What is Customer Engagement? Benefits, Strategies, and Examples

What is Customer Engagement? Benefits, Strategies, and Examples

June 5, 2024

High customer engagement is a recipe for strong customer loyalty and steady growth. But it doesn’t happen automatically—it requires executing the right customer engagement strategies, at the right time.

In this piece, we’ll dive deep into what customer engagement is, some of the benefits it brings to businesses, and how to do it right.

What is customer engagement?

Customer engagement encompasses the overall relationship between brand and customer, including emotional connections and perceptions. Strong customer engagement brings a world of benefits to businesses, including better customer retention, brand loyalty, and steady revenue growth. Engaged customers are likely to become repeat buyers and promote your brand through word-of-mouth.

Difference between customer engagement, customer experience, and customer satisfaction

It’s easy to mix up these terms. Let’s walk through the differences between them.

Customer engagement vs customer experience

Think of the customer experience as the overall journey a customer takes with your brand. It includes everything from browsing your website, to interacting with customer service, all the way through to purchase and beyond. It's the big picture, covering all the touchpoints and stages they go through.

Customer engagement, on the other hand, focuses on the quality and depth of those interactions. Was your onboarding demo a presentation or a conversation? Did the customer just open your product update email blast or did they accept an invite for their account manager to walk them through how the update will benefit their integrations? It's about building strong, two-way relationships that encourage customers to view you as a partner and come back again.

Customer engagement vs customer satisfaction

Customer satisfaction is pretty straightforward—how happy are your users? Are your products or services meeting or exceeding customer expectations?

Customer engagement is more nuanced. It reflects the ongoing relationship an individual has with your brand after their first purchase. High customer satisfaction usually leads to strong engagement, but it has to be paired with a strategy and effort. A customer engagement strategy that communicates your brand’s value proposition tailored to your customer helps achieve customer loyalty.

Why should customer engagement matter for your business?

There are several obvious reasons why customer engagement should matter for your business. Happier customers lead to higher satisfaction rates, sales, and customer retention rates.

But there are plenty of lesser-known benefits of strong customer engagement, too. Businesses that prioritize customer engagement gain deeper insights into customer needs and behavior, allowing them to tailor their offerings and communications more effectively. This facilitates a closer alignment between sales and marketing, making both more effective. Moreover, strong customer engagement enhances your brand’s reputation, which leads to customer growth organically.

What are the benefits of improving customer engagement?

Improving customer engagement brings a wealth of benefits to businesses. These include:

Increased customer loyalty

Many customers prefer to stick with brands they know and love, rather than switching to new ones that are unfamiliar. Strong customer engagement is directly correlated to long-term loyalty, even in competitive markets. By consistently engaging customers and personalizing your relationship, customers will choose to continue business with the brand that has invested in getting to know them. A loyal customer base is less price-sensitive and more resistant to outreach from competitors.

Enhanced brand awareness and reputation

In the social media age, brand reputation is everything. Just a few bad online reviews can sink a business, while positive reviews on social media can spread like wildfire. Peers love to read or hear from trusted sources that even when a problem did occur (we aren’t always perfect), the business dedicated personalized effort to ensure the dispute was resolved and left the customer better than before. Solidifying a partnership and two-way relationship promotes strong engagement at all points of the customer journey.

Higher conversion rates

An engaged customer results from a great product with trust-worthy reps who care about their customers. When these reps approach current customers for upselling and cross-selling opportunities, an engaged customer relies on their partnership with the brand to trust in the value-add of the new offering. But an important reminder is to ensure these offers are timely and relevant in order to maintain the customer’s trust.

Lower churn rate

By definition, loyal customers are less likely to churn. Part of a robust engagement strategy is to have a process in place that helps in identifying at-risk customers. Based on this insight, your outreach cadence and content can be tailored to those customers to understand what may be causing an issue, and how your team is dedicated to solving it. Once again, this two-way partnership is what turns customer support into customer engagement, and significantly reduces churn rates.

What are strategies businesses use to improve customer engagement?

Specific customer engagement strategies vary by industry, but there are a few common practices in common. These include:

Personalized experiences

For today’s customers, personalized experiences aren’t seen as a perk—they’re expected. Leveraging customer data from prior interactions can help businesses design tailored experiences that make customers feel valued. Regardless of your current offline touchpoints in the customer journey, there is always a way to add sending a gift to your sequence. Gifting is a powerful way to express that you care.

Loyalty programs

Programs that reward customers for their loyalty are a fantastic way to foster engagement. Some of the most common loyalty programs include exclusive discounts for loyal customers, rewards on specific purchases, and rewards for referrals. Along with helping to bring in new customers, loyalty programs are directly correlated with higher customer lifetime value.

