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Why Customer Engagement is as Important as Customer Satisfaction

Following the customer-centricity movement of the last decade, entrepreneurs and executives frequently focus on customer satisfaction as the most important ingredient for success. Customer satisfaction measures how well a business meets or exceeds customers’ expectations. For years it was considered the best leading indicator for repurchase intentions. 

But customer satisfaction is only part of the story. 

In fact, customer engagement – which more holistically measures the depth of the relationships between a business and its customers – is a better predictor of loyalty and lifetime value. By actively building, nurturing and managing relationships, business owners extend the opportunity to serve and satisfy their customers.

A study by Gallup, a consultancy, found there was no difference in churn rates between bank customers who were ‘extremely satisfied but not strongly engaged’ and those who were ‘less than extremely satisfied’. In contrast, customers who were both ‘extremely satisfied and strongly engaged’ exhibited a 37% lower churn rate. Engaged customers were over a third more likely to stay with the bank than merely satisfied customers. Gallup found similar results for a major supermarket chain, demonstrating the importance of engagement even in commoditised markets.

High customer satisfaction can lead to loyalty, but without engaging customers at an emotional level, loyalty is not guaranteed. There is a clearer link between loyalty and engagement than satisfaction and all the benefits that come with it: greater returning frequency, higher transaction value and likelihood of recommending your business. In light of this finding, here are our seven tips to engage your customers more fully.

1. Follow Up On Feedback, Complaints or Queries Promptly

Every business is under the pump, but customers are understandably indifferent. They prioritise their concerns and expect you to do the same. Addressing a customer’s queries quickly can make a huge impact on their impression of your business and whether they return to buy again. Create structures that prioritise prompt responses to customers such as appointing an engagement manager (usually a salesperson) for every customer. Treat customer feedback as a valuable resource (not an annoying distraction). Measure it and act on it.

2. Personalise the Sales Experience

One-size-fits-all sales pitches are outdated. Customers expect a personalised experience from simple courtesies, like addressing them by name, to frictionless information flows that mean customers never have to repeat themselves. Listen to and understand your customers’ specific concerns — advise without assuming you know what’s best for them.

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3. Be Honest

Your marketing material creates an expectation in your customer’s minds about the value they will receive for the price they pay. There is nothing worse for building trust than failing to deliver the advertised product features. Give customers no reason to doubt your promises.

4. Admit Mistakes

Mistakes are inevitable — you can minimise, but entirely not avoid them. However, mistakes are great opportunities to, at worst, show vulnerability and, at best, be a hero. The best companies admit when they are wrong and compensate customers appropriately. For example, Uber, the giant ride-sharing company, will typically refund the value of a ride as soon as a customer files a complaint. This shows respect for the customer and fosters trust for future interactions.

5. Reward Loyalty

Rewards can come in many forms – for example, by providing exclusive content, community events or product discounts. You might also consider creating a loyalty program with a tiered reward system. However, with such programs, take care that it does not erode your brand image or encourage ‘false’ loyalty – for example, where customers only return for discounts. To avoid this, focus on true emotional engagement, such as through personalising offers with customisable products, or targeting pain points specific to particular customer segments.

6. Build a Community or Forum

A community allows your customers to engage with each other and with your business. It gives you a platform to answer questions, engage in discussions, post updates, share content, keep an eye on trends and uncover customers’ needs. The community also acts as a valuable source of feedback and helps to make your customers feel heard.

7. Host an Event

Hosting events increases brand awareness and gives existing and potential customers the chance to engage with your community. For example, hosting a panel discussion is a great way for people to share insights, learn from notable speakers and act as a springboard for networking.

Key Takeaways

Customer satisfaction is a minimum requirement to great service and returning patronage. But engaging your customers at an emotional level in an open, honest and sincere manner is critical to developing true customer loyalty, which drives lifetime value. The more your customers trust and respect your product and your brand, the more likely they are to choose you over your competitors consistently.

For more information, our experienced business lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

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How does your business engage with your customers? Let us know your thoughts on LegalVision’s Twitter page.

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Jonathan Ling

Jonathan Ling

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