Customer Loyalty

Customer Engagement in 2023: What You Need to Know Now to Drive Loyalty

Aaron Sullivan
August 16, 2023

There’s one thing that fills the seemingly huge gap between brand awareness and customer loyalty: successful customer engagement.

Brand loyalty is rarely automatic. Once a customer hears about your brand, they might spend some time learning about your products and your company. Then they’ll evaluate your competitors. 

At this point, they might return and join your SMS list. A well-timed SMS offer moves them to buy. Your product arrives damaged, but the shipping protection plan the customer added at checkout helps them replace their product quickly. The experience is so seamless that they tell their friends to check you out.

It takes several small but successful customer interactions over time for someone to start recommending your brand. Getting these connections “right” is the job of customer engagement, and today, it’s more important than ever. Keep reading to learn how to keep customers engaged and move more of them through the customer loyalty loop.

What is customer engagement?

Customer engagement is the result of creating and managing emotional connections with customers. The goal of those connections is to nurture customer relationships over time, leading — hopefully — to a longer customer lifecycle. 

Of course, you want all emotional connections to be positive ones, but sometimes, they’re not. A delayed shipment, damaged product, or slow response to a question asked via social media — these result in negative emotions. Good customer engagement means salvaging the relationship in spite of these situations. 

Customer engagement vs. customer satisfaction

Customer engagement lays the foundation for customer satisfaction, but satisfaction isn’t the same as engagement.

It’s possible for a satisfied customer to buy repeatedly without leaving a review, joining your loyalty program, or reaching out to customer support. And it’s also possible for an unsatisfied customer to be engaged: they might be motivated to leave a negative review and trash your brand on social media.

The point? Customer engagement is as much a dialogue as a strategy. If you don’t listen to engaged customers, you won’t know how to increase their satisfaction with your brand.

Customer engagement vs. customer experience

Customer engagement helps you create and evaluate experiences designed to move customers deeper into the sales funnel and loyalty loop.

Suppose you create a video to help customers understand how to use and get the most out of a wireless speaker. You promote the video across the channels used by your target audience only to learn that most viewers watch only a few seconds before clicking away. It’s not a stretch to conclude that the video isn’t a great customer experience.

This lack of engagement tells you the video might be too long, so you break it into smaller, bite-sized pieces to make the experience more customer-centric.

What are the benefits of customer engagement?

Customer engagement plays out across channels like email, SMS, and in-person retail store visits, as well as through omnichannel campaigns and loyalty programs. Finding the right mix benefits your brand in several ways.

Better customer retention

A positive customer experience — and the promise of more — encourages engagement. And if you deliver on your promises, you give customers fewer reasons to shop elsewhere. That’s customer retention in a nutshell.

Not surprisingly, disappointing experiences have the opposite effect. In 2022, PwC learned that 55% of surveyed consumers said they would stop buying from a company after several bad experiences. Even worse, 8% said they would churn after a single negative experience.

Suppose you run a Facebook ad campaign to acquire new customers for your skateboard brand. Here’s a chain of engagement that could lead to retention:

  • An ad photo of an influencer using the skateboard results in an emotional connection, and a 15% discount drives a click. (A click is an engagement.)
  • The discount populates automatically, and the customer can customize the board’s colors. The customer completes the sale.
  • This customer travels frequently, so engaging with your real-time tracking helps them anticipate the delivery.
  • A follow-up email recommends a just-released accessory that’s the same color as the skateboard. The customer buys the accessory.

For more engagement tips to boost retention, read “Create an effective customer engagement strategy in 7 steps.

More customer referrals

If you create experiences that consistently engage customers emotionally, you’ll do more than retain them. You’ll increase the chances that they tell their friends, generating more potential business.

In its 2022 Customer Loyalty Data Study, Clarus Commerce found that 48% of loyal customers told their friends about their favorite brand in the past 12 months.

And if only a handful of those word-of-mouth referrals end up placing an order, you’ve added customers without spending more money on marketing.

Healthier profit margins

It’s not difficult to make the connection between customer engagement and stronger profit margins. As customers engage with your brand — positively or negatively — you gather valuable customer data. Use data-driven insights to create personalized experiences that boost the revenue side of the profit equation. 

If you keep track of what customers buy or even what products they view, for example, you can include upsell prompts in your SMS or email marketing campaigns. Twilio’s 2023 State of Customer Engagement Report found that brands that invested in “digital customer engagement” increased their revenue by 90% on average, up from 70% in 2021.

