The Missing Links in the Customer Engagement Cycle

customer engagement cycleThe Customer Engagement Cycle plays a central role in many marketing strategies, but it’s not always defined in the same way. Probably the most commonly described stages are Awareness, Consideration, Inquiry, Purchase and Retention. In retail, we often think of the cycle as Awareness, Acquisition, Conversion, Retention. In either case, I think there are a couple of key stages that do not receive enough consideration given their critical ability to drive the cycle.

The missing links are Satisfaction and Referral.

Before discussing these missing links, let’s take a quick second to define the other stages:

Awareness: This is basic branding and positioning of the business. We certainly can’t progress people through the cycle before they’ve even heard of us.

Acquisition: I’ve always thought of this as getting someone into our doors or onto our site. It’s a major step, but it’s not yet profitable.

Conversion: This one is simply defined as making a sales. Woo hoo! It may or may not be a profitable sales on its own, but it’s still a significant stage in the cycle.

Retention: We get them to shop with us again. Excellent! Repeat sales tend to be more profitable and almost certainly have lower marketing costs than first purchases.

Now, let’s get to those Missing Links

In my experience, the key to a strong and active customer engagement cycle is a very satisfying customer experience. And while the Wikipedia article on Customer Engagement doesn’t mention Satisfaction as often as I would like, it does include this key statement: “Satisfaction is simply the foundation, and the minimum requirement, for a continuing relationship with customers.”

In fact, I think the quality of the customer experience is so important that I would actually inject it multiple times into the cycle: Awareness, Acquisition, Satisfaction, Conversion, Satisfaction, Retention, Satisfaction, Referral.

Of course, it’s possible to get through at least some of the stages of the cycle without an excellent customer experience. People will soldier through a bad experience if they want the product bad enough or if there’s an incredible price. But it’s going to be a lot harder to retain that type of customer and if you get a referral, it might not be the type of referral you want.

I wonder if Satisfaction and Referral are often left out of cycle strategies because they are the stages most out of marketers’ control.

A satisfying customer experience is not completely in the marketer’s control. For sure, marketing plays a role. A customer’s satisfaction can be defined as the degree to which her actual experience measures up to her expectations. Our marketing messages are all about expectations, so it’s important that we are compelling without over-hyping the experience. And certainly marketers can influence policy decisions, website designs, etc. to help drive better customer experiences.

In the end, though, the actual in-store or online experience will determine the strength of the customer engagement.

Everyone plays a part in the satisfaction stages. Merchants must ensure advertised product is in stock and well positioned. Store operators must ensure the stores are clean, the product is available on the sales floor and the staff are friendly, enthusiastic and helpful. The e-commerce team must ensure advertised products can be easily found, the site is performing well, product information in complete and useful,  and the products are shipped on time and in good condition.

We also have to ensure our incentives and metrics are supporting a quality customer experience, because the wrong metrics can incent the wrong behavior. For example, if we measure an online search engine marketing campaign by the number of visitors generated or even the total sales generated, we can absolutely end up going down the wrong path. We can buy tons of search terms that by their sheer volume will generate lots of traffic and some degree of increased sales. But if those search terms link to the home page or some other page that is largely irrelevant to the search term, the experience will be likely disappointing for the customer who clicked through.

In fact, I wrote a white paper a few months ago, Online Customer Acquisition: Quality Trumps Quantity, that delved into customer experience by acquisition source for the Top 100 Internet Retailers. We found that those who came via external search engines were among the least satisfied customers of those sites with the least likelihood to purchase and recommend. Not good. These low ratings could largely be attributed to the irrelevance of the landing pages from those search terms.

Satisfaction breeds Referral

Referrals or Recommendations are truly wonderful. As I wrote previously, the World’s Greatest Marketers are our best and most vocal customers. They are more credible than we’ll ever be, and the cost efficiencies of acquisition through referral are significantly better than our traditional methods of awareness and acquisition marketing. In my previously mentioned post, I discussed some ways to help customers along on the referral path. But, of course, customers can be pretty resourceful on their own.

