Conversion vs. Engagement — What drives long-term growth?
By: Smartkarrot Inc.
Tags: Customer Engagement, Customer Lifetime Value, Customer Experience, Personalization, Marketing

The aim of every business marketing campaign is to generate lots of traffic, drive engagement, build brand loyalty and in the end, funnel all of it into successful conversions. However, all campaigns do not work the way as expected, and you may need to make some changes in your strategy to achieve greater results.

Both consumer engagement and conversion are very important elements in business, but it is important to set a primary goal and put a greater emphasis on any one of them. Focusing on a single aspect can sometimes be a difficult task, but it is important to make this choice in order to spend time, resources and effort efficiently.

Improving the conversion rate means getting more revenue and traffic per visitor, but you should remember that it works for a short-term — like an immediate fix. Moreover, the growth rate is linear, meaning that it will be more or less constant unless something else changes drastically. Customer engagement, on the other hand, is a long-term strategy that requires a lot more effort for execution. However, if you want your audience to increase exponentially, focusing on engagement should be the aim. Increasing engagement will eventually lead to more revenue even if you keep a consistent conversion rate. It’s important to take a look at the bigger picture, and not sacrifice active engagement for short-term conversions.

Ways to boost customer engagement:

Improving customer engagement will take time to produce results, but here are a few ways to get started -

1. Creating a seamless experience

Customers never see what’s happening behind the scenes, they only see the brand. They expect every interaction on every platform to be consistent, and in the same tone. By leveraging data and choosing an intuitive engagement platform, brands should create consistent engagement so that customers keep coming back for more. The aim should be to meet customers wherever they are and keep interacting with them.

Source: Customer Portfolios

2. Develop community bond

Finding common ground over bonding with a brand is one of the best ways to keep your customers engaged. Investing wisely on social media and providing relevant content can help position your brand as a leader when it comes to conversations.

Another important point to remember while developing a bond and boosting customer engagement is to ask for feedback. Their opinions and experiences are very helpful information for you to improve your business. Conducting surveys is a good way to understand what customers are thinking about your brand and make room for improvement.

Source: Get Satisfaction

3. Reward repeat buyers

“40% of a company’s business is driven by 8% of visitors: the returning buyers.” (Source)

It is always a wise decision to spend your budget on rewarding repeat buyers instead of giving out discounts to new customers. There are chances that new customers will only shop during a sale and never come back again. By providing referrals and incentives, you can build a solid relationship with your existing customers, thus helping to grow your business.

Source: Yotpo

It is not always necessary that rewards need to be only special coupons or a hefty discount. It could also be providing access to new content beforehand, early access to new products or exclusive deals, especially for loyal customers.

4. Build a personal connection

When a customer thinks of purchasing a product, he/she will always have multiple brand options to choose from. Moreover, if the quality of products/services is similar, the customer is more likely to make a choice that resonates with them on a personal level. And this is the reason why personalization matters so much.

By using tools that help in collecting and aggregating customer data and preferences, you can send targeted and relevant information to your customers that will help build a connection and encourage brand loyalty.

Source: Campaign Monitor

How to calculate customer engagement:

It is important to measure your customer engagement to understand the strength of the brand community. The following metrics can help you determine how engaged your customers are with your brand -

● Purchase frequency — Purchase frequency can be evaluated by dividing the number of orders by the number of unique customers. A higher purchase frequency indicates that your customers are indeed returning and engaging more with your brand. Also, remember in this regard more than the actual frequency of purchase, it is the increase in the frequency that is more important.

● Average order value — A study revealed that “an average customer’s 5th purchase with a particular brand will be 40% larger than the first.” (Source) Customers begin trusting a brand and reciprocate the same by spending more only when they believe that they are being cared for. If you notice an increase in your average order value, it is an indication that customers are indeed developing an emotional connection with your brand, and making the choice to stay loyal.

● Guest checkout rates — This metric is a clear indicator if your customer engagement efforts are working or not. The lower the guest checkout rate, the better it is for your business. It means that more and more consumers are creating accounts to make purchasing from your e-commerce store easier the next time they shop, and willing to be a part of your community. More than 50% of customers come back to a brand after making 3 purchases. (Source)

● Customer lifetime value — Calculating the average customer lifespan, yearly purchase frequency and the average value of your store, Customer Lifetime Value (CLV) is derived that helps understand how much revenue an average customer will provide your business in the lifetime. On average, 1–3 years is the typical customer lifetime for shopping with a particular brand. However, good customer engagement strategies and emotional connection can lead to a higher financial profit over time.

● Churn and retention rates — An obvious way to determine customer engagement is by analysing the churn and retention rates. A lower customer churn rate indicates that your customers are more committed to being engaged with your community. “According to the Harvard Business Review, customers who are fully emotionally connected to a brand are 70% more valuable than those that lack an emotional connection.” (Source)

Customer engagement serves as the pathway to achieving every major business objective that you have. Be it through social media, in-store demonstrations, personalization, push notifications, referrals and incentives or targeted campaigns, engaging with customers is crucial for fostering trust, maintaining a healthy relationship, encouraging better communication and leading to customer loyalty.

It is now easy to keep your customers engaged with SmartKarrot — the world’s first engagement optimization platform. This intuitive platform will allow you to create, monitor, manage and tweak engagement journeys online, via a simple API/SDK integration, eliminating the hassle of coding.

The key platform features include -

● SmartSegmentation — For creating audience segments

● SmartNotifications — For sending the right message through relevant channels

● SmartSurvey — For getting audience feedback

● SmartIncentives — For rolling out customized incentives that count

● SmartAnalytics — For deriving deep insights from your data

● SmartEngagementScore — For understanding how engaging your app is

Get the SmartKarrot advantage for your business today!