Historically engagement has been elusive and hard to measure. However, there are four outcomes of customer engagement that can be measured in actual dollars:

1. Share of Wallet – Engaged customers buy more products/services, more often
2. Positive Referral – Engaged customers persuade potential customers to switch brands
3. Customer Churn – Engaged customers remain loyal and stay longer
4. Feedback Response – Engaged customers give more feedback, which allows companies the opportunity to address concerns and save potentially lost revenue

Even using conservative numbers, the financial benefits of engagement are substantial. Our research shows that it can be measured, and it is not as difficult as companies think. In fact, we found that improving customer engagement by a small amount, as little as one percent, can have a dramatic impact on financial results. The economics of engagement are real, and they can have a major impact on any business willing to invest the time, energy and resources in a plan of action. While most companies continue to compete on the traditional battlegrounds of price, service and quality, those that capitalize on engagement will create an unbeatable advantage.

Here are few examples of companies who have experienced significant growth in revenues due to their engagement efforts:

Allegiance Customer Case Studies

• Net Promoter Score. Everyone at the luncheon was familiar with Net Promoter and a few used a loose interpretation of it.  However, most everyone acknowledged the limitations that come from only knowing a score without receiving any insights into how to improve that score. The answer seems to come down to the nature of the data collected – are you merely looking to see if they were satisfied with their past experience or do you also have a future focus  by identifying current and anticipated needs. (I felt fortunate to know that enterprise feedback management (EFM) technologies, such as those offered by Allegiance, are available to help VOC leaders address this area of concern.)
• Alignment of the cosmos. Senior executives are starting to focus heavily on current customers and how to increase share of wallet and how to better measure and improve customer loyalty. Some of the luncheon attendees felt it was prompted by the recession while others felt it was the improvement of ROI analysis. All seemed to agree that they had better success gaining political support and funding when tying VOC to business outcomes.
• Balance the good with the bad. Many attendees lamented that VOC professionals focused too much on the negative feedback and to a certain extent, ignored learning how to turn positive customer experiences into phenomenal customer experiences, learning the link between revenues and movement on the customer loyalty scale, soliciting feedback about product innovation, identifying what emotional needs the company/product/service fills and how to strengthen that emotional tie.

Regardless, the VOC luncheon was a great opportunity to hear about some of the issues that are currently top of mind with today’s VOC leaders.

Matthew Bowman, Director of Campaign Marketing, Allegiance

In a new report called the “National Benchmarking/Pulse of America report for Banks and Credit Unions” which was put together by Allegiance, 600 consumers per quarter were asked questions about their “primary” bank or credit union (i.e. the financial institution that they use for everyday purchases) between January-June 2009 (about 1200 responses). What we found was: 

1. Customer/member expectations of banks and credit unions have shifted away from the more traditional roles of industry leader, guardian and protector of customer/member finances. As a result, two items increased in their impact on customer/member engagement: 1) The perception that doing business with one’s bank or credit union saves customers/members time and money, and 2) Feeling trust in the financial advice customers/members get from their bank and credit union.
2. Credit unions continue to have much higher member/customer engagement levels than banks, but the gap is narrowing. Customers’ engagement with their banks stayed about the same with roughly 30% engaged customers from Q1 to Q2. Although credit unions continue to have much higher member/customer engagement than banks, credit unions saw a significant drop in customer engagement from 57% to 49% between January and June 2009. [The 8% drop in credit union engagement is the sharpest drop Allegiance has seen in credit union member engagement since the Allegiance National Benchmarking/Pulse of America survey began in October 2007.] In addition, the percentage of disengaged credit union members rose from 4% to 8%, most likely due to credit unions being forced to raise rates on credit cards and/or introduce variable rates.
3. Engagement levels among older customers have fallen. Engagement stayed roughly the same (rose on average by 5%) for banking and credit union customers/members age 54 and younger. However, customers 55 and older saw a 10% drop on average in engagement. (i.e. The push to engage younger customers through social networking may be leaving older customers/members disengaged. Therefore, banks and credit unions should not and need not abandon the practices that have grown their base of loyal, older customers.)
4. Both banks and credit unions appear to be focusing their customer/member engagement resources on the most profitable demographics. While engagement fell by 8% for customers with incomes of $50,000 or less, engagement rose by 3% for customers with incomes of $50,000-$150,000.
5. Banks and credit unions that had a multi-state and/or international presence experienced a huge 12% drop in customer/member engagement between Q2 2008 and Q2 2009, whereas banks and credit unions that only operated on a local or statewide level saw little change in their customer/member engagement levels during that same period.

To read about these and other findings, download the report  at: http://www.allegiance.com/resources/papers/poa-aug09-report.php

Kimberly Mathie, MarComm Manager, Allegiance