Reading time: 4 minutes

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One-size-fits-all sales pitches are outdated.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.

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.

How does your business engage with your customers? Let us know on Twitter or LinkedIn


How Franchisors Can Avoid Misleading and Deceptive Conduct

Wednesday 18 May | 11:00 - 11:45am

Ensure your franchise is not accused of misleading and deceptive conduct. Register for our free webinar today.
Register Now

New Kid on the Blockchain: Understanding the Proposed Laws for Crypto, NFT and Blockchain Projects

Wednesday 25 May | 10:00 - 10:45am

If you operate in the crypto space, ensure you understand the Federal Government’s proposed licensing and regulation changes. Register today for our free webinar.
Register Now

How to Expand Your Business Into a Franchise

Thursday 26 May | 11:00 - 11:45am

Drive rapid growth in your business by turning it into a franchise. To learn how, join our free webinar. Register today.
Register Now

Day in Court: What Happens When Your Business Goes to Court

Thursday 2 June | 11:00 - 11:45am

If your business is going to court, then you need to understand the process. Our free webinar will explain.
Register Now

How to Manage a Construction Dispute

Thursday 9 June | 11:00 - 11:45am

Protect your construction firm from disputes. To understand how, join our free webinar.
Register Now

Startup Financing: Venture Debt 101

Thursday 23 June | 11:00 - 11:45am

Learn how venture debt can help take your startup to the next level. Register for our free webinar today.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer