Contact Center Solutions Featured Article

Measuring "Customer Engagement" On The Bottom Line

March 26, 2008

Companies today may, in theory, understand that engaged customers lead to higher revenues and profits, but they are probably unable to quantify the impact of customer "engagement" efforts on the bottom line, so it remains a nebulous idea that may or may not be of benefit to the call center. (Who said, "If you can't measure it, you can't manage it?") Allegiance, a provider of enterprise feedback management, has said that it recently developed a simple yet powerful method to help businesses measure the impact of engagement activities on revenue.

A new Allegiance white paper, The Positive Economics of Customer Engagement, provides details that are especially timely as the economy slows and businesses look for ways to retain and grow customers and revenues.
According to the white paper, engagement is the emotional connection or attachment that a customer develops during the repeated and ongoing interactions with a company. Engaged customers demonstrate behaviors such as referring other people, buying more products more often, staying longer in a business relationship, and remaining loyal even when faced with poor customer service or a bad product experience. By measuring the impact of these behaviors, business managers can show how engagement activities increase revenues.
“Engagement is needed more than ever during tough times, because it has a powerful impact on retention, growth and profits,” said Adam Edmunds, Allegiance CEO. “Historically engagement has been elusive and hard to measure. Our research shows that it can be measured, and it is not as difficult as companies think. In fact, we found that improving customer engagement by a small amount, as little as one percent, can have a dramatic impact on financial results.”
The paper identifies four of the top outcomes of customer engagement and shows how to measure them in actual dollars. These include:
1. Share of Wallet – Engaged customers buy more products/services, more often
2. Positive Referral – Engaged customers persuade potential customers to switch brands
3. Customer Churn – Engaged customers remain loyal and stay longer
4. Feedback Response – Engaged customers give more feedback, which allows companies the opportunity to address concerns and save potentially lost revenue
“These measurements work because they are easy to implement by almost any business out there today,” said Kyle LaMalfa, Allegiance best practice manager and engagement expert. “Loyalty and engagement professionals should have absolute confidence that their efforts have a positive impact on their organization, and these measurements help show that reality.”
In the white paper, Allegiance uses a hypothetical business that typifies business in America today — a medium-sized-to-large retail bank. Using survey data from its Pulse of America for Banking survey, Allegiance segments customers into three categories: engaged, disengaged and swing. Swing customers are those with the potential to be engaged or disengaged. This group, representing 56 percent of customers in the survey, is where the highest opportunity exists for companies to increase the number of engaged customers and sell more products.
To download the White Paper, visit
Tracey Schelmetic is Editorial Director for Customer Interaction Solutions magazine, and covers the customer relationship management and call center industries for ContactCenterSolutions. To read more of Tracey’s articles, please visit her columnist page. She also blogs for ContactCenterSolutions here.