitative input readily available in the digital channel.

If we as an industry struggle to define the basis for measurement, how is it possible that so many companies are able to think strategically about improving customer engagement? More than likely the hype surrounding the subject has driven companies to cobble together plausible sounding initiatives but they have done so in a measurement vacuum. If this is the case, it is even more interesting that so many companies are able to report tangible improvements in online customer engagement associated with specific tactical efforts like micro-blogging, user contributed content, and rich interactive applications.

Hype... has driven companies to cobble together plausible sounding initiatives but they have done so in a measurement vacuum.

My hope for the coming year is that the measurement industry can come together and adopt a standard definition of engagement, one that can be practically applied so that when we ask ‘what drives engagement?’ the answers are grounded in such a way that we can compare results across sites, across technologies, and across audiences. Nobody questions the need to engage our customers and prospects, but the time has come for a common context when doing so.

Eric is a strategic business consultant advising businesses around the globe on their use of web analytics technology, as well as the author of Web Analytics Demystified, Web Site Measurement Hacks and The Big Book of Key Performance Indicators. webanalytics demystified.com

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3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Satisfaction metrics together with transactional data are viewed as critical for developing customer insights.

Figure 19

Customer data collection Respondents were asked to indicate up to three sources of data which they thought would be useful for developing customer insights during an economic downturn [Figures 19 & 20]. Almost half of company respondents (47%) said that customer satisfaction information would be useful for this purpose.

Transactional data was cited by 37% of companies surveyed. Its relatively high importance comes as no surprise as companies will be closely monitoring how the economic situation impacts on customer spending.

Company: Which of the following types of customer data* do you believe will be most useful for developing customer insights during an economic downturn?

50 Offline behaviour data was deemed to be among the three most important information sources by only 9% of respondents.

Custome

Customer praise: 7.58% (32)

Custome

40

Customer 40 satisfaction: 47.39% (200)

Custome

30

Customer feedback on competitors products or services: 19.67% (83) 30 Customer-generated ideas for products / services: 22.99% (97)

Custome products

50

40

Customer satisfaction: 47.39% 40(200)

In contrast, previous offline behaviour data was deemed to be among the three most important information sources by only 9% of respondents.

30

Customer feedback on competitors products or services: 19.67% (83) 30 Customer-generated ideas for products / services: 22.99% (97)

The agency perspective on 40 the relative importance of different types of data during an economic downturn was similar to that of 30 companies themselves.

It is clear that satisfaction metrics together with transactional data are20 viewed as critical for developing customer insights.

10

20

0

50(83) Customer complaints : 19.67% Customer praise: 7.58% (32)

20

10

Lifestyle data: 20.14% (85) 20

20

0 10

Customer complaints : 19.67%50 (83) Customer praise: 7.58% (32)

0

Agency: Which of the following types of customer data* do you believe will be most useful to your clients for developing customer insights during an economic downturn?

50 complaints : 19.67% (83) Customer

Previous online behavioural data was reported as being useful by 30% of companies surveyed.

This information can enable organisations to analyse how customer behaviour evolves during the downturn and respond accordingly.

Declared customer preferences and customergenerated ideas for products / services were cited as being useful by 27%50and 23% of respondents respectively.

Figure 20

Customer satisfaction: 47.39%40 (200) Customer feedback on competitors products or services: 19.67% (83) 30 Customer-generated ideas for products / services: 22.99% (97) Lifestyle data: 20.14% (85)

20

Data on customers’ personal values and beliefs: 15.40% (65) 10 Previous online behaviour data: 29.86% (126)

Data on customers’ personal values and beliefs: 15.40% (65) 10 Previous online behaviour data: 29.86% (126) Demographic data: 18.72% (79) 0 Transactional data: 36.73% (155) Declared customer preferences: 26.54% (112) Previous offline behaviour data: 9.24% (39) Other: 1.66% (7)

Lifestyle 20 data: 20.14% (85) Data on customers’ personal values and beliefs: 15.40% (65) 10 Previous online behaviour data: 29.86% (126) Demographic data: 18.72% (79) 0 Transactional data: 36.73% (155) Customer complaints: 19.77% (86)

Declared customer preferences: Customer praise: 5.06% (22) 26.54% (112)

Customer satisfaction: 40.23% (175)

Previous Customer offline behaviour data: feedback on competitors products or services: 24.37% (106) 9.24% (39) Customer generated ideas for

Other: 1.66% (7) products/ services: 22.99% (100) Lifestyle data: 17.01% (74) Data on customers’ personal values and beliefs: 22.99% (100)

Customer complaints: 19.77% (86) Customer praise: 5.06% (22) Customer satisfaction: 40.23% (175) Customer feedback on competitors products or services: 24.37% (106) Customer generated ideas for products/ services: 22.99% (100) Lifestyle data: 17.01% (74) Data on customers’ personal values and beliefs: 22.99% (100) Previous online behaviour data: 28.74% (125) Demographic data: 17.47% (76) Transactional data: 35.40% (154) Declared customer preferences: 28.74% (125) Previous offline behaviour data: 13.79% (60)

Custome products/

Lifestyle d

Data on c and belie Previous 28.74%

Demogra

Transacti

Declared 28.74% Previous 13.79%

Other: 2.

Other: 2.99% (13)

Previous online behaviour data: 28.74% (125)

Demographic data: 18.72% (79)0

Demographic data: 17.47% (76)

Transactional data: 36.73% (155)

Transactional data: 35.40% (154)

* Respondents could check up to three options

3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Over a third of respondents (36%) say that the desire for simplicity needs to be addressed in the next 12 months.

Changing customer behaviour and attitudes Perhaps predictably, sensitivity to price is the type of customer behaviour which company respondents feel that they will most likely need to address over the next 12 months [Figure 21].

Nearly half of companies surveyed (48%) say that this is among the five most significant behavioural traits. This is consistent with other research4 by E-consultancy which shows that customers will increasingly turn to price comparison sites in the next few months.

As the global economic crisis worsens, thriftiness in spending will no longer be a choice, but rather a necessity for many people.

Coupled with price sensitivity, prolonged decision-making will also become a significant type of behaviour which needs to be addressed, as suggested by 31% of companies and 38% of agencies.

However, not everyone will want to spend all their time making decisions about the cheapest things to buy, or whether they actually need to make a purchase. Focus on quality is also seen as something which will become more evident, with 45% of company respondents saying they need to address this.

Even more than they want to buy cheaply, more customers will ensure they are getting the best value, even if that means paying more for products and services.

Companies also need to consider how more people are likely to be “trading up and down”, and how this will affect them.

Although some consumers will take a longer term view about what represents value, others will be in crisis mode and live more on a hand-to-mouth basis. Just over a quarter of respondents (27%) say that their organisations will need to address an increased focus on short-term needs.

Just over a third of respondents (36%) say that the desire for simplicity needs to be addressed in the next 12 months. The desire for simplicity is shaped by the need for consumers to establish a feeling of control, both over their finances and their long-term future.

Customers will seek out brands that they can trust to deliver goods and services reliably.

Companies will need to ensure that they are focused on best-in-class customer service, and it can be seen that 32% of respondents say that increased intolerance of poor customer service is prominent on their radar.

Just 9% of company respondents believe that the purchase of luxury and indulgent items within the next 12 months will be a significant factor for them.

Some believe that the luxury sector will face a temporary downturn as consumers cut back spending on high-end goods and services. A large swathe of people working in financial services will not have the same levels of disposable income – and bonuses – as in previous years.

On the other hand, the downturn is unexpected to affect the super-rich, who will continue to indulge as normal while, counter-intuitively, others who can’t really afford it could also indulge in luxury purchases as a way of denying that they are affected by the crisis.

Slightly fewer agencies (34%) than companies 30 (30%) report that a lack of brand loyalty will shape the next wave of consumer behaviour, as customers increasingly choose price 20 over brand loyalty as a basis to differentiate between rival competitors.

50

40

50

Sensitivity to

Prolonged de 31.12% (131

40

Focus on qua

Intolerance of 32.07% (135

30

10

0

20

30

0

Sensitivity to price: 48.22% (203)

Sacrifice (fam

Prolonged decision-making: 31.12% (131)

Lack of suppl 30.17% (127

Focus on quality: 44.89% (189) Intolerance of poor customer service: 32.07% (135)

10

Desire for sim

Buying and se 4.75% (20)

Sacrifice (family first etc.): 7.36% (31) Lack of supplier/brand loyalty: 30.17% (127)

0

Desire for simplicity: 36.34% (153) Sensitivity to price: 48.22% (203) Prolonged decision-making: 31.12% (131) Focus on quality: 44.89% (189)

10

Online Shopping and Credit Crunch Report 2008.

Company: Which of the following behaviours and attitudes* do you expect your organisation will need to address in the next 12 months?

50

From the agency perspective, sensitivity to price is seen as being even more important, reported as a significant behaviour by 62% 40 of respondents.

20

4

Figure 21

Intolerance of poor customer service: 32.07% (135)

Buying and selling second-hand: 4.75% (20) Purchase of luxury and indulgent items: 8.79% (37) Buying own-brand products: 7.13% (30)

Sacrifice (family first etc.): 7.36% (31)

Focus on short-term needs: 27.08% (114)

Lack of supplier/brand loyalty: 30.17% (127)

Other: 4.28% (18)

Purchase of lu items: 8.79%

Buying own-b 7.13% (30)

Focus on shor 27.08% (114

Other: 4.28%

Desire for simplicity: 36.34% (153) Buying and selling second-hand: 4.75% (20) * Respondents checkand up indulgent to three options Purchasecould of luxury

items: 8.79% (37)

21

3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Figure 22

Agency: Which of the following behaviours and attitudes* do you expect your clients will need to address in the next 12 months?

