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Customer Engagement Report 2010

in association with cScape

Customer Engagement Report 2010 in association with cScape

Econsultancy London

4th Floor, The Corner

91-93 Farringdon Road

London EC1M 3LN

United Kingdom

Telephone:

+44 (0)20 7269 1450

http://econsultancy.com

[email protected]

Econsultancy New York

41 East 11th St., 11th Floor

New York, NY 10003

United States

Telephone:

+1 212 699 3626

All rights reserved. No part of this publication may be

reproduced or transmitted in any form or by any means,

electronic or mechanical, including photocopy, recording

or any information storage and retrieval system, without

prior permission in writing from the publisher.

Copyright © Econsultancy.com Ltd 2009

Published December 2009


All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage

and retrieval system, without prior permission in writing from the publisher. Copyright © Econsultancy.com Ltd 2009

Contents

1. Executive Summary and Highlights ................................ 1

1.1. Key findings .................................................................................. 1

1.1.1. Customer engagement strategy ..................................................................... 1

1.1.2. Tactics, behaviour and attitudes ................................................................... 1

1.1.3. „Enterprise 2.0‟ ............................................................................................... 2

1.1.4. Mobile ............................................................................................................. 2

1.1.5. Mapping and measurement .......................................................................... 3

2. Introduction by cScape (survey sponsor) ........................ 4

3. Introduction by Econsultancy ......................................... 6

4. About Econsultancy ......................................................... 7

5. About cScape .................................................................... 8

6. Methodology and Sample ................................................ 9

6.1. Methodology ................................................................................ 9

6.2. Respondent profiles .................................................................... 9

6.2.1. Annual company turnover ........................................................................... 10

6.2.2. Business sector .............................................................................................. 11

6.2.3. Business focus .............................................................................................. 12

6.2.4. Geography .................................................................................................... 13

7. Findings ......................................................................... 14

7.1. Customer engagement strategy ................................................. 14

7.1.1. Importance of customer engagement to the organisation ......................... 14

7.1.2. Interest in online customer engagement .................................................... 15

7.1.3. Attributes of an engaged customer ............................................................. 19

7.1.4. Success of customer engagement strategy .................................................. 22

7.2. Tactics, behaviour and attitudes ............................................... 23

7.2.1. Tactics for improving customer engagement ............................................. 23

7.2.2. Investment to drive increased customer engagement ............................... 26

7.2.3. Changing behaviour and attitudes .............................................................. 29

7.3. Enterprise 2.0 ............................................................................ 32

7.3.1. Adoption of technology for product development and innovation ........... 32

7.3.2. Adoption of technology for internal (employee) communications ........... 34

7.3.3. Adoption of technology for customer service improvement ..................... 36

7.3.4. Resourcing social media and customer engagement ................................. 37

7.3.5. Innovation in customer engagement .......................................................... 39

7.3.6. Barriers to cultivating customer engagement ........................................... 40

7.4. Mobile ........................................................................................ 43

7.4.1. Investing in the mobile channel .................................................................. 43


All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage

and retrieval system, without prior permission in writing from the publisher. Copyright © Econsultancy.com Ltd 2009

7.4.2. Mobile and customer engagement strategy ................................................ 45

7.4.3. Using mobile marketing to build engagement ........................................... 47

7.4.4. Barriers to a more focused approach to mobile ......................................... 49

7.5. Mapping and measurement ....................................................... 51

7.5.1. Methods of gathering customer intelligence .............................................. 51

7.5.2. Mapping customer experience to gain a single view of the customer ....... 53

7.5.3. Challenges related to measuring and understanding customer engagement .................................................................................................. 55

Customer Engagement Report 2010 in association with cScape Page 1

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information

storage and retrieval system, without prior permission in writing from the publisher. Copyright © Econsultancy.com Ltd 2009

1. Executive Summary and Highlights This is Econsultancy‟s fourth annual Customer Engagement Report carried out in association

with cScape. More than 1,000 companies and agencies took part in the research, which took the

form of an online survey1 in October and November 2009.

The research is useful for those who want to get an overview of customer engagement strategies

and tactics, and the extent to which companies are adapting to changing customer behaviour and

attitudes, and increased use of social media and the mobile channel.

The report features expert commentary from an array of respected industry commentators

including BJ Fogg, Ron Shevlin, Martha Russell and Jim Sterne.

1.1. Key findings

1.1.1. Customer engagement strategy

The proportion of company respondents who regard customer engagement as “essential” for

their organisations has increased to 55%, up from 52% last year and 50% two years ago. The

number of agency respondents who regard this as essential for their clients has jumped

significantly from 43% to 55%.

Almost three-quarters of responding organisations (71%) say that their customer engagement

strategy has been either “very successful” (8%) or “quite successful” (63%). This compares to

28% of companies who say they have been “not very successful” or “unsuccessful”.

Customer engagement is seen as being about creating relationships which result in value both

for customers and for organisations. Company respondents are most likely to indicate that

increasing long-term customer value (37%) and increasing value delivered to the customer

(35%) describe their interest in customer engagement most appropriately.

The biggest area of increased interest since last year is for strengthening emotional

investment in your brand. The percentage of respondents saying their interest in customer

engagement relates to this has jumped from 25% last year to 31%.

Compared to last year, respondents report increased participation in online communities or

support groups (+9%), giving regular feedback (+8%) and participation in innovation and

design (+7%). Marketers are benefiting more from the relationship-building aspects of

customer engagement rather than being exclusively focused on the more directly financial

benefits such as sales.

1.1.2. Tactics, behaviour and attitudes

As was the case last year, email newsletters are the tactic most likely to have resulted in a

tangible improvement to an organisation‟s online customer engagement. Two thirds of

respondents (67%) indicate that regular email bulletins have had a positive effect, down very

slightly from 69% a year ago.

More than half of companies (58%) are still planning to increase their investment in email

newsletters over the course of the next year.

The tactics which have come to the forefront for driving customer engagement are social

networking and Twitter activity. Presence on social networks has almost doubled from 23%

to 44%, while the percentage of respondents saying that micro-blogging (i.e. Twitter) has

tangibly improved customer engagement has, remarkably, gone up five-fold (from 7% to

35%).

1 Econsultancy uses Clicktools for its online surveys




The majority of companies (61%) say that they will increase investment in their social

network presence and 44% will spend more on micro-blogging.

Intolerance of poor customer service is the type of behaviour or attitude that company

respondents are most likely to expect to increase over the next year. Well over half of

respondents (61%) say that they expect people to become less tolerant about poor service, and

this percentage has almost doubled since last year.

1.1.3. „Enterprise 2.0‟

Just over a third of organisations (36%) say they are using social networks and email

newsletters for product development and innovation but only a quarter (25%) of companies

tap into user ratings and feedback. Even fewer (17%) are using discussion forums to feed into

development.

Many companies are also neglecting to share information internally. Very small percentages

of companies are using employee blogging (17%), internal social networking tools (13%),

intranets (10%) or social knowledge sharing (8%) to help drive development and innovation.

Email newsletters and internal social networking are used by around a third of companies

(both 32%) for internal communications.

More than half (55%) of responding companies say there is a specific team or individual

internally to manage social media. Exactly a quarter of companies have commissioned an

agency to use social media for customer engagement.

The increased profile of social media is also reflected by the fact that a third (34%) of

companies have increased their social media budget in the last 12 months.

Organisations who urge their staff to engage with social media are still very much in the

minority. Some 29% say senior staff members are urged to use social media to build

customer dialogue, while a fifth (19%) say this applies to junior staff.

Only 17% have processes and workflows in place to encourage staff use of social media, and

only 13% actually incentivise staff to use social media to engage with customers online.

Lack of resources (budget and time) is still perceived to be the biggest barrier to cultivating

better customer engagement, with 52% saying that this has been an obstacle in the last 12

months. This is exactly the same proportion as last year.

The second biggest problem last year was problems with technology but that is now much less

of an issue, almost halving from 30% last year to 17% now saying this is an issue.

1.1.4. Mobile

A large proportion (41%) of companies are not planning any investment at all in the mobile

channel in 2010, and a further 49% are planning only limited investment. Only 11% are

planning to invest significantly but this increases significantly for the largest companies.

Only a small minority of organisations (6%) say they have a customer engagement strategy

which seamlessly embraces mobile marketing. The majority of companies who are using the

mobile channel at all are using it just for the occasional, ad hoc piece of marketing (18%).

When it comes to building customer engagement, companies have been quickest to use the

mobile channel for increased dialogue with customers. A fifth of company respondents say

they are doing this and a further 36% say they plan to do this.

A third (34%) of companies are planning to create applications for mobile phones, in addition

to the 16% who say they are already doing this.

Nearly two thirds of companies (62%) have no plans for mobile commerce. Only 10% of

companies are using transactional mobile activity to build customer engagement. A further

28% are planning to do this.




Companies who are either using or planning to use mobile as part of their customer lifecycle

marketing, for broader CRM, for user-generated content or location-based marketing are

also in the minority.

Companies generally attribute their inertia when it comes to integrating mobile to a lack of

resources (51%), although there are other widely cited reasons including lack of skills /

experience / understanding and lack of business case.

1.1.5. Mapping and measurement

Web analytics play a pivotal role in gathering intelligence, and over half of companies

surveyed (51%) say this is useful for engaging customers online.

Online customer surveys are thought to be useful by just over a third of companies surveyed

(34%). Customer journey analysis is said to be useful by 30% of companies.

Despite the growing awareness around social media metrics and measurement, only a fifth of

companies (21%) say buzz monitoring is useful for engaging customers online.

Fewer companies say that they are “very advanced” at mapping their customer touch points

than in previous years. Only 3% say that they are very advanced at mapping their customer

touch-points, compared to 6% two years ago. More companies say they are “not very

advanced”; 40% compared to 36% last year and 35% two years ago.

Mapping customer experience across touch points has a tangible impact on the ability to

engage with customers. Of the companies who said their customer engagement strategy has

been successful, 46% say they are “very advanced” or “quite advanced” at mapping their

customer touch-points. For the companies who have not been successful, only 14% are quite

advanced and none are very advanced at this kind of mapping.




2. Introduction by cScape (survey sponsor) Welcome to the 2010 Online Customer Engagement Survey Report. Now in its fourth year, this

annual report has become a regular benchmark for organisations wanting to assess their

customer engagement strategies. With over 1,000 participants the survey continues to be the

largest of its type anywhere in the world. Indeed this year the survey gained the largest number of

non-UK participants in its history.

The number of you who consider customer engagement „essential‟ to your organisation continues

to grow slightly, but what I feel this year‟s survey reveals best is the extent to which the last 12

months have changed how we will do business in the future. In many ways this was to be

expected. The world has just experienced the toughest economic environment since the 1930s and

any company not looking to change the way they operate is likely to be suffering the consequences

already.

But how to change and into what, have been the hardest questions for most organisations.

Predictably the big „winners‟ in this report are social media and micro-blogging tools like Twitter.

These are the technologies that companies see as worthy of increased attention and financial

investment. If 2009 was the year that saw the main-streaming of many of these social

technologies, then 2010 will be the year that social technologies get serious. This will manifest

itself not only in terms of marketing investment, but also in the way they begin to impact the

internal structure and culture of organisations both large and small.

The reorganisation required to take advantage of these social technologies should not be

underestimated. It is worth recognising that the introduction of these tools is unprecedented.

Technologies like fax, email and the telephone had all first established themselves (and their

associated behaviours) within business before making their way into society as a whole. Today we

are seeing the reverse as enterprises struggle to adjust and embrace the pre-established attitudes

and behaviours of customers and employees while trying to bring these social tools „in-house‟.

This year we‟ve added a new section to the report entitled Enterprise 2.0. This touches on issues

of product development and innovation, customer service and employee engagement, all areas of

increasing importance to customer engagement.

If I were to make any recommendations based on the results in this year‟s report it would be that

organisations need to focus on quality, simplicity and customer service in the next 12 months.

These are three key areas that can foster an understanding of value and emotional connection

within the customer.

Since the conception of this survey we have stressed the importance of an emotional connection

as part of engagement and this has never been more important than today. Indeed „strengthening

emotional investment in your brand‟ showed the biggest year on year increase of all the reasons

why organisations are interested in customer engagement.

Underlying much of this year‟s results is an expressed desire to get closer to our customers, to

understand them better and to become a more integral part of their lives. So it is slightly

surprising that the number of companies planning to step into mobile customer engagement is

not larger.

More than any other channel, mobile has the ability to connect emotionally with us. The mobile

phone is omnipresent and highly personal – I spend more time with mine than I do my family.

This poses both challenges and opportunities in equal measure. While 2010 appears to be the year

when many more organisations are preparing to get their toes wet with mobile, it appears most

are waiting for someone else to start swimming. If that‟s you, you‟ll probably have a healthy lead

by the time the others dive in.




What the 4th Annual Online Customer Engagement Report reveals to me is that we find ourselves

firmly placed in an interregnum – a period between the close of one era of business and the

opening of another. This isn‟t something created by the current troubled economy but what our

economic woes have done is focus our attention on the changes happening.

While customer engagement is no panacea for a troubled economy, or changes within the

business environment, what it does offer is grounding – an opportunity to stabilise and reap the

benefits of increased predictability in our customer relationships. As I wrote back in 2006 in the

introduction to the first of these surveys; „customer engagement is the best measure of current

and future performance; an engaged relationship is probably the only guarantee for a return on

your organisation‟s or your clients‟ objectives‟.

There are many interesting observations and insights within this report, probably more than any

previous report we have produced. I really do hope you find it useful and stimulating, and look

forward to any feedback you care to share.

It just remains for me to thank all those who‟ve continued to help make this a successful report.

To all those who took the time to complete this, the longest survey to date, we salute you. Thanks

to Linus and Aliya at Econsultancy – great job guys. To our partners who promoted the survey

around the globe, particularly Bruno. To our report contributors – over 30 experts this year –

thanks for sharing your time and intellect. And finally to my colleagues at cScape: Monica,

Theresa, Sal, Sarah A and Rob.

Richard Sedley

cScape Customer Engagement Director

E: [email protected]

T: @richardsedley




3. Introduction by Econsultancy The importance of customer engagement has become increasingly well understood, and this was

well illustrated recently by the uproar2 which followed the decision by American Airlines to fire a

web designer who sympathised with a disgruntled customer who made some criticisms about the

airline‟s website on a blog.

It‟s good to see customer engagement in the mainstream news, even if it wasn‟t quite for the right

reasons. The employee had admittedly broken a non-disclosure agreement around the airline‟s

internal workings but his employers should have handled the matter a little less clumsily. After

all, the designer was driven by a desire to improve his company‟s website and had given

constructive criticism whilst also defending his company.

Thankfully, many companies are now seeing the bigger picture and are trying to bring about a

cultural shift. More enlightened business leaders are promoting processes and employee

behaviour which reward attempts to engage customers, while also minimising the risk of social

media “fails”.

