The Meaning and Importance of Engagement

A few days ago I thought I’d do a quick search to find out how we marketers are defining and measuring engagement. It had been awhile since I checked this out and I assumed there would be greater unanimity about what we mean. The IAB has a working group considering related issues, but I didn’t find any public information, so I went looking. I came up with enough for several posts!

Along the way I ran across a relatively new firm that specializes in what Allegiance calls Enterprise Feedback Management. Its Engage Platform facilitates measurement of both customer and employee engagement as a driver of business results. We all know that happy, motivated (read that “engaged”) employees deliver better customer service and create happier customers, but it doesn’t hurt to be reminded that customer loyalty and employee loyalty are two sides of the same coin.

So with that perspective in mind, what is engagement? We don’t have a commonly-accepted definition yet. Some of the popular definitions are oriented to the impact on the brand, others to how we actually measure engagement. I’ll look at branding issues in this post and metrics in a follow-up.

Let’s start with the idea that it’s more than loyalty. We all know that many satisfied customers defect. I asked a group of students last week how many were “for sale” to better offers from marketers. Almost all of us are. So, as the caption of the graphic indicates, we need to go beyond satisfaction in our effort to prevent defections. Here’s Allegiance’s definition of engagement:

Allegiance considers engagement the emotional bond or attachment that a customer develops during the repeated and ongoing interactions accumulated as a satisfied, loyal and influencing customer.

Peppers and Rogers add that all definitions of engagement have three basic components; intellectual, behavioral and emotional. That’s the basic components of attitude in sociological theory, which tells us something about the concept of engagement. (You can download both Allegiance’s Discover Engagement and Peppers and Rogers Engagement, The New Competitive Advantage papers here.)

The thrust of the Peppers and Rogers paper is that engagement can and should be measured. Their engagement chain concept shows the major drives of engagement for both customers and employees. The drivers are measurable and the paper notes they can be divided into engaged, swing and disengaged customers. They don’t say so, but it seems most efficient to target swing customers in an attempt to increase their level of engagement.

Is it worth the effort? This chart says that it emphatically is. Performance is significantly better on a variety of financial metrics measured over various business units in 10 different companies when customers are engaged. Little surprise there! Similar outcomes for engaged employees are reported on page 4 of the report. Firms with both customers and employees who are engaged are roughly “twice as effective financially” as those who excel on only one type of engagement (page 5), so the combination is potent.

One thing that strikes me is that this is the update to the Bain loyalty studies that made such an impact on marketers in the 90s. Those studies helped realize the importance of customer loyalty and retention marketing programs. Even then we recognized that loyal customers recommended, referred and, in general, were advocates for the brand.

We have now invented the term “engagement” to help explain what happens beyond loyalty. I’ll come back to how to create engagement and more on engagement metrics in days to follow—stay engaged!