80

Sensitivity to price: 61.84% (269)

60

Focus on quality: 37.47% (163)

50

70

40

Sensitivity to price: 61.84% (269) Prolonged decision-making: 37.70% (164)

30

60 50

Focus on quality: 37.47% (163)

20

Intolerance of poor customer service: 41.84% (182)

40 30 20

Sacrifice (family first etc.): 11.49% (50)

10

Lack of supplier / brand loyalty: 33.79% (147)

0

10

Desire for simplicity: 36.55% (159) Sensitivity to price: 61.84% (269) Prolonged decision-making: 37.70% (164)

0

Ways of improving engagement and areas of investment The overwhelming majority of companies surveyed (69%)decision-making: agree that email newsletters Prolonged have resulted(164) in a tangible improvement in 37.70% customer engagement [Figure 23].

70

80

Tactics and initiatives

Focus on quality: 37.47% (163) Intolerance of poor customer service: 41.84% (182) Sacrifice (family first etc.): 11.49% (50) Lack of supplier / brand loyalty: 33.79% (147)

Buying and selling second-hand: 4.83% (21) Purchase of luxury and indulgent items: 8.74% (38) Buying own-brand products: 8.74% (38)

This can partly be attributed to the fact that industry-wide metrics for email marketing Intolerance of poor customer service: (such as open rates and click-throughs) have 41.84% (182) enabling marketers to been long established, understand the impact of their efforts to the Sacrifice (family first etc.): bottom line.

11.49% (50)

Just under a third of respondents (30%) say that focused micro-sites, on-site video (brandLack of supplier / brand loyalty: created) and (147) user ratings and feedback have 33.79% resulted in better engagement.

Desire for simplicity: 36.55% (159)

Given that user reviews not only enhance credibility online retailers, but have also Buyingfor and selling second-hand: been shown to boost conversion rates and 4.83% (21) average order values, it is not surprising that ratings and reviews feature prominently here5.

Purchase of luxury and indulgent

Similarly, the blink of an eye, on-site items:in8.74% (38) video has also quickly gone from being a Buying own-brand products: compelling differentiator to something which consumers expect.

8.74% (38)

Focus on short-term needs: 32.64% (142)

Focus on short-term needs: 32.64% (142) Other: 2.07% (9)

Other: 2.07% (9)

Desire for simplicity: 36.55% (159) Buying and selling second-hand: 4.83% (21) Purchase of luxury and indulgent items: 8.74% (38)

22

* Respondents couldproducts: check up to three options Buying own-brand 8.74% (38)

5

See also E-consultancy’s Social Commerce Report

In spite of the questions raised over the profitability or return on investment from Web 2.0 features and functionality, a quarter of company respondents (25%) and just under a third of agencies (31%) report that blogging has tangibly improved customer engagement.

Similarly, 23% of company respondents and 30% of agencies report improvement in engagement through brand presence on social networks, whilst 21% of organisations mention user-generated content.

Despite the relative novelty of micro-blogging utilities such as Twitter, 7% of companies have improved their customer engagement through this channel. This is a small percentage but a not insignificant number of businesses.

Areas of increased investment It is interesting to note that percentages in Figure 24 are generally higher than in Figure 23. Although there is a correlation between demonstrably improved customer engagement and increased spending, there are significant numbers of companies who are investing in various areas without having experienced a tangible uplift in customer engagement. This must be either because they can’t measure the uplift or because they are expecting benefits other than increased customer engagement.

For example, although only 16% of respondents report that rich on-page interactive experiences have resulted in a tangible improvement in customer

engagement, 38% of companies anticipate greater investment in this area in the future.

In terms of spending over the next 12 months, there will be most investment in email newsletters, with 59% of respondents saying that their organisations will increase their spending in this area [Figure 24].

Other components of Web 2.0 and social media such as user ratings & feedback (41%), user-generated content (37%), blogging (36%) and brand presence on social networks (36%) are also expected to attract significant sums of investment in spite of oft-heard complaints that it is not always easy to track ROI in some of these areas.

In terms of the agencies surveyed, respondents also rank email newsletters highly, with 60% of these respondents saying that this tactic has resulted in tangible customer engagement improvement. Slightly more agencies than clients (38% compared to 30%) report better engagement resulting from user ratings and feedback.

Lucrative areas of growth within the next 12 months, from the agency perspective, include increased investment in brand presence on social networks, online video and rich on-page interactive experiences.

3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Figure 23

Figure 24

Company: Have any of the following resulted in a tangible improvement in your organisation’s online customer engagement?

80 Just under a third of respondents (30%) say that focused micro-sites, on-site video (brand-created) and user ratings and feedback have resulted in better engagement.

70 60 50

Company: In which of the following do you anticipate investment to increase online customer engagement over the next 12 months?

60 networks (e.g.Facebook): Brand presence on social 23.27% (84)

Brand presence on social ne 35.79% (141)

50 On-site video (brand-created): 29.92% (108)

On-site video (brand-created

On-site video (user-created): 3.32% (12) 40 Focused micro-sites: 30.19% (109)

On-site video (user-created):

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Email newsletters: 69.25% (250) 50 30 On-site video (brand-created): 29.92% (108) On-site audio: 8.03% (29)

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On-site video (user-created): 3.32% (12)

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Focused micro-sites: 30.19% (109)

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Email newsletters: 69.25% (250)

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On-site audio: 8.03% (29)

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Blogging: 24.65% (89)

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Blogging: 24.65% (89) 20 30 Micro-blogging utilities, e.g. Twitter: 6.65% (24) Desktop-based applications / widgets / gadgets: 10 4.16% (15) 10

Micro-blogging utilities, e.g. Twitter: 6.65% (24)

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Desktop-based applications / widgets / gadgets: 4.16% (15)

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Brand presence on social networks (e.g.Facebook): 23.27% (84) On-site video (brand-created): 29.92% (108) On-site video (user-created): 3.32% (12) Focused micro-sites: 30.19% (109) Email newsletters: 69.25% (250) On-site audio: 8.03% (29)

35.79% (141)

User ratings and feedback: 29.64% (107) 42.64% (168) On-site video (brand-created):

Micro-blogging utilities, e.g.

Desktop-based applications 14.72% (58)

Micro-blogging utilities, e.g. Twitter: 13.45% (53) Desktop-based applications / widgets / gadgets: 14.72% (58)

Web-based widgets / badge (102)

On-site video (user-created): 14.21% (56)

Personalised messaging throughout the site: Focused micro-sites: 37.82% (149) 10.53% (38) Email newsletters: 58.63% (231)

User ratings and feedback: 40.86% (161)

Rich on-page interactive exp

Personalised messaging throughout the site: 27.16% (107)

User ratings and feedback: 4

40 content ( e.g. reviews, imagery): User-generated 21.05% (76)

User-generated content ( e.g. reviews, imagery): 36.55% (144)

30 Mobile communications: 10.25% (37)

Mobile communications: 18.27% (72)

12.94% (51) User-generated content (On-site e.g. audio: reviews, imagery): Blogging: 35.79% (141) 21.05% (76)

On-site branded communities / forums: 14.68% (53)

Desktop-based applications / widgets / gadgets: 4.16% (15)

SMS service10 alerts: 10.53% (38)

Personalised messaging throughout the site: 10.53% (38)

On-site audio: 12.94% (51)

Blogging: 35.79% (141)

Rich on-page interactive experiences: 37.56% (148)

User ratings and feedback: 29.64% (107) 50 Personalised messaging throughout the site: 10.53% (38)

Micro-blogging utilities, e.g. Twitter: 6.65% (24)

User ratings and feedback: 29.64% (107)

Email newsletters: 58.63% (231)

Rich on-page interactive experiences: 15.79% (57) Brand presence on social networks (e.g.Facebook):

60interactive experiences: 15.79% (57) Rich on-page

User on-page customisation, e.g. BBC home page: 3.88% (14) 20

Rich on-page interactive experiences: 15.79% (57)

Focused micro-sites: 37.82% (149)

On-site audio: 12.94% (51)

Web-based widgets / badges / gadgets: 25.89% (102)

Blogging: 24.65% (89)

Web-based widgets / badges / gadgets: 9.70% (35)

On-site video (user-created): 14.21% (56)

Web-based widgets / 0badges / gadgets: 9.70% (35) 0

Web-based widgets / badges / gadgets: 9.70% (35)

0

Email newsletters: 58.63% (

On-site video (brand-created): 42.64% (168)

Blogging: 35.79% (141)

20

1020

Focused micro-sites: 37.82% Brand presence on social networks (e.g.Facebook): 35.79% (141)

Micro-blogging utilities, e.g. Twitter: 13.45% (53)

applications / widgets / gadgets: Mobile communications: Desktop-based 10.25% (37) 14.72% (58)

Social knowledge sharing, e.g. wikis: 8.31% (30) 0 Other: 2.22% (8)

Web-based User on-page customisation, e.g.widgets BBC/ badges home/ gadgets: page25.89% : (102) 3.88% (14)

Rich on-page interactive experiences: 37.56% (148)

User ratings and feedback: 40.86% (161) On-site branded communities / forums: 14.68% (53) Personalised messaging throughout the site:

Personalised messaging thro 27.16% (107)

User on-page customisation, e.g. BBC home page: 14.97% (59)

User-generated content ( e.g 36.55% (144)

On-site branded communities / forums: 23.86% (94) SMS service alerts: 14.97% (59)

Mobile communications: 18.