In the 4th annual Customer Engagement Report, we have tried to understand the extent to which

organisations are moving towards an “enterprise 2.0” environment and focusing on what we

describe as their “social business design”.

A great example of a company which has reaped the rewards of customer engagement is the

online retailer Zappos3, which has 380 people in its customer loyalty department and now gets

75% of its business from repeat customers.

Its employees routinely send hand-written thank you cards and flowers to customers by way of

thanks. Zappos management encourages employees to make decisions and, in stark contrast to a

company like American Airlines, doesn‟t punish them when they show initiative, for example by

interacting on social media sites.

Our research shows that companies which have processes and workflows to use social media to

build customer dialogue, or who urge staff to use sites such as Twitter and Facebook for

interaction, are still very much in the minority. However, we predict that in a year‟s time

significantly more companies will be embracing social media activity, whether for customer

service, internal communications or for product development and innovation.

But while everyone is talking about social media, we shouldn‟t lose site of the fact that customer

engagement is about much more than an employee with a Twitter account or an executive with a

blog.

Crucially, customer engagement needs to be effective and consistent across offline and digital

channels. There are also tremendous opportunities created by mobile, and this is reflected by a

dedicated section on this topic in this year‟s report.

As we‟ve been saying since the first Customer Engagement Report three years ago, it is important

to map customer experiences across different touch points. The research shows that those doing

this are significantly more likely to have successful customer engagement strategies.

Linus Gregoriadis

Research Director, Econsultancy

E: [email protected]

T: @linusgreg

2 http://econsultancy.com/blog/4936-american-airlines-fires-an-employee-for-customer-engagement 3 http://econsultancy.com/blog/4912-q-a-zappos-jane-judd-on-customer-loyalty

http://econsultancy.com/blog/4936-american-airlines-fires-an-employee-for-customer-engagement

http://econsultancy.com/blog/4912-q-a-zappos-jane-judd-on-customer-loyalty




4. About Econsultancy Econsultancy‟s reports, events, online resources and training help an international community of

more than 85,000 digital marketers make better decisions, build business cases, find the best

suppliers, look smart in meetings and accelerate their careers.

Econsultancy, which has offices in London and New York, is an award-winning online publisher

of reports covering best practice, user experience benchmarking, market data, trends and

innovation, and supplier selection. Econsultancy is an invaluable resource for internet

professionals who want practical advice on all aspects of e-business.

Econsultancy also operates a highly popular training division, used by some of the world‟s most

prominent brands for staff education, both in-house and via public courses. Econsultancy

provides training across all areas of digital marketing and at all levels from one-day courses to an

MSc in Digital Marketing.

In addition, Econsultancy hosts more than 100 conferences and events a year, including the

Online Marketing Masterclasses, the annual Future of Digital Marketing conference, the Peer

Summit, Roundtables, Briefings and a range of social events.

Econsultancy also runs the prestigious Innovation Awards where pioneering work carried out in

the world of digital marketing and e-commerce is judged by an international panel of

experts from companies themselves known for innovation.

The Econsultancy.com site now attracts 175,000 unique users per month where they access

research, read the blog and take part in discussions in the forums. And as a portal to the digital

marketing community, Econsultancy members can also link up with other members and digital

suppliers through the directories, as well as find a new job or new digital talent using the job

listings.

Some of Econsultancy‟s members include: Google, Yahoo, Dell, BBC, BT, Shell, Vodafone,

Yell.com, Oxfam, Virgin Atlantic, Barclays, Carphone Warehouse, IPC Media, Deloitte, T-Mobile

and Estée Lauder.

Join Econsultancy today to learn what‟s happening in digital marketing – and what works. Call us

to find out more on +44 (0)20 7269 1450 (London) or +1 212 699 3626 (New York). You can also

contact us online.

http://econsultancy.com

http://econsultancy.com/reports

http://econsultancy.com/reports

http://econsultancy.com/training

http://econsultancy.com/training

http://econsultancy.com/awards

http://econsultancy.com/

http://econsultancy.com/membership_plans

http://econsultancy.com/about/contact

http://econsultancy.com/




5. About cScape cScape is an award-winning, full service digital agency that ranked number 14 in NMA‟s design

and build 2009 top 100 poll. Based in the UK but operating internationally, cScape is part of the

AIM-listed cScape Group Limited which has over 110 staff. We offer digital marketing/customer

engagement campaign strategy, planning, management and training (including social media

governance); graphic design and rich media services including app development and video, and

technical health checks/build (intranet, extranet, website and mobile) for customers such as

Aviva, Sony, Barclays, the British Council, ExxonMobil, Tesco, Carbon Trust and the Chartered

Institute of Personnel and Development.

We practice what we preach in terms of engaging our own clients, many of whom have retained

cScape to help them with their digital marketing for many years. So what made these customers

choose us? The main reason cited is our unique blend of strategic, technical and creative services,

combined with our ability to draw on multi-disciplined engagement experts from around the

globe.

Our Customer Engagement Unit (CEU) counts Dr Dave Chaffey, recognised by the Chartered

Institute of Marketing (CIM) as one of the 50 marketing „gurus‟ worldwide that have shaped

digital marketing, and Richard Sedley, the CIM‟s Course Director for Social Media, as part of its

exceptionally qualified team.

We‟ve won multiple awards for our information architecture, user experience and creative work.

In addition, cScape is technically strong across the board, with particular expertise in Microsoft

SharePoint technologies, holding Gold Partner status with a Microsoft Most Valuable Professional

as our Chief Technical Officer.

We‟ve an exciting programme of events planned for 2010 and hope you will be able to join us. For

more information about these events, cScape‟s CEU and other services contact Theresa Clifford:

[email protected].

Find out more about cScape:

www.cscape.com

www.customer-engagement.net

Follow us on Twitter:

@cscape

@cscapeCEU

Join the debate:

www.customer-engagement-network.com

http://www.cscape.com/

http://www.customer-engagement.net/

http://twitter.com/cscape

http://twitter.com/cscapeceu

http://www.customer-engagement-network.com/




6. Methodology and Sample

6.1. Methodology This is Econsultancy‟s fourth annual Customer Engagement Report carried out in association

with cScape. There were more than 1,000 respondents to our research request, which took the

form of an online survey4 in October and November 2009.

Information about the survey, including the link, was emailed to Econsultancy’s user base and

promoted online via Twitter and other channels. The incentive for taking part was access to a

complimentary copy of this report just before its publication on the Econsultancy website.

Econsultancy and cScape would like to thank those who took the time to complete the

questionnaire. If you have any questions about the research, please email Econsultancy's

Research Director, Linus Gregoriadis ([email protected]).

6.2. Respondent profiles The vast majority of survey respondents work either for in-house teams (i.e. client-side

organisations), or for external agencies (including consultants and technology suppliers). A third

(33%) of respondents work client-side, while just over half (55%) are agency-side.

For the purposes of this report, we have carried out separate analysis for both these groups and

the distinction is abbreviated to „companies‟ (including not-for-profit organisations) and

„agencies‟.

In total, 401 company respondents took part in the survey, compared to 657 agency participants.

Figure 1: Which of the following best describes your job role?

Response: 1198

4 Econsultancy uses Clicktools for its online surveys

mailto:[email protected]




6.2.1. Annual company turnover

Figure 2 shows the range in the size of participating organisations, as defined by company

turnover. Approximately a third of respondents (32%) work for companies with annual revenues

of £10 million or less.