We’ve all seen blog posts, Facebook posts or tweets about bad customer experiences. But plenty of positive public commentary can also be found.  Target’s and Gap’s Facebook walls have lots of customers expressing their love for those brands. Even more powerful are blog posts some customers write about their experiences.  I came across a post yesterday from entitled Tales of Perfection that related two excellent experiences the blogger had with Guitar Center and a burger joint called Arry’s. Both stories are highly compelling and speak to the excellent quality of the employees at each business. Nice!

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Developing a business strategy, not just a marketing strategy, around the customer engagement cycle can be extremely powerful. It requires the entire company to get on board to understand the value of maximizing the customer experience at every touch point with the customer, and it requires a set of incentives and metrics that fully support strengthening the cycle along the way.

What do you think? How do you think about the customer engagement cycle? How important do feel the customer experience is in strengthening the cycle? Or do you think this is all hogwash?


20 Comments

  • By Matt, January 26, 2010 @ 2:44 pm

    I think this is underplayed in your blog…

    “In fact, I think the quality of the customer experience is so important that I would actually inject it multiple times into the cycle: Awareness, Acquisition, Satisfaction, Conversion, Satisfaction, Retention, Satisfaction, Referral.”

    Satisfaction can be the catalyst to advancing customers level on interaction with your brand/website.

    Nice post!

  • By Jennifer, January 26, 2010 @ 2:51 pm

    Customer experience–and specifically usability–is key in strengthening the customer engagement cycle. If the online experience is anything but seamless and intuitive, would-be customers are so busy and frustrated trying to navigate and find products or figure out how the Checkout process works that they can’t become engaged. The reality is that online retailers put up lots of roadblocks in the path to engagement–with lackluster usability being one of the most common missteps.

  • By David Fishman, January 26, 2010 @ 4:15 pm

    Great post Kevin. I think this sentence does a pretty good job of summarizing the post, “In the end, though, the actual in-store or online experience will determine the strength of the customer engagement.” This will in turn drive the cyclical effect that Matt references in his comments.

  • By Becky, January 26, 2010 @ 5:13 pm

    I enjoyed your post, Kevin. It made me thing about the fact that the 4 Ps of marketing leave out satisfaction and referrals as well… Product, price, place, promotion – and I think you hit the nail on the head when you said people focus on these things because they are “within their control” versus satisfaction and referrals are much more difficult to measure and understand.

  • By Rhonda, January 27, 2010 @ 3:53 pm

    Great points, Kevin! Somewhere in the area of Referral and Awareness is the Acquisition Source. Interestingly, certain acquisition sources drive better-matched traffic that is easier to convert, more satisfied, on average, and has greater lifetime value. It’s been my experience that referrals are often a small acquisition source, but they drive some of the best-matched prospects. One way to gauge this “matchedness” is to look at that group’s satisfaction.

  • By Andy (Ansar) Syed, January 28, 2010 @ 11:03 pm

    Kevin, do you have any thoughts on the data to measure the customer satisfaction index? The data needed to measure it might be all over – customer survey responses, social networking posts, referred links etc.

    And also can a customer satisfaction index trend for a company be used to project the stock price. Is not satisfied customers in turn impacts the company’s top and bottom line?

  • By Kevin Ertell, February 2, 2010 @ 2:46 pm

    Hi all, thanks for your comments and sorry for my slow response.

    Matt: I completely agree with you that a satisfying customer experience is the catalyst to advancing customers through the cycle. It’s definitely important to remember that customer experience matters at every step of the process.

    Jennifer: Great points about usability and the amount of roadblocks often put in customers’ way — especially online. I would add that usability and customer experience matter in the physical world as well. A rude or uninformed sales associate can easily kill the engagement cycle.

    David: Totally agree. Marketing can get the engagement cycle started and even help it along the way, but the actual end experience is going to make or break the cycle.

    Becky: Great point about the 4 Ps. Your point complements Matt’s and David’s points well. It takes a team to make it all happen, and we can’t ignore elements that are out of our complete control.

    Rhonda: I completely agree that acquisition sources matter. A credible referral from a friend is absolutely going to put a customer in an accepting frame of mind. A search term click from Google will be much more effective if the customer lands on a relevant page than if she ends up on the home page and has to search again.