Social knowledge sharing, e.g. wikis: 16.24% (64) Other: 2.79% (11)

User on-page customisation 14.97% (59)

23

On-site branded communitie

3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Mobile marketing to enhance customer engagement Only 5% of companies have a customer engagement strategy which embraces the mobile channel.

Figure 25

The results demonstrate that mobile marketing continues to be the subject of ongoing hype without much evidence of investment.

Segmentation of audience to identify quality customers In terms of segmenting users, both companies (49%) and agencies (47%) alike use referrers / channel as a key means of identifying quality customers. Slightly more agencies (52%) report that their clients use demographic data than the companies themselves (45%).

Less than a fifth of companies (16%) say that they use degree of emotional engagement to segment their online audience.

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Company: How do your segment your online audience to identify “quality” customers / users?

Our customer engagement strategy seamlessly embraces mobile marketing: 5.33% (21)

120

We do the occasional ad hoc piece of marketing via the mobile channel: 17.26% (68)

100

We don’t do any mobile marketing, but we are planning to: 35.79% (141)

The vast majority of respondents (78%) report that their company is not doing any mobile marketing. Of these, 42% say that their company has no plans to implement any mobile marketing, while 36% of companies plan to do some mobile marketing in the future.

From the agency perspective, a higher proportion of agencies (30%) than clients (17%) report that their clients do the occasional ad hoc piece of mobile marketing.

Figure 27

Company: How are you using mobile marketing to enhance customer engagement?

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We don’t do any mobile marketing, and we don’t have any plans to do any: 41.62% (164)

Figure 26

Agency: Typically, how are your clients using mobile marketing to enhance customer engagement?

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Next 12 12 Don’t know / Use now Use nowDon’t use Next months months not relevant Don’t use Value to organisation B 42.

A Customer lifecycle A Customer lifecycle 37.02% (134) 37.02% 22.10% (134) (80) 26.52% (96) 26.52% 14.36% (96) 22.10% (80) (52) They do the occasional ad hoc piece of marketing ValueReferrer to organisation B Value to organisation B C 42.23% 20.71% (155) (76) 25.89% 11.17% (95) 20.71% 48.

(76) (41) / channel 42.23% (155) 25.89% (95) via the mobile channel: 29.56% (120) C Referrer / channel C Referrer / channel 48.61% (175) 48.61% 17.50% (175) (63) 25.28% (91) 25.28% 8.61% (91) 17.50% (63) (31) Behaviour D 41.

D Behaviour D Behaviour 41.16% (149) 41.16% 17.40% (149) (63) 32.04% (116) 32.04% 9.39% (116) (34) 17.40% (63) They don’t do any mobile marketing, but they are E Recency and / or frequency E Recency and / or frequency 45.03% (163) 45.03% 17.96% (163) (65) 27.07% (98) 27.07% 9.94% (98) 17.96% (65) (36) Recency and / or frequency E 45.

Demographics Demographics F F 45.15% 45.15% (163) (163) 23.82% 23.82% (86) (86) 21.05% 21.05% (76) (76) 9.97% (36) planning to: 34.24% (139) of emotional engagement 16.24% (57) G Degree of emotional engagement G FDegree 16.24% 41.31% (57) 25.64% (90) 25.64% 16.81% (90) 41.31% 45.

(145) (145) (59) Demographics They don’t do any mobile marketing, and they Hdon’t Other H Other 3.13% (4) (4) 7.03% 7.03% 60.16% (9)3.13% 29.69% (9) 29.69% (38) (38) (77) G Degree of emotional engagement 16. have any plans to do any: 31.53% (128) H Other 3.1 Their customer engagement strategy seamlessly embraces mobile marketing: 4.68% (19)

COMMENT

Becky Carroll Creating customer engagement on their turf Figure 28

Building strong relationships with customers is critical to improving customer repurchase and recommendation rates.

If a customer feels connected to an organization that understands and cares about them, they are much more likely to remain loyal and tell their friends.

The results of the Third Annual Online Customer Engagement Survey give an indication of where these customer connections need to take place: wherever our customers like to “hang out” online.

Agency: How do your clients typically segment their online audience to identify “quality” customers / users?

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Customer communication and the resulting conversation should not just take place on the organization’s website but wherever our customers are already interacting online.

Next 12 engagement hasDon’t entered Use now Online customer use months

take place on the organization’s website but wherever our customers are already interacting online. For some customers, this may be through their favorite social network, such as Facebook or MySpace. For other customers, this may be on a popular blog or forum. Still others may prefer to interact via their own content (videos, photos, etc.) or simply to comment on the content created by others.

We need to look across the customer experience and see how customers are interacting with both our organization as well as with other customers. How can we help them spread the word about us? An engaged customer can become our greatest evangelist.

We should also ask ourselves why a customer would want to engage with us. Often, the answer is for customer service purposes.

Engagement is strengthened when it occurs throughout the customer lifecycle, not just when a customer needs something from us, or when we have something to say.

Don’t know /

not relevant The answer to getting better results from a new era, one of interaction with the online engagement A Customer lifecycle Use now 36.93% 23.37% (93) 24.12% (96) 15.58% (62) isn’t just throwing our Don’t know / Don’t(147) know / Next 12 Next 12 Use nowDon’t use months not relevant Don’t use brand through conversation. The Report not relevant months message out to (51) any number of social media 41.01% Value to organisation 26.08% (103) 20.00% (79) 12.91% A B 36.93% (147) 36.93% 24.12% Customer lifecycle Customer lifecycle (147) (96) 23.37% (93) 23.37% 15.58% (93) 24.12% (96) 15.58% (162) (62) (62)indicates many organizations (69%) are sites to see what sticks. Planning ahead, we B C 41.01% 20.00% Value to organisation ValueReferrer to organisation/ channel 41.01% (162) (162) (79) 26.08% (103) 26.08% 12.91% (103) (51) 20.00% (79) 12.91% (51) 46.84% (178) 22.89% (87) 15.00% (57) 15.26% (58) C Referrer / channel 46.84% (178) 46.84% 15.00% Referrer / channel (178) (57) 22.89% (87) 22.89% 15.26% (87) 15.00% (57) 15.26% (58)still trying to engage online through their (58) need to invest time D D 37.98% (147) 37.98% 18.60% Behaviour Behaviour (147) (72) 30.49% (118) 30.49% 12.92% (118) (50) 18.60% (72) 12.92% (147) (50)email newsletters Behaviour 37.98% 30.49% and (118) 12.92% (50) to understand where our plan to18.60% continue to(72) customers prefer to interact online. Then, 45.26% (172) 45.26% 18.42% Recency and / or frequency E Recency and / or frequency (172) (70) 23.42% (89) 23.42% 12.89% (89) 18.42% (70) 12.89% (49) (49) the next 12(89) months (59%).

This is Recency and / or frequency 45.26% 18.42% (70) 12.89% (49) F EDemographics 52.22% (200) 52.22% 14.36% Demographics (200) (55) 20.89% (80) 20.89% 12.53% (80) 14.36% (55) 12.53% (172) (48) (48)do so in23.42% in order to most effectively engage those G Degree of emotional engagement 11.56% (43) 11.56% 42.20% Degree of emotional engagement (43) 24.19% (90) 24.19% 22.04% (90) 42.20% (157) (157) 22.04% (82)fine for one-way communication; however, (82) Demographics F 52.22% (200) 20.89% (80) 14.36% (55) 12.53% (48) H Other 5.93% Other (7) (7) 4.24% 4.24% 63.56% (5)5.93% 26.27% (5) 26.27% (31) (31) 63.56% (75) customers, we need to go to those sites, watch (75) calls for more.(157) G Degree of emotional engagement 11.56% (43)true customer 24.19%engagement (90) 42.20% (82) for a while, and begin and22.04% listen intensely way to enable ongoing online H Other 5.93% (7) The best 4.24% (5) 26.27% (31) to engage 63.56%our customers (75) in conversation engagement is to create ongoing online where they are. By taking this approach, customer conversations. This occurs when we will understand how best to converse we engage online on the customer’s terms, with our customers, in the manner that they as well as on the customer’s turf. In other prefer, which will naturally increase customer words, customer communication and the engagement, and loyalty, with us. resulting conversation should not just A

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Becky is Director of Social Media at Brickfish, a social media advertising network, and author of the blog Customers Rock!, which gives advice on how businesses can make sure their customers’ experiences rock. customersrock.net

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COMMENT

Matthew Bailey Striking a balance

Matthew is editor of Customer Magazine and its sister title VitAL. He is an experienced business to business journalist with over 13 years’ experience on a range of technical and industrial periodicals.

31media.co.uk

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One of the prime ways to drive an economy out of recession is to get Joe Public back out on the high streets and on-line, spending their hard-earned money again. So it’s reassuring to note that 44.07 percent of the respondents to the Customer Engagement Survey were placing more emphasis on customer engagement in the face of the economic downturn. On the other hand, over a third seem to be burying their heads in the sand and not emphasising this important function.

