Guided by Feedback: Measuring Customer Engagement

[ILLUSTRATION OMITTED] Customer engagement is one of those seemingly squishy marketing concepts grown out of the social internet phenomena and Web 2.0, which has surprising precision and heft once you spend some time with it. In webland, the client who is engaged interacts with your site often and buys what you have to sell there; he or she may be opinionated and free to offer personal views, blog on the industry you serve, or otherwise spend quality personal time thinking about your company. In this sense, engagement is measured by metrics like click-through rate, duration of visit, and percentage of repeat visits. In broader terms, the engaged customer is a pleased customer. (Although definitions differ on this, the engaged customer, according to Gallup, has an emotional attachment to the brand and generally incorporates it into his or her self concept.) He or she becomes a regular--and possibly an advocate. Net promoter score examined A loud and proud metric in this broader field of engagement analysis is the Net Promoter Score, which was developed by Fred Reichheld, founder of Bain's Loyalty Practice and the NPS Loyalty Forum, a community of practitioners. Reichheld, who spoke at the recent Forrester Financial Services Forum in New York, offered a simple explanation of the score. "What we found was that the Golden Rule applied to business," he said. "'Treat people the way you want to be treated' is not only an ethical way to operate, it can yield a payoff. " Customers who perceive that value in the product was enhanced by fair treatment and good service buy more. When a bank combines NPS information on loyalty with information on customer profitability and other segment data, according to Reichheld, the bank can glean insight about what's working and what isn't, supporting necessary strategic shifts. The score also lets a bank leverage its customer service and retail delivery spend to boost profits. Important to banks Having engaged and loyal customers is important to banks, which face a tough economy and, according to Forrester Research, have received the lowest Customer Advocacy Rankings in the five years that the firm began looking at it. "The subprime mortgage crisis and a sagging stock market has consumers feeling less confident about their financial position," says Bill Doyle, vice-president and principal analyst at Forrester Research. Banks that continue with status quo operations and a product focus will remain on shaky ground. But, as bankers realize, even when the grass was greener and accounts had more green, many consumers were said to view retail banks as typically interchangeable and serving up of commodity fare. Leaders in the field--Wells Fargo and Wachovia come to mind--have gradually reworked operations to better enable awareness of the customer's perspective, in part, admittedly to make their cross-sales campaigns work. Yet, both have pushed to improve service issues via better channel integration, and generally, more consistent customer experiences across the channels. In short, these and other leaders have tried to "be all they can be" for consumers, but loyalty isn't easy to come by. And perhaps this is why there is more attention being paid to measuring non-financial feedback from customers: those who manage to get it right--the process and the loyalty--will have something. "Measuring factors like loyalty, customer engagement, and customer satisfaction is becoming a popular idea," says John McHugh, a New York-based managing partner, Financial Services CRM practice with Accenture. "You're beginning to see more dashboards being developed to, in effect, link customer service insights to other measures," he says. Banks, he explains have long known that happy customers are important to success, but only now is the industry in the first wave of formalizing how this intuitive truth translates into harder measures of success. …