Over half of companies (56%) taking part have a turnover of more than £10 million, and more

than a quarter of respondents (28%) work for companies with a turnover in excess of £150

million.

Agency respondents typically work for smaller organisations. Some 42% of responding agencies

have a turnover below £1 million [Figure 3].

Companies

Figure 2: What is your annual company turnover (revenue)?

Response: 251

Agencies

Figure 3: What is your annual company turnover (revenue)?

Response: 302




6.2.2. Business sector

Respondents are spread across numerous business sectors or verticals, reflecting the universal

importance of customer engagement. The best represented sectors are financial services (16%),

retail (10%), publishing (8%) and travel (7%).

Figure 4: In which business sector is your organisation?

Response: 250




6.2.3. Business focus

The majority of companies in this survey (52%) are B2C-focused businesses, whilst 58% of

agencies have a B2C focus. Just under a third of companies (31%) and around a fifth of agencies

(20%) have a B2B focus.

Companies

Figure 5: What types of business have you focused on in the last 12 months?

Response: 305

Agencies

Figure 6: What types of businesses have your clients focused on in the last 12 months?

Response: 419




6.2.4. Geography

The majority of respondents (71%) in this survey are UK-based, but this is very much a global

survey. Some 9% of respondents are located in North America, and 6% are based in mainland

Europe.

„Other‟ countries or regions represented include Brazil, India, Australia, and south-east Asia.

Half of the agency respondents are based in the UK (51%), with a higher proportion of

respondents (29%) coming from the US, Europe and beyond.

Companies

Figure 7: In which country/region are you (personally) based?

Response: 268

Agencies

Figure 8: In which country/region are you (personally) based?

Response: 305




7. Findings

7.1. Customer engagement strategy

7.1.1. Importance of customer engagement to the organisation

The proportion of company respondents who regard customer engagement as “essential” for their

organisations has increased to 55%, up from 52% last year and 50% two years ago. More striking

is the significant jump (from 43% to 55%) in the number of agency respondents who regard this

as essential for their clients [Figure 10].

Companies

Figure 9: How important is customer engagement to your organisation?

Response: 308

Agencies

Figure 10: Typically, how important do you feel online customer engagement is for your clients?

Response: 421




7.1.2. Interest in online customer engagement

As was the case last year, it is clear that customer engagement is seen as being about creating

relationships which result in value both for customers and for organisations.

Company respondents are most likely to indicate that increasing long-term customer value

(37%) and increasing value delivered to the customer (35%) describe their interest in customer

engagement most appropriately.

The biggest shift since last year [Figure 12] is for strengthening emotional investment in your

brand. The percentage of respondents highlighting this factor has jumped from 25% last year to

31%.

Fewer respondents (18% compared to 21% last year) see reduced acquisition costs as something

which defines their interest in customer engagement. Since the recession took hold, companies

have been much more focused on customer retention, rather than on acquisition.

According to agencies [Figure 13], the most significant factor driving client interest in customer

engagement is gaining customer insight, mentioned by a third (34%) of respondents [Figure 13].

Agencies also report an increased focus (+9%) on strengthening emotional investment [Figure

14].

Supply-side respondents have also seen more interest driven by the increased importance and

power of the customer. The proportion of agency respondents who say this is a primary driver of

interest has increased from 11% last year to 20%.

Companies Figure 11: Which of the following best describe your organisation‟s interest in online customer engagement?5

Response: 306

5 Please note that respondents could check up to three options




Figure 12: Interest in online customer engagement – difference between 2010

and 2009 results

Voice of the expert

“Staying competitive and increasing customer lifetime value should be goals of any organization

worth its salt. One of the best ways to address this is through co-development. Whether that is co-

creation, co-product development, co-working; making customers part of your organization

brings the brand closer to their heart.”

BJ Cook, CEO and co-founder of Digital Operative Inc.




Agencies Figure 13: Which of the following do you think best describes your clients‟ interest in online customer engagement?6

Response: 420

Voice of the expert

“The message is clear; engaging customers around the world is key and it is not just about

translating copy. Campaigns must embrace the social nuance of separate markets. This means

including the use of appropriate channels – for example, vkontakte.ru, smortri.ru, moikrug.ru

and liverjournal.ru instead of Facebook in Russia (currently the world‟s largest user of social

networks) and mobile for geographies like Africa where PC usage is comparatively low. Culturally

tailored, sensitive imagery and rich media, appropriate inter-personal communications and the

right jargon or slang all help as well.

“You may argue that it all takes extra resource (something the survey highlights as an issue) but

just ask yourself if you can really afford not to engage the tremendous buying power of the non-

English speakers who will drive nearly 70% of the world‟s economy in 2010?”

Monica Hart, account director, cScape,





Figure 14: Client interest in online customer engagement - difference between

2010 and 2009 results

Voice of the expert

“Companies need to adapt their structure and count on experts that know the tools and frameworks, but also take into account the real needs of the business across multiple departments. With defined goals, they should work on focused efforts with agencies that also get it, aiming for measurable performance improvement. Secondly, accept that engagement is not achieved overnight. It‟s more like a process; you need to actively monitor and converse with your audience. The insights you get from it lead to a better notion of what should be done to increase the value of your offering. Deliver product enhancement based on real needs and be sure that useful, caring brands create deeper emotional links with their consumers. This leads to long term customer value. As a bonus, when you engage with the cool people that are in the know, your message hits the home run – thanks to the status-phere.

“So hop in and play the game! But always remember, games have rules: maintain a crystal clear reputation, adopt

radical transparency, provide brand utility and engaging content.”

Bruno Ancona Lopes, CEO of Foreplay – a digital engagement agency based in São Paulo, Brazil




7.1.3. Attributes of an engaged customer

As we did for last year‟s Customer Engagement Report, we asked respondents which attributes of

an engaged customer their organisations had benefited from in the past 12 months.

The type of behaviour which is most likely to have helped responding organisations is still the

recommendation of product, service or brand. However, Figure 16 shows that the proportion of

companies who have seen benefits from this has decreased from 58% last year to 42%.

There has been an even bigger drop (from 44% to 23%) in the percentage of customers who say

that engaged customers convert more readily. Similarly, purchased more readily is down 14%

from 36% last year to 22%.

The behaviour which has become more prevalent is around participation in online communities

or support groups (+9%), giving regular feedback (+8%) and participation in innovation and

design (+7%). Recommendation of products, customer conversion and sales of course remain as

important as ever to businesses, but marketers are benefiting more from the relationship-building

aspects of customer engagement rather than the more directly financial benefits.

The recession may have had an impact on the number of customers recommending and buying

products or services, but this trend also reflects a shift in the perception of what customer

engagement is about.

The trends indicated by the agency responses [Figure 18] are broadly similar, although they

haven‟t witnessed the same drop in product or brand recommendation.

Companies

Figure 15: Which of the following attributes of an engaged customer has your organisation benefited from most in the past 12 months?7

Response: 297





Figure 16: Attributes of an engaged customer - difference between 2010 and 2009 results

Agencies

Figure 17: Typically, which of the following attributes of an engaged customer do you feel your clients have benefited from most in the past 12 months?8





Response: 414

Figure 18: Attributes of an engaged customer - difference between 2010 and 2009 results




7.1.4. Success of customer engagement strategy

Encouragingly, almost three-quarters of responding organisations (71%) say that their customer

engagement strategy has been either “very successful” (8%) or “quite successful” (63%).

This compares to 28% of companies who say they have been “not very successful” or

“unsuccessful”.