To be fair, perhaps they already have fantastic customer engagement, but experience tells us that there’s always room for improvement and now is certainly no time for complacency.

With reports that the budget end of the retail market is booming, it’s perhaps no surprise then that the survey has pointed out a sensitivity to price (61.76%) amongst respondents’ clients. Will this trend continue or will there be a ‘flight to quality’? A focus on quality was expected by 37.96 % of the survey suggesting that they are in for the long haul not the short term, although a focus on short term needs was predicted by 33.43%, so it appears to be a finely balanced situation.

There’s always room for improvement and now is certainly no time for complacency.

Obviously, differentiating your offering through more effective customer engagement has to be a key cost-effective method of boosting margins in a cold economic climate. The government and many customer relations insiders have been keeping up a chorus stressing the importance of training. While the temptation may be to slash the training budget and go for an on-paper, cheaper, automated, IT-based approach, it remains the case that most customers want to interact with other humans and for these people to be effective they need knowledge and training. I suspect that the savvy customer relations practitioners will cherry-pick the best from both approaches.

Issues around customer engagement and key principles Barriers to better online customer engagement Lack of resources continues to be a major barrier to successful customer engagement although, encouragingly, slightly fewer companies than last year now find this to be a major problem (52% compared to 60% in last year’s survey).

Similarly, although problems with technology cause difficulties for fewer respondents than last year, steps still need to be taken to address this. Almost a third of companies (31%) say that this is a significant barrier to cultivating better customer engagement (compared to 35% last year). However, it can be seen that only 17% of agencies report that problems with technology are holding back their clients.

More than a quarter (28%) of companies still struggle with proving a tangible return on investment or providing a viable business case (difficulty proving ROI).

Meanwhile, a third of agencies (33%) report that organisational incoherence is typically a problem for clients but only 21% of organisations say that this is actually an issue. This difference again suggests that this problem is more evident to observers looking in.

At a glance, the biggest obstacles* holding back companies from cultivating better customer engagement are as follows:

Lack of resources

52%

Problems with technology

31%

Difficult proving ROI

28%

Complexity of organisation

26%

The most significant barriers reported by agencies on behalf of their clients are:

Lack of resources

45%

Lack of skills / experience / understanding

42%

Organisational incoherence

33%

Difficult proving ROI

31%

According to 42% of agencies [Figure 30], a lack of skills, experience or understanding is holding back clients from cultivating better customer engagement. Only a quarter of companies surveyed said this was a major barrier.

* Respondents could check up to three barriers

COMMENT

Stéphane Hamel When engagement rhymes with commitment Figure 29

Company: Which of the following have been the most significant barriers to cultivating better customer engagement in the last 12 months?

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Organisational incoherence, will: 21.48% (84)(84) Organisational incoherence,culture cultureoror(lack (lackof)of) will: 21.48% Lackof of skills skills // experience (97) Lack experience//understanding: understanding:24.81% 24.81% (97) Customers or or products products unsuitable: Customers unsuitable:5.37% 5.37%(21) (21) Lackof, of, or or difficulty difficulty proving, 28.39% (111) Lack proving,ROI ROI/ /business businesscase: case: 28.39% (111) Problems with technology: 30.69% (120)

Problems with technology: 30.69% (120)

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Lack of methodology or framework: 24.81% (97)

Lack of methodology or framework: 24.81% (97) Complexity of organisation: 26.34% (103)

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Complexity of organisation: 26.34% (103)

Lack of resources (budget and time): 52.17% (204)

Lack of resources (budget and time): 52.17% (204) Difficulty in finding supporting agencies: 3.84% (15)

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Difficulty in finding supporting agencies: 3.84% (15)

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Lack of senior management buy-in: 18.16% (71)

Lack of senior management buy-in: 18.16% (71)

Figure 30

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

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Organisational incoherence, culture or (lack of) will: 32.67% (131) Organisational incoherence, culture or (lack of) will: 32.67% (131)

Lack of skills / experience / understanding: 41.65% (167) Lack of skills / experience / understanding: 41.65% (167)

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Customers or products unsuitable: 5.74% (23) Customers or products unsuitable: 5.74% (23)

Lack of, or difficulty proving, ROI / business case: 31.17% (125) Lack of, or difficulty proving, ROI / business case: 31.17% (125)

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Problems technology:17.46% 17.46%(70) (70) Problems with with technology: Lack orframework: framework:25.44% 25.44% (102) Lack of of methodology methodology or (102)

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Complexity organisation:20.45% 20.45%(82) (82) Complexity of organisation: Lack of of resources resources (budget (182) Lack (budgetand andtime) time): 45.39% : 45.39% (182)

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The economic downturn might be the trigger companies were waiting for to justify a stronger focus on customer engagement. Those that have a good handle on their strategy – and measuring it – are seeing higher outcomes. Despite economic troubles, they are more likely to pursue long term strategies. Simply put, they will come out of it stronger!

Pressured by the economy, customers will be more sensitive to price, extend their decisionmaking process, and become less loyal.

Focus on short-term benefits: 25.32% (99)

Focus on short-term benefits: 25.32% (99) 0

Everyone agrees that the concept of ‘customer engagement’ is important, but few have defined a strategy to support it. Without it, it’s hard to know and describe the attributes of an organisation’s customer engagement. It’s even harder to drive long term commitment and objectives: improving life-time value and truly being customer centric.

Difficulty in finding finding supporting (29) Difficulty supportingagencies: agencies:7.23% 7.23% (29) Focus on on short-term short-term benefits: Focus benefits:31.17% 31.17%(125) (125)

Commenting on last year’s survey results, Avinash Kaushik said ‘it shows that companies and marketers are only thinking of what to get out of me, the customer’. Have things changed? Maybe not, but at least the bulk of analytical data is coming from a very clever source: listening to your customers! Here, we’re reaching a concept very common in web analytics: what are my visitors’ goals and objectives?

Are they able to achieve it? Were they satisfied with their experience?

Pressured by the economy, customers will be more sensitive to price, extend their decision-making process, and become less loyal. At the same time, quality and desire for ‘simplicity’ is increasing. ‘Simplicity’ goes far beyond offering a great online experience. Organisations that are embracing the concept of ‘competing on analytics’ to continuously measure, analyse and improve all areas of their business will be much better positioned than those approaching the web as an online marketing silo.

Stéphane is an eBusiness Strategist & Web Analytics Consultant. He is also Online instructor at The University of British Columbia and founder and Web Analytics Advocate at Immeria: an immersion in analytics. immeria.net

Ultimately, to nurture customer engagement, you need the budget and time to allocate scarce resources. Sadly, unless your organisation is already embracing a customer engagement strategy, this will remain the most pressurised area and it is likely this will worsen in the coming months.

Lack of of senior senior management Lack managementbuy-in: buy-in:24.44% 24.44%(98) (98)

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3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Key principles of customer engagement In a free-form question, agencies and clients were asked what principles they would urge each other to adhere to, in order to improve customer engagement.

Analysis of company answers showed that the following themes emerged:

• The need for more focus on

customer service and the business processes which drive this

• Maintaining a focus on demonstrating clear return on investment (including effective measurement and tracking to understand what works)

• Embracing Web 2.0 technologies (where appropriate)

• A clean and simple user experience

Some client-side respondents felt that their agencies should show a keener interest in their businesses as a whole, including towards their core market, products and customers.

One respondent mentioned that more time should be given to talking to (and meeting) their customers, in order to really understand them.

tracking are also widely seen as essential for understanding how to manage and improve business processes.

Respondents also felt that simplicity, in terms of focusing on a clean user experience (simple, elegant and useful rather than complex, technical and pretty) was an important principle to adhere to. Analytics and

Client-side respondents put more emphasis on the importance of financial constraints, and maintaining a focus on maximising ROI.

• Increase their understanding of the

changing online environment and realise that customer behaviour is shifting

• Understand how a customer

reacts to an online experience

• Increase customer engagement

with the brand or product, to help improve customer loyalty and trust

Analytics and tracking are also widely seen as essential for understanding how to manage and improve business processes.

• Realise the need to balance hard selling against soft engagement

“Agencies/media owners still haven’t done enough to justify non-ROI channels and [this] will just get worse as the economy falters.”

• Try to understand the opportunities

“In the current economy, any marketer not looking at where they can measure and deliver quantifiable ROI is behind the pack.”

• Always consider what impact the user

“Customer engagement initiatives are really just the next evolution of marketing.”

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Respondents also mentioned implementing Web 2.0 technologies and methods, including working with social networking sites, viral marketing and blogging.

In summary, agencies said that clients should take the following into consideration when trying to improve customer engagement:

that Web 2.0 can bring – and embrace new media, rather than shy away from it. Don’t be afraid of engaging the customer in new or alternative ways experience will have upon the business.

“Measuring customer engagement is a time-consuming job, and not something that can be done by existing staff in their spare time. You need to hire good specialists, but will soon notice a return on investment.”

COMMENT

Alex Smith Invest in the right blend Migration of marketing budgets Respondents were also asked to share their opinions about the migration of ‘traditional’ marketing budgets (for traditional marketing activities) into customer engagement initiatives.