    Andy: I’m biased of course, but I found during my time as a client of ForeSee Results that the ACSI methodology is second-to-none as a measure of customer satisfaction and customer experience effectiveness (and certainly my employment has only strengthened that view). It’s accurate, credible, reliable and sensitive to change, and I’ve found it to be absolutely predictive of financial results. The overall American Customer Satisfaction Index has proven to be very predictive of stock price and company results on a macro level.

  • By Dan Croxen-John, February 23, 2010 @ 3:50 pm

    Hi Kevin,

    I enjoyed your post, after being directed to it by a post from Bryan Eisenberg. It may be that we are simply using different terms for the same concept, but there is plenty of research that has found ‘satisfied’ customers do not display higher-than-average levels of retention/loyalty.

    I believe that a more useful concept in evaluating customers’ views on the service they’ve received is that of ‘customer delight’. Satisfaction suggests to me a fulfillment of needs, rather than positive and emotional response to a customer experience.

    Customer satisfaction, in my view, is equivalent to possessing ‘order qualifiers’ or ‘hygiene’ factors. Customer delight is an experience worth of remark – or referral to others – and is commensurate with ‘order winners’.

    If we simply aim for customer satisfaction as retailers we will fail our customers, only ‘customer delight’ can generate referrals, loyal customers and experiences worth sharing on Facebook, Twitter et al.

    That said, I am ‘delighted’ with your blog and will be reading it on a regular basis.

    Best wishes

    Dan Croxen-John
    Applied Web Analytics

  • By Kevin Ertell, March 24, 2010 @ 12:53 pm

    Hi Dan,

    Thanks for your comment, and sorry for my slow response. For some reason, I failed to notice your comment on my blog dashboard and just now saw it.

    I think to some degree what we’re each discussing differs only in semantics. In the end, we’re both talking about the need to deliver quality experiences for our customers as the best way to grow our businesses.

    Unfortunately, the term “customer satisfaction” has been overused to the point that its definition is now fairly muddy. I like to look at it as the degree to which the actual experience matches a customer’s expectations.

    Of course, how you define satisfaction also dictates how you measure it. At ForeSee Results, we have some very strong data that shows our way of measuring customer satisfaction (using the American Customer Satisfaction Index methodology)is absolutely predictive of someone’s likelihood to become more loyal, buy more and recommend.

    All that said, I like the term “customer delight” as well. I think it has some emotional impact that helps us all understand the importance of a quality experience. The better the experiences we provide, the more likely we will be to generate customer retention, loyalty and referral. In the way we measure “satisfaction” I think “delight” would be a very high point on the scale. And the higher the score, the more likely to retention and referral.

    As the Wikipedia article said, “Satisfaction is simply the foundation, and the minimum requirement, for a continuing relationship with customers.” That statement might be even clearer in its opposite form: It is not possible to continue relationships with customers without satisfaction.

    Thanks again for your excellent perspective and for reading and contributing to my blog.

  • By Kaitlin Quinn, December 12, 2014 @ 9:39 am

    Having a strategy involving the customer engagement cycle and the voice of the customer is very important.Great post!

  • By Lisa Bordeaux, June 24, 2015 @ 11:57 am

    For me as a customer, one of the keys pieces of the customer engagement cycle, is relevance. This is especially important online, where I drown in content.

    It might be why product reviews are so valued, and why social as an engagement channel is so challenging.

    For online engagement, I think you need to have interest profiles on people and engage them with meaningful information. Take BlueNile and Twist – BlueNile, shows me wedding rings all the time, but I am not looking for wedding rings. Twist shows me designer collections, which BlueNile has, but I can’t get past the wedding rings…

    The same is true for Sur La Table. Give me recipes for quick meals, and tools to make it easier in the kitchen – and I’ll spend time on your site. My brother used to own Brasa, in Seattle, he would rather contribute recipes, and buy Le Creuset.

    Our customer, Country Outfitters, knew people buy boots once a year, no many how many boot ads they sent them. Conversions were low, opt outs were high. They learned through A/B testing that offering personalized content in non-buying cycles, drove higher AOV and lifetime revenue.

    I don’t know where it goes in the mix… but if it’s really relevant – I will overlook bad service. Most classic example – gas stations…

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