The supply-side results [Figure 20] tell a similar story. The majority of respondents (61%) say

their clients have been quite successful, which again suggests there is ample room for

improvement.

Companies

Figure 19: How successful has your organisation's customer engagement strategy

(or initiatives) been within the last 12 months?

Response: 305

Agencies

Figure 20: Typically, how successful do you feel your clients' customer

engagement strategies (or initiatives) have been within the last 12 months?

Response: 418




7.2. Tactics, behaviour and attitudes

7.2.1. Tactics for improving customer engagement

As was the case last year, email newsletters are the tactic most likely to have resulted in a

“tangible improvement to their organisation‟s online customer engagement” [Figure 21]. Two

thirds of respondents (67%) indicate that regular email bulletins have had a positive effect, down

very slightly from 69% a year ago.

As we noted last year, well-established industry metrics for email marketing (such as open and

click-through rates) mean that marketers can quantify and appreciate the impact of their efforts

in this area.

In a year when social media sites have rarely been out of the news, it is not surprising that the

tactics which have come to the forefront for driving customer engagement are social networking

and Twitter activity [Figure 22].

After email newsletters, these tactics are now seen as having the biggest impact. Presence on

social networks has almost doubled from 23% to 44%, while the percentage of respondents saying

that micro-blogging (i.e. Twitter) has tangibly improved customer engagement has, remarkably,

gone up five-fold (from 7% to 35%).

Social networking sites have not suddenly appeared in the last 12 months but what has changed in

that time is the appreciation by many businesses that social media activity represents an excellent

opportunity for dialogue with customers and building relationships.

This trend is also evident from the agency results [Figure 24].

The data suggest that focused micro-sites and rich on-page interactive experiences have become

slightly less important for driving customer engagement. This might be because there is more

focus on social media activity on third-party sites.

Companies

Figure 21: Have any of the following resulted in a tangible improvement in your

organisation's online customer engagement?9

Response: 261





Figure 22: Tactics used for driving customer engagement - difference between

2010 and 2009 results

Note: we did not include „rich media advertising‟ in last year‟s survey and hence we have indicated that the

trend data point is not available.

Agencies

Figure 23: Have any of the following resulted in a tangible improvement in your

organisation's online customer engagement?10

Response: 261





Figure 24: Client tactics used for driving customer engagement - difference

between 2010 and 2009 results



Voice of the expert

“Twitter! Video! Online Gaming! So many great new ways to reach out to customers and really engage them! But

what‟s the winner? Which communication method „resulted in a tangible improvement in your organisation‟s

online customer engagement‟? Email. Lowly email. It scored 67%, versus the next highest which was „brand

presence on social networks‟ (44%).

„It‟s only for old people.‟

„It‟s too slow to be effective.‟

„I only use it to communicate legal stuff.‟

Yes, email is still the workhorse of the marketing department.

Why? It works.

“Why? It‟s a real Boy Scout. By that, I mean it‟s trustworthy, loyal, helpful, friendly, courteous, kind, obedient,

cheerful, thrifty, brave, clean and reverent. No really.

“So yes, dive into mobile. Yes, invest in Twitter tracking. Yes, increase your budget for social networking

presence (and advertising). But please, please don‟t forget about that faithful steed in the stable known as email.

She‟s a real workhorse.”

Jim Sterne, Founder, eMetrics Marketing Optimization Summit & Web Analytics Association




7.2.2. Investment to drive increased customer engagement

Figure 25 shows that the emphasis on social media in the context of customer engagement is set

to continue. The majority of companies say that they will increase investment in their social

network presence (61%) and 44% will spend more on micro-blogging.

Figure 26 provides evidence that many more companies than a year ago are gearing up for

investment in social networking and Twitter.

The same chart also shows that there will be less emphasis on micro-sites as we move into 2010.

This may be partly related to a reduced focus on customer acquisition which often involves

campaign micro-sites. Companies are thinking more strategically about how they can build

engagement on their principal web properties rather than tactical landing pages.

Another area where there is evidence of reduced focus is rich on-page interactive experiences and

this may simply be because companies believe that time and effort is better invested elsewhere.

It should be noted that the increased focus on social media is not coming at the expense of email

investment. More than half of companies (58%) are still planning to increase their investment in

email newsletters over the course of the next year.

Many companies are now tying up their email activity with social media, for example by making it

easy for email recipients to share content with their friends and contacts on social networks.

The increased use of behaviourally targeted email does not seem to be coming at the expense of

email newsletters, even though it is becoming harder for companies to get the attention of

customers through generic newsletters.

Marketers are having to make their e-newsletters more relevant by personalising content and, in

some cases, by inserting event-triggered dynamic content.11

Companies

Figure 25: In which areas will you increase investment to drive online customer

engagement over the next 12 months?

Response: 272

11 According to email marketing expert Dave Chaffey, the use of event-triggered dynamic content in e-newsletters is still surprisingly

rare. He comments here on an Econsultancy blog post by James Gurd.

http://econsultancy.com/blog/4958-email-marketing-six-steps-to-improving-customer-engagement-in-2010

http://econsultancy.com/blog/4958-email-marketing-six-steps-to-improving-customer-engagement-in-2010




Figure 26: Areas for increased investment - difference between 2010 and 2009

results



Agencies

Figure 27: In which areas do you expect your clients to increase investment to

drive online customer engagement over the next 12 months?12

Response: 365





Figure 28: Areas for increased client investment - difference between 2010 and

2009 results



Voice of the expert

“Perhaps the most stunning statistic is the percentage of companies that plan to invest in Twitter as a channel for

customer engagement. In 2008, Twitter barely registered with survey participants, with just 7% of companies

realizing improved customer engagement from Twitter. Hence, only 13% planned to invest in Twitter in 2009.

“What a difference a year makes! Twitter has seen massive growth, and more companies are scrambling to make

the micro-blogging channel a key part of their customer engagement efforts. What conclusions can we draw from

this? Well, it‟s apparent that companies are realizing that customers expect engagement to be a two-way

dialogue.”

Andy Beal, CEO of Trackur

Voice of the client

“2009 saw the emergence of a new type of customer service spearheaded by the use of Twitter – „social media

customer service‟.

“UK companies such as ASOS, BT, Carphone Warehouse, Virgin Trains, and EasyJet recognised that customer

service was beginning to move towards a more de-centralised micro-interaction (in the words of David Armano)

paradigm.

“Whether you believe social media has changed the rules of engagement of customer service, or think instead

nothing has changed, everything is still to play for.”

Guy Stephens, Customer Knowledge Manager, The Carphone Warehouse




7.2.3. Changing behaviour and attitudes

Intolerance of poor customer service is the type of behaviour or attitude that company

respondents are most likely to expect to increase over the next year [Figure 29].

Although the equivalent question was phrased slightly differently last year [Figure 30], it is clear

that this has become much more of an issue. Well over half of respondents (61%) say that they

expect people to become less tolerant about poor service, and this percentage has almost doubled

since last year.

We attribute this to two main factors. Firstly, the recession has led to even more competition

between businesses and this means that the desire to retain customers is now burning even more

strongly. Consumers are less tolerant of poor service because they know they can get a better deal

elsewhere if a company is not meeting their requirements.

The second trend is the rise of social media which means that companies are more aware when

there is dissatisfaction about products or services. Whereas disaffected consumers, at worst, used

to tell a few friends about bad experiences, they can now name and shame instantly in full view of

dozens or even hundreds of friends or followers.

As a consequence, many companies have been forced to raise their game, recognising that

provision of an excellent customer experience has never been a better way of marketing a

business.

