Marketing is full of jargon and buzzwords, deployed with alarming regularity from boardrooms to breakfast meetings. From bounce rates to personas, conversion rates to cost-per-lead, it can feel like people are speaking a foreign language, quite frankly. Everyone nods along sagely, but the devil’s in the detail. Truly understanding the ins and outs of what you’re talking about is the first step on the road to achieving it. Take customer experience and customer engagement. Does your team know the difference?

The definitions

Forrester has defined 'customer experience' as: “how customers perceive their interactions with your company.” It’s interaction-based and the measure is customer perception.

We define 'customer engagement' as “an on-going, value-driven relationship between a customer and a business, which is consciously motivated according to the customer’s reasons and choices.”

The explanation

In our definition of customer engagement, how a customer perceives their interactions with your brand (customer experience) is important, but it is the flow of experiences that drives engagement. The problem is you can’t manage experiences – how customers feel. But you can manage engagement, and engagement provides a broader context for how to drive value for your brand and your customers.

A customer could spend many minutes happily interacting with a brand through a variety of touchpoints, each experience taking them closer to their end goal. Within one transaction or interaction, a customer may perceive they are satisfied. However, all it takes is one negative experience to damage the memory of the entire experience and the association with the brand, which ultimately leads to a disengaged customer.

Research from Gallup revealed that brands who successfully engage their customers go on to see 63% lower customer attrition, 55% higher share of wallet, and 50% higher productivity. However, Gallup also found that actively disengaged customers present a 13% discount in those same measures.

A common concern among marketers is that by using personal information in a way that customers consider intrusive, they will encourage customers to withdraw. In a survey of UK marketers by The Economist Intelligence Unit (EIU), damaging the brand by making customers feel uncomfortable is considered the greatest risk associated with contextual marketing.

However, speaking to consumers, 1/3 of people will share their personal details if this saves them time in the future, according to Thunderhead’s Engagement 3.0 research report. What’s more, if in the conversation with them you demonstrate that you’re putting that customer information and knowledge to good use, you’re in turn offering them something more relevant or valuable, 83% of customers will feel happier about you.

The point

The perception of customer experience is changing as the full omnichannel customer journey and the broader context of customer engagement are acknowledged. Because the flow of experiences over time is so critical to engagement, understanding the end-to-end customer journey is key, and the source of more value than focusing on separate, individual interactions. The emphasis needs to be on creating value through an on-going conversation with each customer.

At the core of increased ROI is managing customer interactions through the journey lens to drive value, as opposed to looking only at transactional interactions. The growing value from increased advocacy, loyalty, satisfaction, revenue lifetime value, referrals, reduced attrition and costs of service, product and service enhancements, productivity and share of wallet, all
deliver value for the business.

The conclusion

Industry research has proven the link between customer engagement and business value.

To improve customer lifetime value, brands need to think beyond individual interactions and focus on the customer journey.


By Jason Hemingway, chief marketing officer at Thunderhead

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