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Customer Engagement Strategies Deliver Revenue

Posted On: July 10th, 2012 by Jane Hiscock

Most organizations today have shifted or are in the process of shifting from product centric to customer centric.  But our recent interviews with CMOs from more than 25 Fortune 500 companies show that while this is a known requirement, making the shift is not simple.  Take the example shared with us from a large American apparel company – “From the highest levels of our business we know we must put the customer at the center.  In reality this is a massive challenge – for data alone we’ve been collecting it in brand silos for more than 30 years.” 

This isn’t just a massive data challenge.  At IBM’s recent CMO CIO Leadership Exchange,  we dug into the question of how to get to an understanding of each customer at an individual level and then how to build systems of engagement.  Many of the CMOs and CIOs identified the overwhelming hurdles presented by management, culture and incentives as some of the most significant barriers to delivering upon a customer engagement strategy.

When these internal people challenges become overwhelming it is important to consider three points from a study by The Gallup organization which found that:

  • Organizations that optimize for customer engagement outperform their competitors by 26% in gross margin and 85% in sales growth.
  • Engaged customers represent an average 23% premium in share of wallet, profitability, revenue, and relationship growth over the average customer

And if you think it really is too difficult – it will cost you to wait because according to Gallup:

  • Disengaged customers represent a 13% discount in those same measures.

The evidence is clear:  customer engagement not only brings you more revenue and profit; without it you will actually lose ground.  If you consider the fact that your competitors are already focusing on this opportunity, you stand to lose even bigger ground.

Post Comments:

  1. Comment by Ken Scheidle on July 10, 2012

    This is an important point that you make. We’ve had many consultants in espousing the shift to pull strategies, etc. Your blog identifies the reality that all of us face that are in the trenches doing the work. It is a very difficult thing to achieve. The stats from Gallup are very helpful. Thank you

  2. Comment by Margaret Molloy on July 11, 2012

    Jane: Great post, great stats. The proliferation of platforms like social media makes customer engagement no longer optional. Your points about culture and incentives are so critical and often overlooked. The technology is getting better, culture needs to keep pace. At the heart of the issue is a commitment to longterm success versus short term gains. This is tricky given the short tenure of CMOs and the quarterly focus on earnings. I’m optimistic that leading companies are recognize this and that customers will reward them. @MargaretMolloy

  3. Comment by Jane Hiscock on July 11, 2012

    Ken I think you make a very good point that it isn’t enough to discuss strategies without understanding the massive change management that is required. I would be interested to learn more about where you are finding success.

  4. Comment by Jane Hiscock on July 11, 2012

    Margaret -The tenure of CMOs is one worthy of focus in this discussion. While I’m hopeful that the tenure is increasing, as you rightly point out it is difficult to really drive change in the 23 month average that we currently see. The 90 day push to hit earnings is also a very valid point and certainly creates a challenging environment for this type of longer term strategy. Thank you for the post!

  5. Comment by Erica from Business.com on August 10, 2012

    Customer engagement is always important. User experience, for online businesses, is a huge part of that. It isn’t just clever writing and CTAs that create engagement. It’s interesting images/video and an ease of use. We can’t forget about the user experience as a part of our engagement strategies!

  6. Comment by Jane Hiscock on August 10, 2012

    Erica, a very good point on user experience and the need for images, video and ease of use. Great content will be missed if the overall user experience is terrible and certainly most of us are looking for designs that enhance our ability to find, consume and understand content quickly. Thanks for the comment!

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