Many respondents were highly positive about the trend towards increased investment in customer engagement methods including blogging, forums, social media and viral campaigns.

Although the importance of engagement activities was generally recognised by most of the agency respondents, issues surrounding the difficulty of measuring such initiatives were raised, alongside the view that for a measurable ROI, traditional methods could often be preferable for meeting certain objectives.

The attitude of respondents towards the idea that customer engagement marketing is replacing traditional marketing of course depends on assumptions about definitions of ‘traditional marketing’ and ‘customer engagement’. Where customer engagement was equated only with social media without a clear ROI, there tended to be more negativity.

However, there is also an acceptance that building deeper relationships with customers is increasingly important, and that there has been a change in how companies need to address their marketing activity. Generally, respondents believe that there is still a place for traditional marketing activities but that an increased focus on customer engagement is essential.

Some respondents were sceptical about the value of any type of marketing – particularly social media – where return on investment cannot be directly measured, and pointed out that some initiatives would come under greater scrutiny over the next few months.

“The traditional marketing activities are still best when it comes to references, but customer engagement initiatives are used to understand the customers better in the broader sense of marketing.”

In a time of economic downturn many businesses tighten belts, prepare for the fierce competition to retain their customers and return to the focus on the basics of sales, conversion and customer affinity.

Those organisations that invest and make the effort to define the right customer engagement blend for their organisation will be those which we will be looking at, wondering “How do they do it?”

At this time, businesses also keep one eye out for the organisations that are easily outperforming them and their competitors.

These annoying companies seem to have success when everybody else is failing and make light of a poor economic climate leaving everybody to wonder “How do they do it?”

Often this can be attributed to a simple principle of competition: finding a way to fundamentally change the way that business is done. With the online world growing up over the last decade this is nothing new, as customer online engagement has changed significantly with social networks, blogs and so on.

In respect to this, the Third Annual Online Customer Engagement Survey shows that there is no silver bullet for improving customer online engagement. Excluding email marketing, most companies found that a combination of customer engagement methods worked best for them.

Looking to the future, the survey highlights that a focus for many organisations next year will be on engaging on-page interactive experiences. A similar focus will remain on the customer engagement techniques that worked well this year, such as social networks, blogging and immersive video content.

It’s clear that there is no formula to prescribe the right blend of techniques to significantly increase the online customer engagement.

With the toughening economic environment provoking the tendency to focus on customer engagement basics and reducing costs, perhaps those organisations that invest and make the effort to define the right customer engagement blend for their organisation will be those which we will be looking at, wondering “How do they do it?”

Alex is the Creative Development Channel Development Manager for Microsoft UK. Alex is focused on forming alliances with top web design and development agencies and works with over 50 UK web agencies. microsoft.com/web

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“

Good email planning mirrors customer preferences and behaviours. I have observed how Amazon sends fewer emails when I am quiet and then becomes prolific following one of my sporadic online spending sprees.

”

Lucy Conlan, Tread carefully – the customer is not always right, p32

Thoughts on customer engagement

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3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Lucy Conlan

Tread carefully – the customer is not always right When it comes to email, customer centricity doesn’t mean being customer led Do you know what you will be wearing, eating or reading next week, month or over the next year? I would anticipate (if you are like me) you will have only the sketchiest of ideas.

Contemporary living offers so many choices, and while choice is a good thing a lot of options can be overwhelming. Sometimes working out what we want now can be hard, let alone being asked to anticipate future needs.

It is interesting then, that we ask consumers to make decisions about what types of emails they would like to receive from our businesses and organisations. For most customers, they will be asked to state their preference for email communications early on in their relationship with an organisation – either at their first website visit or at the point of first online purchase.

Many customers feel they should sign up for everything so as not to miss out.

Many businesses and organisations as diverse as Argos and the National Trust have made the process easy by removing choice – asking customers to sign up to only one list. However, others offer a lot more complex options. The IT business information website, Forester, has over 20 types of emails and The Washington Post offers 15.

by signing up to hear about everything, they would be receiving one email on average a day. However, our analysis showed that most customers would actually purchase across only one or two product areas. For most people therefore, there was a definite gap between what they thought they were interested in and what they were actually prepared to buy.

When signing up for these types of email subscriptions, some customers may feel very clear about what they would like, some may make impulsive decisions and some may be downright confused. I have observed that many customers feel they should sign up for everything so as not to miss out. More cautious characters may decide to receive a simple update to avoid being overwhelmed with too many communications.

Why is this a concern? Industry research and analysis shows that the relevancy of content is key to customers remaining engaged with brands and products. Jupiter indicated in a 2007 survey that 53% of consumers unsubscribe when the offer and content in emails is not interesting.

Communicating the diverse range of cultural events at Europe’s largest arts and conference centre, the Barbican (barbican. org.uk), produced a significant challenge to the marketing team. I discovered that most customers thought they would like to hear about ALL the artforms – music, theatre, visual arts and film. This could mean that they would hear about events as diverse as Philip Glass concerts to James Bond films to Korean productions of Shakespeare. It also meant that

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What should we do as marketers to help steer customers closer to their true preferences so that we keep their interest?

I would recommend observing customer behaviour following the initial email registration very closely. For all things in life, the early stages in a relationship set the scene for how things develop and email is no exception. For example, if a customer always opens emails for only one or two product areas out of a total of five they have signed up for, give them the option to reduce the volume of emails received to eliminate the unwanted content. You can offer the option to receive less frequent emails and instead receive a ‘catch all’ summary email.

But people are a fickle lot and do change their minds!

Keep observing changes in the relationship – what customers are interested in may change suddenly or gradually over time. Revise your email communication strategies to ensure that they have the flexibility to grow and be adapted for the majority of customers, particularly the most lucrative ones. For example, if a customer appears to suddenly become avidly interested in one product area can you increase the volume of relevant emails? Are there extra incentives that you can give them such as a special offer or provide insider information such as advising of a limited amount of stock in the product that they are interested in?

3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Cautious characters may decide to receive a simple update to avoid being overwhelmed.

Email checklist

Keep observing changes in the relationship – what customers are interested in may change suddenly or gradually over time.

Good email planning mirrors customer preferences and behaviours. I have observed how Amazon sends less emails when I am quiet and then becomes prolific following one of my sporadic online spending sprees.

Amazon is taking the lead from me and reflecting the changes I make. As a customer, I find it more satisfying to be on the end of their reactive communications than some e-tailers who appear to have more rigid frameworks.

It is much more polite and satisfying for a customer to receive appropriate volume and content despite their stated preferences. By reading the clues correctly we can satisfy our customers while maintaining loyalty and profitability.

Give customers an easy email sign-up process Limit the options of emails offered initially Observe customer behaviour and then increase or reduce email volume to reflect their usage Offer customers the opportunity to sign up to specialised lists that they show an affinity for

Lucy is a Digital Marketing Consultant for the cScape Customer Engagement Unit.

Lucy helps clients to achieve strategic objectives and establish robust return on investment models. Her clients include the Chartered Institute for Personnel and Development (CIPD), Aviva and Sony.

Exclude customers from email types that they are not opening 33

3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Clare O’Brien

It’s a meatball sundae Jim, but not as we know it How to engage with customers when both they and the online channel are moving at light speed The overwhelming importance of online as an engagement channel is plainly evident, and the suddenness (and variety) with which this has come about is, breathtaking.

So it’s inevitable that skill competencies are ‘under development’. Our understanding of what customers want online, how this relates to offline channels and how best to deliver absolutely everything may be out of the primordial slime but it’s still evolving.

So, why worry? We’ll get there in the end, right? Rome wasn’t built in a day.

The problem with that approach is that breathtaking speed. You’re building Rome while a competitor over there is already working on their first moon base. And your web-using customers? Well, they’re flying at light speed to Mars.

A meatball sundae is the unfortunate result of mixing two good ideas.

We’re already talking about Web 3.0 – broadly the refinement of the application of all the technical and social capabilities described by Web 2.0 into more productive and intuitive user experiences. We need to start paying a little more attention to our customers so we can realistically address Customer Engagement.

Start by asking the following question and choosing just one answer.

If a brand wants to engage its customers online it should... a) Pull together all its current marketing material – TV ads, press ads, poster material, brochures -, and republish it all online so people can look at it on a computer. b) Do a), PLUS spend a little bit more on something digitally whizzy – say an online game or two, an email newsletter, run some polls, archive a few PR pieces, set up a Facebook presence and invite comments and anecdotes about the brand. (Remember the old joke? “Enough about me, already. What about you? Tell me what you think about me…”) c) Invest heavily in a purely interactive brand-based comms programme with lots of cool (and expensive) digital stuff the web agency is dying to build. d) Completely revise its on AND offline comms strategy, work out what’s being distributed (including services), what its job is, how it’s being received, consider what people want to access, build the solution, test it, keep asking people if it is or isn’t working and why and over time, start to develop collaborative relationships in territory that was strictly us and them in days of yore.

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In a way, these choices describe a brief chronology (past, present and future) of how marketers are working to harness online channels for customer engagement. Brands investing seriously in online comms are probably producing customer experiences described in b) or c) for example Pampers, Bacardi, Innocent, Olay, Walkers, Persil, Orange etc. Consumers are still being treated to offerings from category a) and as yet offerings from category d) are rare Findings in the 3rd Annual Customer Engagement Survey support this. Clients and agencies more or less correlate when it comes to the importance of strategy, the recognition of objective areas of investment (media application, function etc) and awareness of current competencies. Everyone indicates there’s a long road ahead. That’s why choice d) is a rarity. We’re still learning how to use online as a comms medium while coming to terms with its functional role as an essential operational platform (tax returns, online banking, flight bookings, weekly shopping, congestion charge payments and so on), to figure out what engages people.