Desire for simplicity (53%) has also become more important, and this is again attributable to the

recession. People want to focus on the basic things they need or desire.

Almost half of respondents (48%) say there is more desire for real-time interaction, and this is

also related to the increased empowerment that consumers feel because of social media and the

increasingly available access to instant information.

Sensitivity to price is still prominent for companies and agencies but it can be noted that it is no

longer most likely to be front of mind. Compared to a year ago, companies now have a better

understanding of how elastic their pricing is.

Companies

Figure 29: Which of the following types of behaviour and attitudes do you think

will increase in the next 12 months?

Response: 275




2009 results

Figure 30: Which of the following behaviour and attitudes do you expect your

organisation will need to address in the next 12 months?13

Response: 421

Note: we did not ask about „more desire for real-time interaction‟ in last year‟s survey so this is not

included in Figure 30.

Voice of the expert

“During the lifetime of this annual survey (which started in 2006), customer engagement has become an orthodoxy rather than the fresh-faced neologism that forced itself into our post-Web2.0 consciousness. This year‟s survey shows that digital marketers are embracing a full range of tactics and channels to attract and monetise customers. Two thirds of companies have earmarked social networking for increased investment and virtually every tool and technique at the disposal of marketers is earmarked for some form of extra attention in 2010. “In this frenzy of activity, we now risk drowning out the voice of the customer. The customer may be at the heart of our thinking, but one must question whether that‟s a result of care and attention or because they are the bulls-eye, our „target‟. What the customer wants is greater simplicity and they are increasingly becoming more intolerant of poor service. Yet many of the mechanisms we discuss – mail, blogging, creation of Facebook pages, Tweeting – are too often used as things we do „at‟ a customer, rather than with them. We also need to treat the web as a key part of a customer‟s engagement with a brand; it is no longer just a discount-driven order completion channel. “Our new challenge is to reduce the rhetoric of persuasion, promotion and pestering and openly engage in a conversation – not simply appropriate the tools of conversation. Responsiveness, consideration, flexibility, openness and dependability will be some of the hallmarks of this new behaviour, and this will demand a level of self-knowledge as well as a more developed view of the customer.

“If 2009 represented the maturing of social media tools to further our business goals, 2010 will challenge us to

predicate our business on a more rounded view of our customers‟ multi-channel commercial behaviour: the

„customer model‟ will become the business model.”

Ian Jindal, founder and editor in chief of Internet Retailing

13 Please note that respondents could check up to five options




Agencies

Figure 31: Which of the following types of behaviour and attitudes do you think

will increase in the next 12 months?14

Response: 367

2009 results

Figure 32: Which of the following behaviour and attitudes do you expect your

clients will need to address in the next 12 months?

Response: 435

Note: we did not ask about more desire for real-time interaction in last year‟s survey so this is not included

in Figure 32.

14 Please note that respondents could check up to five options




7.3. Enterprise 2.0 This year‟s research covers what we describe as “Enterprise 2.0”, a phrase we use to refer to how

organisations are equipping themselves structurally to embrace social media and customer

engagement in a world where the traditional business paradigm has been disrupted.

Companies increasingly need to think about their “social business design”, and how they organise

themselves to take advantage of unprecedented opportunities for facilitating communication

with, and between, customers and employees.

So we asked companies and agencies whether they were using various types of “Web 2.0”

technology and features to drive the following:

Production development and innovation

Internal communication

Customer service improvement

The aim is to understand more about how companies are taking a more holistic approach to

customer engagement, beyond the use of technology and social media simply for marketing.

7.3.1. Adoption of technology for product development and

innovation

Figure 33 shows the extent to which companies are embracing a range of channels, features and

technologies for product development and innovation.

It can be seen that many organisations are missing an opportunity. Just over a third of

organisations (36%) say they are using social networks and email newsletters for this purpose

but only a quarter (25%) of companies tap into user ratings and feedback. Even fewer (17%) are

using discussion forums to feed into development.

Just as they are failing to tap into customer feedback, many companies are also neglecting to

share information internally. Very small percentages of respondents are using employee blogging

(17%) internal social networking tools (13%), intranets (10%) or social knowledge sharing (8%)

to help drive development and innovation.

Companies

Figure 33: Has your organisation adopted any of the following for product

development and innovation?

Response: 247




Agencies

Figure 34: Have your clients adopted any of the following for product

development and innovation?

Response: 305

Voice of the expert

“The results of the 2010 Customer Engagement Survey recall the words of Monty Python from their movie Monty

Python and the Holy Grail. In the scene where someone is walking through the town crying „bring out your

dead‟,” one man resists: „I‟m not dead yet‟. And neither is email. While growth has been slower this year than

last, email newsletters still reign as the most commonly used agencies and client tool for product

development/innovation, employee communications and customer support improvement.

“What the Wall Street Journal failed to recognise is that the rise of social networks like Twitter and Facebook

strengthens the role of email from both a personal and business perspective. With alternative means of

communicating, email can – and should – be used for the messages that are most appropriate to the channel.”

Ron Shevlin, senior analyst at Aite Group




7.3.2. Adoption of technology for internal (employee)

communications

Although only 10% of companies are using an intranet for product development and innovation,

43% are using this tool for internal communications.

Email newsletters and internal social networking are used by around a third of companies

(32%). These tools can be particularly helpful for larger organisations which are divided up into

numerous departments and physical locations.

The use of instant messaging (20%), social knowledge sharing (17%) and employee blogging

(16%) for internal communications is very limited.

Companies

Figure 35: Has your organisation adopted any of the following for internal

communications?

Response: 247




Agencies

Figure 36: Have your clients adopted any of the following for internal

communications?

Response: 305

Voice of the expert

“This year‟s survey confirms an even more dramatic uptake in Web 2.0 strategies among brands than last year‟s

version and forecasts more of the same to come. Social media – specifically social media optimisation - is an

important technique of search marketing; genuine (and non-commercial) conversations and links created

between real people and brands are the only real way search engines can establish that a website is popular.”

Amanda Davie, cScape CEU member and the founder of Reform, a search business consultancy




7.3.3. Adoption of technology for customer service improvement

As was the case with product development and internal communications, Figure 37 shows that,

apart from using email newsletters (55%) and social networks (36%), most companies are fairly

limited in how they are approaching customer service improvement beyond the traditional routes

which companies have always adopted.

Some organisations are now using Twitter and Facebook for customer service because it is an

excellent vehicle for customers who want to engage in real-time.

The use of social networks for customer service is something that companies have to consider

carefully before adopting because such an approach can backfire unless an organisation is

properly geared up to deliver against expectations. But where a company does this well, it can

spread goodwill and improve brand sentiment.

Companies

Figure 37: Has your organisation adopted any of the following for customer

service improvement?

Response: 247

Agencies

Figure 38: Have your clients adopted any of the following for customer service

improvement?

Response: 305




7.3.4. Resourcing social media and customer engagement

In order to understand how companies are resourcing social media and customer engagement

activity, we asked company respondents whether a number of statements were true [Figure 39].

More than half (55%) of responding companies say there is a specific team or individual

internally to manage social media. Exactly a quarter of companies have commissioned an

agency to use social media for customer engagement.

The increased profile of social media is also reflected by the fact that a third (34%) of companies

have increased their social media budget in the last 12 months.

Organisations who urge their staff to engage with social media are still very much in the minority.

Some 29% say senior staff are urged to use social media to build customer dialogue, while a fifth

(19%) say this applies to junior staff.

