The Definition of Customer Engagement
Customer Engagement—broadly speaking—is the interactions customers have with a company and its product.
Customer Engagement typically runs right through the core of a business, touching all areas of it from Sales to Development, and is growing in importance to companies who see it as a source of alignment and inspiration. See it’s rise via Google Trends:
Customer Engagement vs. User Engagement
Customer Engagement is sometimes referred to as User Engagement, and their definitions are largely the same. The difference between the two terms exists in the kind of business models in which each is used.
Companies using the term ‘Customer Engagement’ typically embrace a high-touch relationship model in which they embrace their customers. ‘User Engagement,’ on the other hand, is most often used by organizations leveraging a low-touch relationship model.
The difference between a high-touch and low-touch relationship model is defined by the one-to-one vs. one-to-many approach of customer interaction. To expand on that concept, here’s a side-by-side comparison of companies that use Customer Engagement vs User Engagement:
Low-touch relationship model
Greater contract value per account
Product is more complex
Pay up-front to use the product
High-touch relationship model
Less contract value per account
Product is less complex
Free-to-paid usage of product
There’s a lot of overlap in the Customer/User Engagement strategies and tactics for companies leveraging either kind of relationship. However, the emphasis on certain strategies shifts depending on the model.
For example, teams focused on Customer Engagement may invest more in in-person product training, whereas teams focused on User Engagement may invest more in their product’s user onboarding experience.
Customer Engagement Today
More often than not these days, companies are taking a hybrid approach to Customer/User Engagement. They are engaging some customers with a high-touch relationship model, and others—most often those under a certain threshold of contract value—with a low-touch one.
The power of this model is that it expands a company’s target market to effectively cater to both enterprise and smaller deals. And early adopters of this nuanced approach to Customer Engagement are often SaaS businesses. It’s often evident that a SaaS business embraces two relationship models simultaneously when looking at their pricing page:
This snippet of Optimizely’s pricing page demonstrates a difference in pricing as well as in treatment of each kind of customer. ‘Pay As You Go’ customers are offered a self-service one-to-many model of ‘User Engagement,’ and ‘Enterprise’ customers are offered a one-to-one relationship. This divergence of the customer journey may affect every touchpoint here forth.
Examples of Customer Engagement Touchpoints
Every interaction a customer has with a company can be considered a part of the customer journey. Customer journeys include several forms of communication both inside and outside of a company’s product. Examples of common Customer Engagement touchpoints include:
- Onboarding: can happen in-person, over the phone, via a group setting/webinar, or done with in-app product tutorials.
- Emails: are used to communicate with customers outside of the product for use cases such as feature announcements, to encourage further product usage, to promote relevant content, events and more.
- Customer visits: deepen relationships. These meetings may assist a customer in their evangelism for a product and encourage their further usage.
- Events: helps customers to interact with one another and to get to know the company better.
- Satisfaction surveys: give companies a read on their customer-bases’ level of engagement and satisfaction.
- Product usage: at the core of Customer Engagement is how each interacts with the product.
Each of these touchpoints add up to a customer’s overall engagement, which is contributed to and measured across departments.
Important Customer Engagement Metrics
Customer Engagement can be measured holistically by an entire customer-base, or it can be measured customer-by-customer. Typically, an Account Manager or a Customer Success Manager may be concerned about each individual customer’s engagement metrics, whereas a Product Manager concerns his or herself with more platform-wide metrics, perhaps segmented by relationship models in hybrid companies.
Common Customer Engagement metrics in today’s data-rich world include:
- Churn rate: is a calculation of the percentage of customers that leave a given platform month-over-month relative to that company’s total number of customers—it can also be measured by dollars instead of customer count. There’s hardly a more honest metric in customer satisfaction than a company’s churn rate. Holistically, churn rates are often measured in cohorts that offer insights as to when a customer is most likely to churn throughout his journey. This may help those focused on Customer Engagement to dig into the reasons why.
- Activity: metrics include event-based tracking on customers’ key interactions unique to a given product. For example, a Customer Relationship Management software (CRM) may measure the number of contacts added to the system or the number of reports created as a platform engagement KPI. There may also be also general metrics to track, such as the number of times a customer logs in per month and their time spent using a product.
- Feature adoption: is the measurement of features or modules used by a given customer. The breadth of features that customers are currently utilizing is an indicator of their engagement with a product. It’s often safe to assume that the more features they’ve adopted into their interactions, the more value they are receiving.
- Net Promoter Score (NPS): a popular form of customer satisfaction survey, distributed regularly. NPS surveys can measure and track a customer’s happiness in relation to that company and their product.
- Expansion revenue: when a customer upgrades their contract to pay more. Often the upgrade comes with additional product features or enhancements. Expansion revenue serves as a direct feedback loop from current customers. If the customers are willing to pay more for product upgrades or enhancements, it can be inferred the product is adding value to their experience.
Popular Customer Engagement Softwares
There are many software to create, manage and measure Customer Engagement. The list of tools can be broken into 5 categories.
- Event-based analytics systems: to track platform activity to a given customer or user, companies are adopting various event-based analytics systems. These systems provide visibility into the customer journey as they interact with a product and make reports like churn/retention cohorts simple to create.
- Email tools: there are dozens of email service providers out there that can help companies engage their users. Emails can be transactional from the product, promotion-oriented from a Marketing team, or personalized from a Customer Success Manager or a Support Representative.
- Chat tools: many Support and Customer Success teams are taking advantage of chat tools. Chat gives customers a direct line of communication where it’s most native: from inside the product.
- In-app customer experience tools: non-technical team members focused on engagement can communicate to customers in-app through modal windows and product tutorials to build onboarding experiences and increase feature adoption.
- Survey tools: embedded into a product or sent in an email, survey tools can help companies easily create and distribute questionnaires to get actionable feedback from their customer-base.