Social media engagement

Engaging with customers on social media is non-negotiable these days. When done well, it can help businesses understand what their customers are thinking and feeling, along with boosting engagement. Respond to comments, share relevant content, and participate in conversations to show you’re engaged with your customer base.

Real-time customer support

As we noted earlier, timely solving negative customer experiences is self-evident of your care for your customers and turns a negative review into a positive. Providing real-time customer support through live chat, social media, and other instant communication channels can go a long way towards keeping customer engagement elevated. People want to feel heard—so keeping the communication lines open is a prime way to do so.

What customer engagement metrics should you keep track of?

The key to designing the right customer engagement strategy is being able to track your effectiveness. A tracking mechanism involves implementing the right key performance indicators (KPIs) to measure success by. Here are some to keep in mind:

Net promoter score (NPS)

NPS is one of the most widely-used customer satisfaction metrics. Its beauty lies in its simplicity—customers are asked a basic question: “On a scale of 0 to 10, how likely are you to recommend our business to a friend or colleague?”

The responses are then classified as:

  • Detractors (0-6)
  • Passives (7-8)
  • Promoters (9-10)

Your NPS score is the percentage of Promoters minus the percentage of Detractors. The higher the score, the more likely your customers will recommend your brand to others in their circle.

Formula: NPS = % Promoters - % Detractors

Customer satisfaction score (CSAT)

CSAT is another widely-used customer engagement metric, but it’s slightly different from NPS. Instead of asking about the business overall, it asks: "How would you rate your overall satisfaction with the [service/product] you received on a scale of 1 (not satisfied) to 5 (very satisfied)?"

This score is a great tool to learn if your product offerings are doing their job of solving your ideal customer’s problems.

To calculate CSAT, divide the total number of customers who are “very satisfied” (5) or “satisfied” (4) by the total number of responses.

Formula: CSAT = (Number of satisfied customers (4 and 5) / Total survey responses) * 100%

Time To First Value (TTFV)

A customer who quickly makes first use of your product is a customer who likes your product and needs your product, and a prime target to keep happy. Quick adopters of your product indicate that your product is positioned well to solve their problems and they are more likely to become a regular user. It’s just as important to keep track of those who are taking longer than expected to onboard and utilize your tools, as they may need additional nurturing to ensure they realize the value of your product and don’t give up before they’ve even tried. With the effort that goes into acquiring a customer, it’s important they adopt the tool and experience its value for the cost of acquisition to pay off.

Formula: TTFV= Date of reaching value point - Date of onboarding

Customer lifetime value (CLV)

Not all customers are created equal. Some contribute much more to a company’s bottom line over their lifetime than others.

Assigning an economic value to a particular customer helps companies develop strategies to target and retain these high-value individuals.

Formula: CLV = Average value of a sale * Number of repeat transactions * Average retention time in months or years

Engagement rate

Calculating engagement rate is especially useful for gauging the effectiveness of online content. Instead of just counting clicks, it measures interactions such as likes, shares, and comments.

Formula: Engagement rate = (Total engagements on a post / Total followers) * 100%

Average purchase frequency (APF)

High CLV customers tend to have a high average purchase frequency. Calculating how often your average customer makes a purchase can help to inform marketing and sales strategies. This will vary significantly by industry—car dealerships shouldn’t expect a high APF, while in ecommerce, it’s critical.

Formula: APF = Total number of orders / Total number of unique customers

Customer churn rate

Marketers know that it’s more expensive to court new customers than keep the ones you have. That’s why it’s so important to measure churn rate, and keep it as low as possible.

Formula: Churn rate = (Number of customers lost during the period / Number of customers at the start of the period) * 100%

Retention rate

Retention rate is essentially the opposite of churn rate. It measures the percentage of customers a company keeps over a given period. High retention rates are a strong indicator of a satisfied and engaged customer base.

Formula: Retention rate = ((Total customers at end of period − New customers during the period) / Total customers at start of period) * 100%

Examples of customer engagement

Turn a negative into a positive

In a perfect world, all your customers would have positive experiences. But that’s not the reality—sometimes, things don’t go as planned.

The good news is this doesn’t have to result in a lost customer. The best companies turn customer complaints into an opportunity to showcase their commitment to making things right. This can be done via a personalized gift, paired with a heartfelt apology. An unexpected gesture like a surprise gift can rebuild trust and turn a disgruntled customer into a brand advocate.

Rewarding referrals

Referrals are a goldmine for acquiring new customers. When a loyal customer refers a new client who converts, acknowledge their contribution with a thoughtful gift. This strengthens their loyalty, incentivizes them to continue spreading the word, and creates a positive association with your brand in the minds of new customers.