These low percentages reflect the trepidation which companies feel about allowing staff to engage

with customers online. There has been plenty of negative publicity about brand representatives

using social media inappropriately, for example Habitat‟s inappropriate use of “hash tags” on

Twitter and the Ryanair employee who called a blogger a liar and an idiot.

Many businesses only see social media in terms of the cost to their business because of time spent

by employees socialising online. The other side of the story (unreported in newspapers) is that

many companies could be missing out on an opportunity to improve customer engagement and

enhance their brand, by empowering employees whilst giving the right guidance.

However, only 17% have processes and workflows in place to encourage staff use of social media,

and only 13% actually incentivise staff to use social media to engage with customers online.

The supply-side data [Figure 40] suggest even more investment in social media, with 44% of

agency respondents saying that clients have increased their budget for this type of activity.

Companies

Figure 39: Which of the following statements are true for your organisation?

Response: 195




Agencies

Figure 40: Which of the following statements are, in your opinion, typically true

for your clients?

Response: 275

Voice of the industry

“The new forms of online social connectedness that we can see facilitated through tools like Twitter have spilled out into the „real world‟ in the form of conferences, Tweetups and other networking soirées. As the old forms of community in western societies were fragmenting and becoming redundant, there were new social networks connecting individuals in physical ways not just virtual. Not surprisingly businesses want, and indeed need, a piece of this action. “A key part of the digital business strategies we develop for our clients, now rests on the integration of face-to-face networking, whether internal (employees/suppliers) or external (brand/customers). The 61% of companies surveyed in this report who intend to increase investment in social networks and 27% and 44% who intend to increase investment in on-site branded communities and micro-blogging respectively, would do well to consider integrating activities beyond online if these investments are to reap maximum reward.”

Richard Sedley, Director of the cScape Customer Engagement Unit




7.3.5. Innovation in customer engagement

Companies were asked how their organisations were innovating in the way they engage with their

customers online.

Integrating more social media channels was a key theme in the response, with many companies

reporting they were either already using Twitter or planning to use it. Many companies are

moving towards a more personalised engagement experience, and social media channels are a key

part of this.

The supply-side perspective was similar although many agencies said their clients did not have

sufficient knowledge or understanding of online channels. Many companies are still trying to get

the basics right while embarking on new social media projects at the same time.

Innovation in customer engagement – company responses

“We will be starting regular staff social media boot camps for key/enthusiastic staff.”

“We are using YouTube heavily to show our customers different applications of our product line.”

“We show Twitter feedback and mentions of us, our brand and content, on our own site to be transparent about

what others are saying about us.”

“We are reviewing our social media policy. Currently we have limited presence but plan to increase that this

year.”

“We send more personal messages via Twitter. E.g. we engage on a one-to-one basis with people that catch our

eye who are mentioning the brand in some way - and we do this publicly. E.g. we might wish someone good luck

if they say they are starting one of our courses or 'hope it goes well' if they mention they're speaking at one of our

events. This goes down very well and feels natural. Just over time, [it] might become resource intensive.”

“Enabling customers to share information they keep with the company with their friends on Facebook and

Twitter.”

Company respondents

Innovation in customer engagement – agency responses

“I think that clients are starting to realise that they need to innovate using social media but that most have yet to

explore the area effectively.”

“Most of our clients are behind in online engagement - they are just catching up with the crowd.”

“Moving towards a warmer, friendlier web environment by putting the faces of the staff on-site to drive calls-to-

action. We've found conversions have increased for warm and cold leads as a result i.e. those looking for pre-

sales information to get them over the line.”

“They [our clients] are finally (slowly) opening their eyes for what customers have already been doing for a while

now. They need to have a social media posture, because whether they like it or not, they're already there. Most

clients are looking for seeding strategies to talk directly to their target audience, but it's still a minority.”

“Many businesses are still trying to get the basics right and are still wary of social media. The areas where I've

experienced most innovation work have been internal communications and intranet projects that want to

facilitate innovation and collaboration through digital communications and social media.”

“They [our clients] are trying to engage customers and also their stakeholders in order to create a blog

community / network for professional focus.”

Agency respondents




7.3.6. Barriers to cultivating customer engagement

Lack of resources (budget and time) is still perceived to be the biggest barrier to cultivating better

customer engagement, with 52% saying that this has been an obstacle in the last 12 months. This

is exactly the same proportion as last year.

Lack of skills, experience or understanding has become a more significant issue than last year,

and is now the second biggest problem. The percentage of respondents saying this is a significant

barrier has increased by 9% to 33% [Figure 42].

The second biggest problem last year was problems with technology but that is now much less of

an issue, almost halving from 30% last year to 17% now saying this is an issue.

The rise of social media has impacted how companies go about improving customer engagement,

and has often changed the focus from technology owned or licensed by companies themselves to

third-party websites.

Additionally, the availability of open application programming interfaces (APIs) means that it is

easier (at least in theory) to integrate technology, for example if a business wants to join up web

analytics data with customer data from a CRM system.

Agencies [Figure 44] point to increased problems faced by clients who have difficulty proving

return on investment or building a business case. Many companies are wrestling with how to get

investment for social media and customer engagement activity. In the same vein, agencies are

now more likely to point to lack of senior management buy-in (also up 7% since last year).

Figure 43 shows that complexity of organisation is a bigger problem for larger companies.

Companies

Figure 41: Which of the following have been the most significant barriers to

cultivating better customer engagement in the last 12 months?15

Response: 249





Figure 42: Barriers - difference between 2010 and 2009 results

Figure 43: Barriers by company turnover

Voice of the expert

“The flip side of brand risk is brand value. A few individuals at every major brand understand

this. In 2009, these individuals learned to navigate the worlds of Facebook, Twitter and online

video. They championed these channels internally, hoping to increase brand value. But the path

forward has often been blocked by organisational fear. That‟s why wager 2009 has been a year of

frustration.”

BJ Fogg, author of book ‘Persuasive Technology: Using Computers to Change What We Think and Do”.




Agencies

Figure 44: Which of the following have been the most significant barriers to

better customer engagement for your clients in the last 12 months?16

Response: 312

Figure 45: Barriers - difference between 2010 and 2009 results





7.4. Mobile

7.4.1. Investing in the mobile channel

The mobile channel has gradually been increasing in importance over the last few years and the

rise of smart phones and increased use of the “mobile internet” has accelerated this. But Figure

46 shows that there is no big step change in terms of investment.

A large proportion (41%) of companies are not planning any investment at all in this channel in

2010, and a further 49% are planning only limited investment. Only 11% are planning to invest

significantly but this increases significantly for the largest companies [Figure 47]. Agency

respondents [Figure 48] report fewer numbers of companies (16%) planning zero investment.

Companies

Figure 46: Do you plan to invest in the mobile channel in 2010?

Response: 251

Figure 47: Mobile investment by company turnover




Agencies

Figure 48: Do your clients plan to invest in the mobile channel in 2010?

Response: 303

Voice of the expert

“With only 11% of companies and 10% of their agencies reporting this year that they intend to invest significantly

in mobile it seems that businesses still believe they have a choice; to deal with this channel either later, or not at

all. The challenge is that their customers are not waiting.

“Recent research showed customers using camera-enabled mobile phones to take photos of a product they were

considering in order to share it with their friends on Facebook. The retailer may not have a mobile strategy but

the customer does and so the engagement opportunity is being missed. Why didn‟t they provide downloadable,

high resolution photos in store via Bluetooth? What about using bar-code scanning data to encourage return

visits? These are not transactional strategies – they are engagement strategies.”