3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

We’re still learning how to use online as a comms medium while coming to terms with its functional role as an essential operational platform (tax returns, online banking, flight bookings, weekly shopping, congestion charge payments and so on).

To get there we need to really understand – the behaviour of people online as well as offline.

It means asking people what they expect and would like, and creating it. It means keeping close to people and reaching collaborative conclusions that this service and that product and this way of doing something is going to engage people in a long-term relationship of genuine value to both brand and customer.

It also means knowing how to blur divisions between what’s on and offline.

The thinking is that people will say what they’re really interested in online is doing something. For instance, having the conversation with the brand that helps deliver the next generation of products and services, or managing something that makes life easier in the real world. Something that relates to who they are, what they need and makes a

positive difference to their life. Useful content.

Content they want to come back to, content that makes the brand worth recommending to others.

Online needs to be an integral part not just of marcoms planning, but business planning, so we don’t end up creating meatball sundaes*.

We’ve never had the technical means to engage customers en masse in such a direct way before. There’s no reason we should be expert at this, let alone even really understand what needs doing. We’re learning at light speed, a new discipline which will rely on changing the way we do everything.

* “A meatball sundae is the unfortunate result of mixing two good ideas. The meatballs are the foundation, the things we need (and sometimes want). These are the commodities that so many businesses are built on. The sundae toppings (hot fudge and the like) are the New Marketing, the social networks, Google, blogs and fancy stuff that make people all excited. The challenge most organizations face: they try to mix them. They attempt to slap new marketing onto old and end up with nothing but a failed website.”

Clare is a member of the cScape Customer Engagement Unit and co-founder and managing director of CDA, the interactive content consultancy.

Clare works with Anne Caborn to deliver a range of content consultancy, creation and training services that help organisations engage with their customers, by providing good online experiences that meet expectations.

Seth Godin, Meatball Sundae: How new marketing is transforming the business world (and how to thrive in it).

webwordsworking.com

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3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Hugh Gage

Meeting expectations is the first step to engaging with your customers Using analytics to better understand customer behaviour One of the difficulties with identifying [online] engagement is that the definition may change depending on who’s being asked for it. Visitor or customer engagement is quite an abstract concept. A web analyst may talk about it in the context of notional qualitative or quantitative benchmark measurements, whilst the guy on the virtual high-street (if you asked for his opinion) might definite it completely differently in the context of the site he’s visiting and his own specific objectives.

Industry professionals charged with measuring engagement will come up with formulae and combined metrics. These can be benchmarked, so it can be categorically said that either “yes we have improved the level of positive engagement” or, “er… positive engagement seems to be slipping this month”.

Just because they achieve their goal does not mean they did it in a satisfying way

I think the level of engagement is born from the level of visitor satisfaction. That is not to say they are the same, just that the latter comes before the former. The idea of measuring satisfaction is not new. In fact, it has been dismissed by some as too limiting by itself, but assuming that many people know roughly what they want when they enter a site, one who achieves that objective is likely to be more satisfied than one who doesn’t.

Of course there are shades of grey here.

People will persevere with their task even if the going is unnecessarily tough, and just because they achieve their goal does not mean they did it in a satisfying way. This being the case, one would expect the associated data to reflect that across the whole visitor population, including those who were dissatisfied and gave up.

In other words, if steps were taken to improve the quality of the visitor experience, more would be able to achieve what they set out to do and in a happier frame of mind. This in turn would reflect well in the data and importantly, a satisfied visitor is more likely to spread the word about a service or website than an unsatisfied one.

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In an interesting study undertaken by the University of Warwick in the UK, the concept that people differ when deciding what goes with what was explored. The idea being that some people base their ‘similarity judgements’ on physicality whilst others base them on themes. For example, many consider a bee to be more akin to a wasp or a fly, whilst others may consider it to be more akin to honey.

This can be related to the issues around meeting and managing differing expectations.

In circumstances where expectations are not met, the levels of satisfaction and corresponding positive engagement are likely to be lower.

In thinking about engagement we are in many respects asking ourselves whether we are continuing to meet visitors’ expectations as they are interacting with a brand online.

Because there are so many different points at which expectations can be met, throughout the process it would be difficult to measure and benchmark engagement using one or a few metrics. It may be possible to combine associated metrics to produce an index, but equally it might be simpler to start by considering the key points at which expectation needs to be met, and attempt to understand how well it is being done.

If the findings from the University of Warwick research are to be believed, and people make associations in starkly different ways, then the process of meeting expectation and engaging visitors is potentially made more complex on the grounds that what’s good for the goose isn’t necessarily so good for the gander.

In the Customer Engagement report last year it was suggested that there is no such thing as an engagement metric, but that there are a series of metrics that can be used to measure specific actions which might, in themselves, indicate some degree of engagement. That leads to the question of where we should be measuring visitor expectation. Arguably, it should be at the actual point where engagement is likely to be engendered. Some possibilities are:

3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

With purse strings tightening, the web may be seen more than ever as the place to research and get best value.

Point of entry Where did visitors enter the site, how many of them stayed and where did they come from? This is perhaps one of the most critical points in the whole process. Visitors from different sources will have different levels of expectation, and possibly different objectives – e.g. research vs. completed action. Knowing where they came from, which pages the majority entered on and how many of them stuck about, tells the site owner if they have done a good job of welcoming the myriad of different visitors to their site. If this initial level of expectation is not successfully being met, then the idea of engagement won’t even get past first base unless it’s a one page site!

Progression There will always be key areas of content that are more central to a site’s objective. Reaching this content, interacting with it and progressing if required is another way of judging whether the visitor’s expectations are being met. If the visitor isn’t in the least interested in the content then they may be in the wrong place,

The notion of time spent on site, pages viewed per visit or recency and frequency are nice, but only bear relevance in the right context.

or they may have come for a reason unrelated to the primary objective of the site. In this case, the standard benchmarks will not be relevant.

Conversion This doesn’t have to reflect what the site stake holder wants from a visitor, but if people who visit a site knowing what they want are delighted by what they find, they are more likely to take an action that the site owner will be happy about.

Duration The notion of time spent on site, pages viewed per visit or recency and frequency are nice, but only bear relevance in the right context.

They’re like nursery fish metrics: they travel with the big guys and help out where needed.

The above examples are familiar and the list is by no means exhaustive. The intention is to underline the idea that in thinking about engagement, it helps as much to identify the key areas of expectation as well as the metrics for measurement.

People can be difficult to understand at the best of times, so catering for tens or hundreds of thousands is hard. Doing so in a rapidly

changing economic climate is harder still.

Although high street spending has been suffering in the UK, online spending still grows.

With purse strings tightening, the web may be seen more than ever as the place to research and get best value. As a result, consumer attitudes and objectives are changing, so over the next year the ability to stay flexible in understanding them and associate the right [collective of] benchmarks will be crucial.

When thinking about engagement, it might be easier to stop trying to pin it down to a specific definition or set of benchmark criteria, and to consider it from a broader perspective which allows for differing versions associated to individual cases.

Hugh is a member of the cScape Customer Engagement Unit and works as an independent web analytics and usability consultant. He works with a wide variety of client businesses helping drive revenue through improved website performance. He is also author of the Web Pro Analytics column in the UK’s .NET magazine. engage-digital.com

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3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

David Dodd

Can rich content mean rich customer experience?

How to make cool stuff really work for you The last twelve months have seen a large growth in the use of rich content. Even in these dark economic times this trend sees no sign of abating. So if you’re thinking of diving headlong into a brave new world of website whistles and bells, make sure you deploy them to maximum effect.

Like any major online advance, rich content is caught in a cycle of novelty. Whilst this is preferable to the later cycles of invisibility and obsolescence, the bleeding edge is a dangerous place to be. The cycle of novelty can stifle real growth in favour of exuberance and complacency. Remember how frothy Silicon Valley became when e-commerce arrived?

Suddenly we would all be buying toys and pet food online, even if we didn’t have pets or kids.

The idea that e-commerce just ‘worked’, and therefore every e-commerce business would

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Novelty can stifle real growth in favour of exuberance and complacency.

float, was based almost entirely in the cycle of novelty. For e-commerce to succeed, it took the development of new business structures combined with the re-instatement of some old business principles. Our conclusions from the first web bubble should be applied to rich content – don’t expect that placing video, flash apps, audio clips and widgets on your website are going to enhance your customer’s experience any more than giving them a banana every time they hit the scroll bar.

Take video as an example: too many web people EITHER push video as a fix-all golden bullet, OR shy away from it, fearing some golden-bullet-thinking is required to make it work hard. These are polarised assumptions and, of course, neither are true – but that’s the cycle of novelty for you. We don’t need a sophisticated model to integrate rich media and harvest their benefits. We just need a bit of lateral thinking upon existing principles, lateral thinking that we’ve attempted to boil down to a handy (but by no means exhaustive) list of five lightweight (yes, the pun on our name is shameless and intentional) tips:

1 2 3

The hook, not the worm: more often than not your rich content will act merely as the shiny skin of the onion which points your users at the real purpose of their visit, which is laid out in more conventional terms.