Celebrate onboarding completion

The onboarding process is a critical juncture in the customer journey. Mark its successful completion with a celebratory gift. It's a small but impactful way to build a solid foundation for a lasting relationship.

How to build an effective customer engagement strategy

So, you’ve read through these best-in-class customer engagement examples, and want to design a program yourself. Here are some initial steps to follow:

Understand your audience

All companies with top-tier engagement strategies have a sound understanding of their customer base. While you may not have the size of datasets that enterprises maintain, dig into the data you do have. If you have a business and customers, you can always gain insight - which customers are using your product the most frequently, what team within an organization is using your product, what industry are most of your customers a part of, which product offering has the highest amount of users, which product has the least TTFV (time to first value)?.

You don’t have to take this on manually. Data analytics tools can segment your audience and identify trends and patterns in their interactions with your brand automatically. This means less time spent organizing the data and more time strategizing with the data. From a qualitative standpoint, paying attention to what customers are saying on social media platforms and review sites gives an inside look into how customers perceive your brand without blinders on.

Set clear objectives

Increasing customer engagement isn’t a specific enough goal. Instead, focus on setting specific, measurable, achievable, relevant, and time-bound (SMART) goals to focus your efforts and put in place the appropriate KPIs against which you can measure success.

For example, instead of merely aiming to "increase brand awareness," set a goal to "increase social media engagement by 30% within the next quarter."

Leverage the right technology

Creating data-driven customer engagement strategies is easier than ever these days. The right tools, such as customer relationship management (CRM) systems, allow you to maintain detailed records of customer interactions, preferences, and purchases.

But CRM systems are just the start. Engagement platforms can help automate and orchestrate effective marketing campaigns across various channels, while analytics tools can provide valuable insights into customer behavior and campaign performance. It’s a bonus when you find one tool that does both - automate actions and report results - and it works with your current technology. In the offline space, Postal’s platform enables you to gift personalized items in an automated and scaled manner using insights from your current technology to trigger the action. Knowing you need to measure your strategy, it gives you real-time performance reports and syncs back to your other technology tools ensuring the customer profile is up to date with all offline touchpoints. Reach out to talk with us if you want to see the power of our all-in-one engagement platform.

Create engaging content

Part of the reason content marketing is so effective is because it establishes your brand as a thought leader. Customers are inundated with ads on a daily basis—if you can cut through the noise with valuable content, customers will be more likely to visit your website again. Content with value creates trust that the business is an expert, and trust is valuable for a customer-business relationship.

Good content comes in all shapes and sizes. It can include informative blogs, entertaining videos, insightful webinars, and interactive podcasts. The most important thing is to tailor your content strategy to your audience’s interests and your space in the market.

Monitor and adapt

Customer engagement is not a set-and-forget strategy. In order to be effective, it requires ongoing monitoring and adjustments based on your audience’s evolving needs.

Regularly analyze the performance of your engagement activities using the KPIs outlined earlier. Gather customer feedback through surveys, focus groups, and direct interactions to understand their perspectives on your brand and their customer journey. Maybe they express it took too long to get their team up and running using your software. This information helps you adjust who from your customer’s team you should invite to the onboarding meetings next time and how you can avoid future customers from having that problem.

Make sure that the technology you implement can provide you the data needed to calculate these important KPIs - and even better if they have customizable dashboards tailored to generate what you want to see and how you want to see it. Prioritizing this feature in your technology selection will save your team time from having to manually manipulate data to get the metrics you need.

How Postal Can Help With Customer Engagement

Both digital initiatives and offline touchpoints serve a purpose in a successful customer engagement campaign, and the right combination of the two unleashes additional power than when done alone. All of us receive thousands of digital messages per day, and it’s easy for them to fall flat. Tangible gestures like gifts stand out from the crowd.

Postal offers innovative solutions that enhance customer engagement through personalized gifting, automated outreach, and integrated marketing campaigns. Through Postal’s end-to-end platform, businesses can create more meaningful connections with their customers. Whether through direct mail campaigns, special gift deliveries, or unique promotional items, Postal helps personalize customer interactions and enhance overall customer engagement. No matter what your customer base looks like, everyone can appreciate a gift. And we’ve got a gift for just about everyone.

Keely Lords
Keely Lords

Keely Lords is the Brand Manager at Postal, the leading gifting platform for offline engagement that creates memorable moments for organizations to generate leads, increase sales velocity, and retain happy customers. Prior to Postal, Keely was a "jane of all trades" with roles in various industries including accounting and consulting at Deloitte, business operations for a technology start-up, and proposal writing for branded corporate events. She currently lives in Bakersfield (where her family has farmed for over 100 years) with her husband, Austin, and rescue dog, Polly.