Customer engagement - establishing a deep connection with the customer that endures over time - is an increasingly important business mandate, according to a study by the Economist Intelligence Unit (EIU).
More than 8 in 10 executives believe their companies lose sales each year because of failure to create engaged customers, and one in 10 estimates insufficient engagement accounts for 50 to 75 percent of lost sales. More customer engagement, they believe, would translate into improved customer loyalty (80 percent), increased revenue (76 percent) and increased profits (75 percent).
But while most executives believe that the ability to engage customers is increasingly critical to business success, few think their companies are doing it well, and executives believe this failure has an impact on the bottom line. They also view technology as having an increasingly vital role in their customer engagement strategies.
“Executives are increasingly finding that the winning differentiator is no longer product or price, but the level of customer engagement relative to the competition,” says Rama Ramaswami, senior editor of the EIU. “Companies see there is a competitive advantage in going beyond traditional customer loyalty programs to create engaged customers.”
79 percent of executives surveyed say that engaged customers are very important because they recommend products and services to others; 64 percent say they are frequent purchasers; 61 percent say they provide frequent feedback on products and services; and 55 percent believe they are less price-sensitive.
But highly engaged customers are the exception, not the rule. Just 13 percent of respondents believe their customers are very committed to their company’s products, while 44 percent believe their customers are only somewhat committed.
This can carry a high cost. 49 percent of respondents estimate that insufficient customer engagement accounts for up to 25 percent of lost sales each year, while 26 percent believe that it costs them between 25 percent and 50 percent. 11 percent place the contribution to lost sales somewhere between 50 percent and 75 percent.
Technology is seen as providing important tools for building engagement. Most respondents identify technology, such as electronic forms, websites and multimedia technologies, as important tools for creating engagement and believe that they will be even more important within the next five years.