Break the journey: remember you still have a final destination for your user – usually ‘purchase’, ‘submit’ or ‘join’. Well-placed rich content can act as a great way to hasten and strengthen their journey to this destination, cutting drop-off rates in key areas.

Active audience alert! Your audience is not passive, so when producing video content, forget any comparisons to film, television or corporate videos. By extension, remember your user’s journey is NOT going to be linear, so try to avoid making linear assumptions (like placing a juicy video interview after 3 minutes of flashy fluff).

In our experience, drop off with web video ranges between fifteen and twenty five seconds.

3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

If your web video must be shot on a mobile phone in order to get the killer ingredient, so be it – your user has grown accustomed to watching dogs on skateboards, filmed using a digital watch: they’ll understand.

4 5

Action (forget lights and camera) Production values say a lot, but not everything. Appropriate content is more important. So if your web video must be shot on a mobile phone in order to get the killer ingredient, so be it – your user has grown accustomed to watching dogs on skateboards, filmed using a digital watch: they’ll understand.

New technology old channel. Don’t keep opening new channels for new technologies. A ‘video and multimedia’ page is not always the way to go – this kind of ‘destination’ approach to rich content won’t make as much as impact as a video placed in closer proximity to relevant content.

Putting this idea to the test, imagine we’re going to take the plunge with video for the first time. We’ve planned an engrossing five-minute studio interview with our CEO. We can picture her/him setting out the company’s stall in glorious homepage Technicolor. Wonderful.

The lights-camera-action moment beckons as we develop the script, prepare for the shoot, and wonder – ‘should we dress the set with tulips or a solitary white orchid?’. Halt!

Re-read those lightweight tips! We should be thinking, in this instance, of a series of lean and snappy clips where our plucky Chief Exec, now presenting from a real workplace setting, unpacks the rhetoric in a fun and informal way, talking straight down the camera to the folks at home. When our user clicks on a video clip – which has been cleverly placed atop a giant column of text – they’ll be offered insight, illustration and charisma, instead of devilish detail (that’ll be where the good old text comes into play).

Looking at this year’s survey results, it is likely that many of you will be wrestling with rich content in the coming year. I look forward to seeing you on the path to whistles and bells wonderland – make sure you avoid that bandwagon of novelty along the way.

David is is a member of the cScape Customer Engagement Unit and Creative Director at Lightweight Media. He is passionate about brand-savvy video and motion content for digital platforms. lightweightmedia.co.uk

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3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Do you make your customers feel they are taking part in something special by choosing your products or services?

Richard Sedley

Can I tell you a story?

How to use narrative in online engagement One of the biggest challenges developing online customer engagement initiatives is the lack of time and attention we can demand from our audiences. Indeed, the reality for many today is that we live in the fastest paced, most information rich, attention demanding and distracting world that humanity has ever known. This takes its toll on both our customers and our marketing efforts. Even the best laid and most value laden engagement plans will come to nothing if our customers don’t understand the value of what we’re offering, or stick around long enough to experience it.

Step forwards one of the oldest techniques for engagement ever used, storytelling.

At their simplest stories are merely retellings of a cause and effect relationship. For example,

Stories are the most important way our mind makes sense of our world.

“I forgot my wallet today so had to walk to work and arrived late.” Admittedly this is not a very inspiring story but it is a story nonetheless; while “I woke up this morning, went to work and had lunch”, is merely a chain of events and not a story. The key difference here lies in that from the first statement you can draw a lesson i.e. if you forget your wallet you’re likely to be late for work.

1. Provide a reason to boast

Throughout history stories have been one of the best ways to assimilate and pass down our understanding of what is valuable or dangerous to our kind. As a result stories have become one of the key organising principles of the mind. (The FOXP2 gene is thought to make narrative possible, supporting the idea that human brains are actually hardwired for stories). Our brains are now conditioned to seek out and identify stories wherever they may lurk. Even where stories don’t really exist we try to find them, to rationalise and explain the actions of others and ourselves.

Do you make your customers feel they are taking part in something special by choosing your products or services? A simple way is giving your customers information that confirms they made the right choice.

If your current customers are potentially your best sales force, why not give them the tools to spread the word?

So how can we use stories within our online customer and employee engagement strategies?

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My wife often tells the story of how she went to the last ever Stone Roses gig. If you press her on the matter she confesses that it was OK, but probably not the best concert she’s been to. What makes her share this story more than any other is that it was the final time the Stone Roses played, which she learnt after the event. Only once the dust had settled and the ringing in her ears had subsided did she understand that she had seen something special.

Was your event the best attended, the first or the last? Do other well-respected companies or individuals use your product? Select facts that confirm your customer’s wise decision in choosing you and help to ensure that others will get to hear about that choice, too.

Too often we kid ourselves that we have provided our customers with enough information to make a decision.

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In the absence of an explanation customers will write their own stories and we will have squandered an opportunity to help craft those stories to our advantage.

2. Tell them why

3. Show them the consequences

Last year I placed a particularly nice, blue, Donna Karan, silk and mohair suit on eBay – it failed to meet my reserve. After resubmitting the suit, this time explaining that due to marital bliss and a spreading waistline I was reluctantly parting with my wedding suit, it exceeded my estimate.

Behind every online action there is an off-line consequence. For every purchase of a toaster there is a full stomach in the morning, for every book bought there is a person reading on a commute to work, for every course attended there is a new friend met and for every article read there is a water cooler moment. By helping our customers understand the consequences of their online actions we are helping them write happy endings for their stories.

Too often we kid ourselves that we have provided our customers with enough information to make a decision. We load our web pages with facts and stats, features and benefits, functions and costs. But how often do we explain the ‘why’ behind these details?

• Why are we providing this service?

• Why did we write this?

• Why are we selling this?

• Why is it this price?

In the absence of an explanation customers will write their own stories and we will have squandered an opportunity to help craft those stories to our advantage.

The two most powerful, and least contrived, ways we can do this online are through the use of images/video and user generated content. Visuals showing real usage of our service or product allow customers to imagine themselves at the end of the customer journey, ‘pre-purchase’. Allowing other customers to share their stories similarly permits people an insight into the future.

Stories are the most important way our mind makes sense of our world. As that world becomes more hectic and as greater demands are placed on us so stories become an essential way for us to navigate these demands. Our customers are already writing these stories for themselves; it seems churlish not to provide the characters, scenery and script to help them.

Richard is the Director of the cScape Customer Engagement Unit (CEU). richard-sedley.com

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3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Today, websites have to work much harder to prove that they are relevant enough to appear at the top of the search results.

Amanda Davie

But I still haven’t found what I’m looking for Customer engagement starts with search While Google celebrated its 10th birthday this year, analysts have been reflecting on the huge impact that the search behemoth has had on the entire Internet landscape. Google’s influence on the digital economy has been equally impressive: Google has the ability to make – or break – an online business through its ability to drive customer acquisition and, in so doing, has created many hundreds of millionaires in the ecommerce space alone.

Yet it is Google’s influence on consumer behaviour where its power is most evident.

Yes, search engines per se have fundamentally changed the way in which we navigate the Web, but Google’s dominance of this space has moulded the way in which we articulate our information needs, it has shaped our expectations, and it has dictated the way in which we find what we are looking for on the web.

Google isn’t the only one with a responsibility to meet the needs of its users.

In the context of Internet information retrieval relevance has come to mean finding websites that have the information we’re looking for.

In actuality this means websites which match how we articulate or describe what we’re looking for. Most of us have grown accustomed to thinking in keywords when conducting an online search. A consumers need such as “I need to buy my niece a gift for her third birthday and get it in the post quick so that she receives it in time because she lives abroad” is condensed into a short sequence of words such as “children gifts overseas postage”.

Boy! Google certainly has its work cut out in trying to decipher which websites to suggest in response to this need.

We place a huge amount of trust in Google to prioritise its web results according to our individual preferences. Often this is a big ask when all we offer up to help Google decipher our needs is two or three keywords. Plus, as creatures of habit, we increasingly turn a blind eye when Google suggests websites which weren’t necessarily exactly what we had in mind. Google isn’t, after all, a mind reader!

All that said, Google does have the power to satisfy our information needs.

With any great power comes great responsibility. Google is forever enhancing its algorithms to ensure that it delivers the most relevant results. While this job may get easier over time as Google gets cleverer at the same time the search engine index is growing, making the competition stronger – today websites have to work much harder to prove that they are relevant enough to appear at the top of the search results. Google cannot meet customer expectations on its own.

Google’s job is made far easier by publishers who analyse search behaviour when developing their content strategies. By tailoring your website content and copy to the language (or keywords) used by prospective customers you are already driving engagement. An example: among SEO (Search Engine Optimisation) specialists, there has been a return to advocating the importance of metadata – not because optimised meta data influences your ranking, as it arguably once did, but because within the metadata are the words that the user first claps eyes on in the search results. If the words they see are the words they searched on, they are far more likely to be enticed to click through to your website.

Fundamentally, Google wants the same thing as its users: the best possible information

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framed in an accessible and succinct way. It is the responsibility of marketers and publishers to ensure they produce engaging and easily accessible content. The old adage of “give the customer what they want” is as relevant today as it ever was.

Search is the mouth piece of marketing.

