Customer engagement refers to the emotional connection between a customer and a brand. It indicates how strong the relationship is between the two and is the first step towards customer loyalty.
Great customer service and positive engagement lead to a strong affinity towards the brand. A strong customer engagement strategy integrated into digital marketing and product development creates more fully engaged customers who will advocate for the brand. These types of customers will become your brand ambassadors who will then promote your products while constantly buying them.
In fact, there are distinct characteristics that define a highly engaged customer.
It’s important to know what an engaged customer looks like as customer engagement can take various forms. Engaged customers are:
Some customers display one characteristic while others show multiple – if not all. However, you won’t be able to know if you have engaged customers – or if your target audience is engaged at all – if you don’t have feedback mechanisms in place. Make sure that you incorporate regular surveys, comments sections, feedback boxes, and/or outbound marketing calls to get their input and enhance your customer engagement strategy.
According to Gallup research, a highly engaged customer brings in 23% more revenue than the average customer. Hence a solid customer engagement strategy could impact your revenue while continuing to broaden your base of loyal and devoted customers.
Building your army of loyal, brutally honest, responsive, involved, and price-agnostic customers could also set you apart from the tight competition. E-commerce platforms like Shopify, Big Commerce, Woo Commerce and even Instagram make the marketplace crowded with small businesses. Having a solid customer engagement plan could grow your revenue and business despite close competitors. Such a plan would build an emotional connection to your brand, which would strengthen all your customer acquisition and digital marketing efforts.
In fact, a study conducted by Hall and Partners shows “that up to two-thirds of a brand’s profits may rely on effective consumer engagement.”Furthermore, according to Ray Wang from Constellation Research, “companies who have improved engagement increase cross-sell by 22%, drive up-sell revenue from 13% to 51%, and also increase order sizes from 5% to 85%.”
These studies alone suggest the direct link between strong customer engagement and business growth.
So the next question is… how engaged are your customers?
Here are some helpful metrics to find out whether you are doing enough customer engagement or need to level it up.
Repeat purchase rate (RPR)
This is the percentage of customers who have purchased something in your store more than once over a certain period. This figure speaks volumes about how engaged your customers are – when they go back and buy something again, it means you have strong customer retention. Your customer must love your products to come back for more!
Compute by dividing the number of customers who have made repeat purchases (transacted more than once) by the total number of customers.
Average order value (AOV)
This is how much a customer spends on average. Because repeat customers spend approximately seven times more than one-off purchases, this metric is important in gauging how engaged your customers are.
Calculate AOV by dividing total revenue over the last 365 days by the total number of orders placed in the last 365 days.
Guest checkout rates
This figure refers to how many customers complete a transaction, albeit not creating an account. It’s important to compute for this because account creation is often representative of how likely your customer will return for another purchase.
You can measure this by dividing the number of orders made by a guest by the total number of orders.
Purchase frequency (PF)
PF is how often a customer transacts and comes back to your shop. This figure tells you how long it takes for an average customer to make another transaction with you, hence an indication of strong engagement.
Compute PF by dividing the number of orders over the last 365 days by the number of unique customers over the last 365 days.
Every positive interaction with customers – whether through loyalty programs, responding to tweets, personalized experiences, or highly relevant social media content - is a step towards solid customer engagement and customer relationships. Thus, it is important to understand the importance of a solid customer engagement strategy as well as measuring how engaged your target audience is with your brand.