If the goal is to create desire and long-term commitment in customers, the customers must be involved in the experience—not just physically, but emotionally and psychologically.

Why Engaged Customers Equals Competitive Advantage

A recent Economist Intelligence Unit study notes customer engagement is critical yet most companies don't know how to get it.

Over 70% of executives believe that customer engagement is critical to attaining sustainable profits and growth in today's marketplace. However, the overwhelming majority of these executives admit that their own companies fail to garner the necessary level of customer engagement.

Here are a couple of excerpts from the Economist Intelligence Unit study.

Excerpt #1:  In this environment (today's business climate) the enterprise interested in winning, retaining and deepening customer relationships can no longer do so simply by creating a better product or even by holding down costs. For many companies, both strategies are essential simply to stay in the game. Increasingly, executives are finding that the winning differentiator is no longer the product or price, but the level of engagement—the degree to which a company succeeds in creating intimate long-term relationships with the customer or external stakeholder.

Engagement refers to the creation of a deeper, more meaningful connection between the company and the customer, and one that endures over time. Engagement is also seen as a way to create customer interaction and participation.

To make an enduring and meaningful connection, interactions must be engaging and get the customer engaged. The customer needs to be drawn into the experience and get emotionally and psychologically involved.

Excerpt #2:  Most executives (taking part in the study) believe that customer engagement is exceptionally important to their business. Nearly 90% of all respondents say that customer relationships are either very or extremely important to the success of their business. More customer engagement, they believe, would translate into improved customer loyalty (80%), increased revenue (76%) and increased profits (75%). 79% say that engaged customers recommend products and services to others. Engaged customers are also less price-sensitive (55%).

However, highly engaged customers are the exception, not the rule. Of the respondents, 13% believe their customers are very committed to their product, while 44% believe their customers are only somewhat committed.

Trust in the company (or lack of) is the number one reason influencing customer engagement.

Companies, their products, marketing and employees all fall in the bottom third of the 2006 Edelman Trust Scale. Customer engagement is clearly critical to sustainable profits and growth, yet most companies lack the necessary trust to enable customer to become engaged . This state of affairs is both a serious problem and a tremendous opportunity.

Turn the problem into an opportunity

To turn the problem into an opportunity it is essential to distinguish between relationships where the customer is engaged and relationships where the customer is not engaged. The engaged customer is emotionally involved because the circumstance has meaning to them. In contrast, a non-engaged customer has no emotional involvement and enters into transactions with indifference. They want to complete the task with the best trade-off between price and convenience. This indifferent buying personality is inherently not loyal.

Trust becomes a problem in two ways. First, to customers competitive pricing signals what it takes to procure the sale, not value. As a consequence, customers are suspicious of pricing. Second, customers expect a manufacturer and vendor to stand behind products they sell. We call this satisficing trust. It is sufficient trust to purchase a product but, it has little to do with relationship trust or relationship value. As long as satisficing trust prevails, the focus is on price and convenience, not the relationship and the greater value it could deliver.

To shift the focus of the relationship from buying “things” to issues or experiences the customer needs to be instilled with hopeful trust.  Customers become hopeful when they sense that the relationship will help them attain something of meaning. Repeated validation of hopeful trust can lead to leap-of-faith trust which underlies strong relationship value. Customers want to be in trusting relationships. Trusting relationships enable them to pursue meaningful issues and experiences with confidence that the vendor is interested in helping them. The focus of the relationship is on this meaning or value.

Apple Stores put these principles into action. First, all the products on display actually work and customer are encourage to test them out. Second, all stores have a classroom taking up expensive and public real estate. The instructors help customers and potential customers learn how to get computers to do what they want them to do. The Genius Bar is there to provide free assistance to customers who are having trouble with their technology. All of this is aimed at helping customers extract the most value from Apple products. Customers have responded. Apple stores reached $1 billion dollars in sales faster than any retailer in history.

Leap-of-faith trust enables customers to become engaged and therefore gain value. The relationship becomes valued for what it can deliver in the future. This is becomes the glue that leads to commitment, less price sensitivity, high-lifetime value, and advocacy. Customers value and defend these relationships because they simplify an ever changing and increasingly complex world. ___________________________________________________________________________________

The Whetstone Edge invites you to download our latest white paper: Elevate the Dialog: The Pathway to Sustainable Profits, Growth and Customer Equity.

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TELL US YOUR STORY!

We would love to learn about your engaging experiences.  Tell us how a company got you emotionally or psychologically involved in a customer experience. Try to keep your story to 100 words.

We will share the stories in future issues.

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For additional information on the new book by John I. Todor, Ph.D. Addicted Customers: How to Get Them Hooked on Your Company, go to www.AddictedCustomers.com.

This newsletter is brought to you by The Whetstone Edge, LLC (www.TheWhetstoneEdge.com).

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