Then there’s the cost side of the profit calculation. Remember that if you retain more customers, thanks to engaging experiences, you’re offsetting your customer acquisition costs. You have less of a need to acquire customers because you’re keeping more of them. Making more money while lowering costs boosts profitability.

What does customer engagement look like today?

As technology evolves, so too does the number of touchpoints where customers can interact with your brand. If you can keep up with how your customers prefer to engage, you can build relationships faster and minimize customer churn.

Filling out a customer satisfaction survey

Customer satisfaction surveys will always be a valuable engagement touchpoint; they help you evaluate experiences designed to create emotional connections with customers.

The trick is getting your customer base to complete them. Say you want to know how effective and efficient your product recommendations are. It doesn’t make sense to include this survey in an email or SMS since many of these ecommerce visitors might not be ready to sign up for those lists. 

A better option? If a customer fails to add anything to their cart after viewing three separate product pages, use a chatbot or website popup for your survey. Customer engagement platforms like Delighted will send surveys across multiple channels and in a variety of formats to encourage completion.

Why it matters

Without a large enough sample size, survey results won’t mean much. And if there actually is friction in the experience you’re evaluating, the sooner you can correct it, the more customers you’ll keep.

Leaving a negative review on Yelp

Sure, a negative review can damage a brand’s reputation. But not responding to the customer review can damage it even more. Not only are you turning down a valuable win-back engagement opportunity, but you also risk alienating potential customers.

In a 2023 consumer survey, BrightLocal learned that 88% of respondents would be “highly likely” or “fairly likely” to use a business that “responds to all reviews, positive or negative.”

When responding to the customer, express regret and invite them to reach out to you over email or phone, where you can explain next steps.

Why it matters

Customers who leave a negative review are testing you, and sometimes they just want to make sure that they’re heard. They want to see what your brand is made of and how you handle critical feedback. If you reach out quickly with a solution, you might get rewarded with an updated review like this one:

Image of a negative review that was updated to a positive review after the merchant reached out quickly
Reaching out quickly after a negative review, you might be able to turn it into a positive review. Image source

Checking and using loyalty program points

Loyalty programs are excellent channels for boosting customer engagement. They reward customers for engaging with you, and they help you zero in on your most valuable customers.

Many brands are content to reward points for purchases only. But others reward points for any business-enhancing engagement, like referring a friend or creating an account. Loyalty program providers like Yotpo let you track the number of points individual customers earn and how often they redeem them for dollars. 

Over time, you’ll be able to segment your most engaged loyalty program members. Let this segment know their value to your business by sending them unique content and incentives to keep them engaged.

Why it matters

A loyalty program is like any other ecommerce customer experience. If members encounter any friction points, they have fewer reasons to engage with the program. 

Take the simple act of checking loyalty points. Clarus Commerce learned in 2022 that 64% of surveyed loyalty program members check their loyalty points “at least once a month.” One of the best ways to make this process seamless is to integrate your ecommerce platform with a loyalty program provider like Yotpo. Customers will have their own dashboard where they can easily track their points. Plus, they’ll see their point totals at checkout.

Asking a customer support question via chatbot

Chatbots are one of the hotbeds of customer engagement. Customers use them to ask simple product questions as well as submit support tickets. The challenge, which Zendesk recently learned, is that 64% of consumers want chatbots to “provide the same level of customer service as humans.”

Many brands have tried to “humanize” chatbots with self-service options. Here, customers enter certain keywords relating to their issue or select from a short menu of common concerns. The chatbot then returns an automated response or link to a help-center article. 

But sometimes, customers with more complex issues need to connect with an actual human. Deny them this option, and you create a barrier to future engagement. Boutique Rugs has this covered:

Image of Boutique Rugs' chatbot
Boutique Rugs provides a direct option in their chat bot to speak to a human agent. Image source

The menu at the bottom gives customers a direct link to an agent, bypassing the self-service option.

Why it matters

If customers have a good experience using a chatbot for support issues, they might feel comfortable using it as a sales channel. 

In the same Zendesk study from above, 77% of business owners say support teams could help drive revenue. Customer support platforms like Gladly integrate with ecommerce platforms like Shopify. Now agents can see a customer’s purchase history while interacting in a live chat and recommend products to satisfied customers. 

For other examples of what customer engagement looks like in 2023, check out “7 customer engagement examples to inspire your marketing.”

How can you improve customer engagement in 2023?

The competition wants to engage your customers as much as you do. The only way to keep more of your hard-won customers is to better understand their needs and provide more value than your competitors. 

Know your target audience

Knowing your target audience is foundational to an effective customer engagement strategy. If you don’t know what motivates your customer base, you can’t create experiences that boost engagement. But it’s easier said than done. 

Even if you craft a detailed persona of your ideal customer and map their journey across all touchpoints, you’ll still have things to learn about them. Here are a few tactics to consider:

Use Google Analytics (GA). Perhaps your goal is to target women between the ages of 18 to 34. But when looking at your GA demographic data, you see that most visitors actually fall into the category of women aged 35 to 50. Either rework your persona, or try to understand why your target audience isn’t engaging at the level you’d hoped.

Look at social media analytics. Is your content generating comments, shares, and trips to your website or app? If not, you may need to audit your competition’s accounts to learn what content encourages conversions from your target audiences.

Directly engage with target audiences. Sometimes, the best way to learn what boosts engagement is to ask your customers directly. For example, if most of your customers are active on Facebook, SurveyMonkey lets you embed a survey in that channel. You might motivate completion by offering a 10% product discount to anyone who fills the survey out.

The more you know your customers, the better you can foster emotional connections.

Harness the power of your CRM

Your CRM platform is the nerve center of customer data. If you integrate it with your customer engagement platform, you can supercharge your engagement with personalization

A CRM isn’t the same as a customer engagement platform, but they often share similar features. Both might have email and SMS capabilities. But generally, a CRM like Salesforce will house data captured from all marketing channels, providing intelligence for future campaigns.

Say a customer leaves a scathing product review on Facebook, followed by a low satisfaction survey score after a customer support session. This multi-channel customer feedback can live in a CRM. Now what?

Create a rule in the CRM to flag unhappy customers so you don’t include them in email campaigns sent out from your engagement platform. The CRM will automatically move that customer into a win-back campaign.

Monitor customer engagement metrics religiously

If customer engagement is a dialogue between the brand and the customer, then performance metrics capture the customer’s side of the story. Are you truly meeting customer needs, and are your digital experiences leading to customer satisfaction? Enter KPIs.

Conversion rate is one of the most important customer engagement metrics. It measures the number of customers who take a desired action at a touchpoint. If a high percentage of customers aren’t taking desired actions, it means they’re encountering friction or not seeing the value of your offer.

Suppose you launch an Instagram ad campaign promoting a new product. The conversion rate quickly tells you how many users are clicking. If conversions are low, you might decide to move the call to action to the image instead of the caption. The sooner you make a pivot like this, the higher your ad ROI might be.

  Conversion rate is only one way to measure customer engagement. For a longer list of important metrics, read “Customer engagement metrics: 7 examples and how to improve them.”

Add value to the post-purchase experience

A customer who buys once won’t necessarily buy again. A customer engagement strategy must take post-purchase behavior into account to boost retention. (If you’re not sure about your customers’ post-purchase needs, you can embed a survey at the end of an order confirmation email.)

Even existing customers who consider themselves loyal will churn if you don’t meet their post-purchase needs. Clarus Commerce found that 23% of customers would consider leaving a favorite brand if “delivery becomes slow or unreliable.” In this case, real-time tracking would reassure customers that their product is on the way and alert them if there’s a delay.

But what if the product — say a new sofa — arrives on time, but the customer accidentally cuts the fabric? If they had also purchased an Extend Product Protection plan, they could file a service request online and get a resolution in minutes. If Extend approves a replacement, the customer heads back to your website to choose their new item. 

A damaged product is like a bad Yelp review. Both give your brand the opportunity to add value to a negative situation and reestablish engagement with customers you could have lost.

Create engaging, customer-centric experiences with Extend

Customer engagement often involves trial and error. You make assumptions about your target audience and create experiences based on them. Then you look at metrics to learn if your assumptions were correct. 

One assumption that usually pans out is that customers will engage with brands that provide peace of mind. Extend protection plans — including both product protection and shipping protection — reassure customers they have options in case of the unexpected. And when that new sofa arrives after only a few clicks, you’ve moved the customer closer to loyalty. 

Curious about Extend? Click here for a complimentary demo.

Aaron Sullivan
Aaron Sullivan is senior content marketing manager at Extend. He specializes in writing about e-commerce, finance, entertainment, and beer.

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