Where else in the marketing mix do consumers prescribe – or describe – what they want, whether this is a need for information, or a brand, product or service? Understanding search behaviour and the principles of search engine relevance can really help to shape a range of customer engagement strategies: content, usability, accessibility, conversion and loyalty. Google isn’t the only one with a responsibility to meet the needs of its users.

By helping Google to give its users what they are looking for, marketers can, in turn, convert these users into customers.

3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Can you imagine sitting down with someone you just met and showing them photos you took on a night out last week?

Lynda Rathbone

Oh the humanity!

Maximising social media insights

Amanda is a member of the cScape Customer Engagement Unit and an independent Search consultant. She has over ten years’ experience in digital media and has worked for market leading agencies including Outrider and i-level, where she was Head of Search for four years.

As 2009 is just around the corner, I find myself still talking about social networking. Last year I faced my fears, set up a Facebook profile, and I have to say, it hasn’t been that bad.

My main concern about going on Facebook was using my real name, as I didn’t want my professional and my personal lives to be woven together. This has now officially happened.

The first thing new friends, work clients or colleagues do (including a whole slew of folks I’d forgotten about from past lives) is look you up on all the sites, send along a friend request or professional network link, and then proceed to barrage you with a whole bunch of personal and professional updates. And we’ve only just met! This would never happen offline. Can you imagine sitting down with someone you just met and exchanged business cards with, and showing them photos you took on a night out last week?

While this isn’t new information, I do think there is a new, interesting user humanisation trend that is developing, and that is still to be recognised. Instead of thinking of this as a ‘bad thing’, I think the blurring of these lines can actually help us understand each other better, work together more effectively and create better user journeys, both on and offline.

Gaining real, personal customer insight is now just a click away in many cases, and after all, people know what they’re doing when they post this information publicly so why not use it to better inform the experience you deliver?

If clients are doing this to me, I definitely want to return the favour.

By searching across social networks, blogs and online communities, you can compile a much more interesting and detailed set of personas and customer insights, and perhaps uncover interesting audience segmentation data that you would never have had access to before. Data on users is out there – from the users themselves – in a way that it’s never been before. I say let’s join Google and start mining. The opportunity is there to humanise the user experience and I can’t wait to get started. Oh and by the way, feel free to go to my Facebook page and add me as a friend.

Just don’t look at the party pics.

Lynda is a member of the cScape Customer Engagement Unit and the Managing Director of Four Square Media. foursquaremedia.net

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3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

With more customers accessing the web through different devices, it’s worth also reviewing your ‘Technographics’ or ‘Webographics’ which show the devices used by site visitors.

Dr Dave Chaffey

Learning to slice and dice

Your options for engaging online customers through segmentation Since digital channels offer fantastic opportunities for segmenting and targeting online audiences it was good to see a question on segmentation in this year’s engagement survey.

We were keen to find out which techniques were most popular for different points in the customer engagement lifecycle from initial engagement and conversion through ongoing relationship building. In this commentary I will assess the survey’s findings and give some examples and practical tips on how you can review or refine your own approaches to online segmentation and targeting.

The framework I will use for this review is based on the 4 main options for online targeting covered in the fourth edition of my book Internet Marketing: Strategy, Implementation and Practice.

1. Demographic segmentation Targeting according to customer behaviour is arguably the most powerful approach for gaining engagement.

Demographic segmentation is the familiar audience breakdown based on profile characteristics such as age, gender, geographic location or social group. Of course this can only be readily identified for registered site users or email subscribers and potentially used to deliver relevant messages where profiles can be accessed in real time.

Unsurprisingly, this was one of the most popular approaches to segmentation identified in the survey, with around 45% using it currently. But this is surprisingly low since the most successful tool for customer engagement was email newsletters which were rated positively by 69% of respondents.

Email newsletters or solus e-blasts lend themselves to targeting, but perhaps this low figure reflects the lack of refined multichannel communications strategies in many companies.

resolution suggests increasing popularity of mobile devices such as the Blackberry, you may consider repurposing content for this audience or offering a mobile platform.

2. Lifecycle stage Establishing the visitors’ degree of engagement over time is where more sophisticated and typically more costly targeting approaches come into play. You can start by distinguishing between first time and repeat visitors; how does their content consumption vary when you create a segment filter on number of visits with your analytics tool. If you’re using Google Analytics, you can also get a feel for the typical frequency of return visitors through the Visitor Loyalty and Visitor Recency reports.

Many have successfully used the presence or absence of a cookie to use different content or design to engage first time visitors. Site visitors who progress through the lifecycle by

With more customers accessing the web through different devices, it’s worth also reviewing your ‘Technographics’ or ‘Webographics’ which show the devices used by site visitors. Web analytics tools will show you screen resolutions and browsers used by visitors which should inform decisions about the extent to which you support different platforms. If you find that your screen

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registering or buying can be readily targeted through email. Car manufacturers like Mercedes-Benz and Renault evolve messages delivered to newsletter subscribers according to how long they have been on the list.

We are also starting to see more use of web personalisation and merchandising based on lifecycle position. For example, Thomas Cook have described how they have introduced a new platform, based on ATG technology, which offers deep personalisation integrated with different search journeys, video, maps and consumer reviews6.

3. Value Segmenting by value was also revealed as a popular approach in the survey. Best practice is to segment on current and future customer value. Speaking at the E-consultancy Online Marketing Masterclass, Chris Poad of retail group Otto gave some great examples of the criteria that can be used for targeting by value.

Indicators for evaluating customer quality include order value per received catalogue; order value per season; gross margin in % of net sales and returns in % of order value while indicators for customer potential include last date of purchase; number of active seasons; channel usage score and number of different product categories.

www.e-consultancy.com/news-blog/366311/q-a-thomas-cook-s-russell-gould-on-improving-conversion.html

3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Car manufacturers like Mercedes-Benz and Renault evolve messages delivered to newsletter subscribers according to how long they have been on the list.

4. Behaviour The beauty of these techniques online is that the recency, frequency and latency can be assessed for any online interaction.

Targeting according to customer behaviour is arguably the most powerful approach for gaining engagement because communications are in context of known interest and intent.

We have already touched on behavioural approaches when we discussed lifecycle and value based segmentation. Another form of behavioural segmentation which was rated popular was segmenting by referrer (or channel preference), so for example, reviewing degree of engagement with visitors referred by Google AdWords differently from other online or offline media channels.

More advanced behavioural approaches combine analysis of recency, frequency, purchase category and monetary value (RFM).

I find that many marketers have not considered RFM segmentation approaches since they are seen as only relevant to retailers or loyalty schemes. But the beauty of these techniques online is that the recency, frequency and latency (average interval between actions) can be assessed for any online interaction whether it a site visit, purchase, posting in a community or a click on an email.

It’s good to see that nearly half of respondents are using behavioural techniques, but there is clearly potential for doing this smarter, particularly if the tools vendors improve their approach.

Bringing it all together in a persona When you have reviewed all your segmentation options, why not summarise the main customer types through a web design persona? Creating personas of site visitors is now an established technique for increasing the usability and customer centricity of a web site. Personas are essentially a ‘thumbnail’ description of a type of person. Effective personas can be developed by combining any of targeting criteria I have discussed in this piece.

Dave is a member of the cScape Customer Engagement Unit and Director of Marketing Insights Limited. He 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, now in its fourth edition. davechaffey.com

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Winners and Losers in a Troubled Economy: How to engage customers online to gain competitive advantage Martyn Perks & Richard Sedley winners-and-losers-in-a-troubled-economy.com

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Read the previous reports online customer-engagement.net

The cScape Customer Engagement Unit (CEU) works to help people 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 Sarah Woodbridge on s.woodbridge@cscape.com or call +44 (0)20 7689 8800 If you’re a digital specialist or company specialising in online customer engagement Join the gang customer-engagement-network.com

and would like to have a chat about joining the CEU, contact Richard Sedley on r.sedley@cscape.com or call +44 (0)20 7689 8800 Visit us at cscape.com to sign up for our regular newsletters to keep you up to date with the latest acute intelligence.

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3rd ANNUAL ONLINE CUSTOMER ENGAGEMENT REPORT 2009

Survey partners

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The annual Online Customer Engagement Report, now in its third incarnation, generates more interest than any other survey-based research published by E-consultancy, in terms of both number of survey respondents and the extent of PR coverage.

It is heartening that organisations of all shapes and sizes are hungry for knowledge about how they can boost their business performance through better and deeper customer relationships.

We are delighted to be working with cScape on this project because their thought

leadership and enthusiasm continue to ensure that the survey itself is thought-provoking, whilst also generating data and findings which are insightful for businesses across a range of sectors.

As the research has become more established, an added bonus is that we can now include related opinion pieces from a broad range of contributors who are unified by their passion for this subject.

A reason for the broad appeal of this research is that it brings together various components of digital marketing within a single theme

which is undeniably important to virtually everyone organisation.

It gives an important strategic context and framework for organisations who want to understand what levers they need to pull and what tangible benefits they might reap as a result of customer engagement initiatives.

The gloomy economic prognosis for 2009 will ensure that this topic continues to grow its profile because companies will need to focus more than ever on making sure they understand how customer behaviour is changing so they can engage more effectively.

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

Repeated interactions that strengthen the emotional, psychological and physical investment a customer has in a brand (product or company).

Definition of customer engagement