Paul Blunden, CEO of Foviance




7.4.2. Mobile and customer engagement strategy

This research looks at investment in mobile marketing and services specifically in the context of

its use for enhancing customer engagement.

Only a small minority of organisations (6%) say they have a customer engagement strategy which

seamlessly embraces mobile marketing [Figure 49].

The majority of companies who are using the mobile channel at all are using it just for the

occasional, ad hoc piece of marketing (18%).

A mobile strategy needs to embrace many areas which touch upon customer engagement,

including messaging (MMS and SMS), online content provision and commerce. It is therefore not

surprising that many companies are wrestling with their mobile strategy.

Figure 50 shows more take-up of mobile marketing by agency clients.

Companies

Figure 49: How is your organisation using mobile marketing and services to

enhance customer engagement?

Response: 244




Agencies

Figure 50: How are your clients using mobile marketing and services to enhance

customer engagement?

Response: 295

Voice of the expert

“Mobile is a healthy medium, yielding good results for those who know how to use it. But it hasn‟t become

mainstream enough, and as the study shows, there isn‟t a fundamental grasp of how to make mobile marketing

relevant for consumers. If there was, companies and their agencies would show bigger confidence in the medium

and it would take more of a centre stage. As it is, they are taking no more than tentative steps into using this

channel.”

Jay Cooper, Mobile Marketing Strategist




7.4.3. Using mobile marketing to build engagement

We have broken down mobile marketing into separate areas in order to understand in more detail

how companies are using the channel to engage with customers. These areas of mobile are based

on a model used by mobile marketing strategist Jay Cooper17.

It is again clear from the small number of companies who are active across this spectrum of

activity that mobile is at a very embryonic stage in the adoption curve.

Companies have been quickest to use this channel for increased dialogue with customers. A fifth

of company respondents say they are doing this and a further 36% say they plan to do this soon.

A third (34%) of companies are planning to create applications for mobile phones, in addition to

the 16% who say they are already doing this.

Surprisingly, nearly two thirds of companies (62%) have no plans for mobile commerce. Only 10%

of companies are using transactional mobile activity to build customer engagement. A further

28% are planning to do this.

Companies who are either using or planning to use mobile as part of their customer lifecycle

marketing, for broader CRM, for user-generated content or location-based marketing are also in

the minority.

Companies

Figure 51: In what ways are you using mobile marketing to build customer

engagement?

Response: 223

17 http://uk.linkedin.com/in/jaycooperlondon

http://uk.linkedin.com/in/jaycooperlondon




Agencies

Figure 52: In what ways are your clients using mobile marketing to build

customer engagement?

Response: 277




7.4.4. Barriers to a more focused approach to mobile

Figure 53 shows that companies generally attribute their inertia when it comes to integrating

mobile to a lack of resources (51%), although there are other widely cited reasons including lack

of skills / experience / understanding and lack of business case.

Agencies are more likely to point to lack of skills or inexperience [Figure 54]. Companies are still

feeling their way when it comes to mobile and a significant complication is that there are so many

different strands to mobile which require different expertise18.

Figure 53: What is holding you back from a more focused and integrated

approach to mobile marketing?19

Response: 229

18 Econsultancy has produced a Mobile Marketing Buyers Guide, including profiles of 14 leading suppliers of mobile marketing platforms. http://econsultancy.com/reports/mobile-marketing-buyers-guide 19 Please note that respondents could check up to three options

http://econsultancy.com/reports/mobile-marketing-buyers-guide




Agencies

Figure 54: What do you feel is holding your clients back from a more focused and

integrated approach to mobile marketing?20

Response: 300





7.5. Mapping and measurement

7.5.1. Methods of gathering customer intelligence

Figure 55 looks at the various methods used by companies to gather customer intelligence. The

results show that web analytics play a pivotal role in gathering intelligence, as over half of

companies surveyed (51%) say this is useful for engaging customers online.

Online customer surveys are thought to be useful by just over a third of companies surveyed

(34%). Customer journey analysis is said to be useful by 30% of companies.

Despite the growing awareness around social media metrics and measurement, only a fifth of

companies (21%) say buzz monitoring is useful for engaging customers online. However, slightly

more agencies say this is useful (29%), which may indicate that companies are somewhat behind

when it comes to measuring and monitoring social media.

Similarly, 21% of agencies say their clients find monitoring online search practices useful for

engaging customers online, but only 14% of companies concur.

Companies

Figure 55: In the last 12 months which of the following methods of gathering

customer intelligence have you found most useful for engaging your customers

online?21

Response: 247

Voice of the expert

“Customer intelligence is still the lifeblood of business. Market efficiencies exist in finding customers who are

like each other and then helping them discover your brand‟s desired position. When the herd instinct tips the

early and late majorities, market forces can transform a business.

“So, it‟s not surprising that marketers are trying to integrate the concepts of community into the most recent

media newcomer – social media. Many are looking for best practices, so they can get up to speed efficiently. The

leaders - those willing to take some risks to differentiate themselves - are trying new approaches to managing

intentional social media communities, developing quick leverage responses for sudden immersion in accidental

communities and inventing renewal tactics for phantom communities whose vitality has faded.”

Martha Russell, Associate Director of Media X at Stanford University





Agencies

Figure 56: In the last 12 months which of the following methods of gathering

customer intelligence have your clients found most useful for engaging

customers online?

Response: 299

Voice of the expert

“In 2009-10, web analytics is still the number one strategy for gathering customer intelligence online. While it is encouraging indeed to see companies leveraging proven technology, it is similarly discouraging to see both corporate and agencies detailing the same barriers to success we have seen in previous years when it comes to understanding our customers. “All are cited as barriers to success when working to improve customer engagement. While the situation seems to be improving compared to a year ago, none of the challenges appears to be moving towards conclusion, save one – the application of a strategic framework. “In the previous survey, 33% of organisations reported that lack of methodology or framework was a barrier to cultivating better customer engagement. In the latest survey, the figure is dropping, which suggests to me that companies are starting to embrace the idea that it is not the tools but how you use them. The three year trend is even more encouraging – in the 2008 survey over 36% of companies reported a lack of process and methodology as a primary barrier to their success. “The depressing statistic is the growth in the lack senior management buy-in statistic. Until senior management understands the need for a defined strategy towards the measurement and cultivation of customer engagement, companies and their agencies will continue to struggle to effect positive outcomes in the digital channel.

“The opportunity lies somewhere between the 90% or so companies who believe that online customer

engagement is important or essential and the 50% plus of companies reporting a lack of resources to define and

execute engagement strategies. It is, and always has been, people, process and technology in equal measures that

produce results. Determine your strategic framework for customer engagement and I‟m convinced that success

will follow.”

Eric T. Peterson, expert on web analytics, and founder of Web Analytics Demystified.




7.5.2. Mapping customer experience to gain a single view of the

customer

Figure 57 shows that fewer companies say that they are “very advanced” at mapping their

customer touch points than in previous years. Only 3% say that they are very advanced at

mapping their customer touch-points, compared to 6% two years ago. Similarly, more companies

say they are “not very advanced”; 40% compared to 36% last year and 35% two years ago.

This may be because companies are now more aware of their deficiencies in this area. In addition,

more companies are adopting a multichannel approach, which could mean that they have more

customer touch-points to deal with than in previous years. Consequently, mapping customer

experiences to gain a single view of the customer becomes increasingly difficult.

Just under a quarter of companies (24%) say they need to start mapping customer experiences,

compared to 18% last year and 17% two years ago.

Despite its increasing complexity, it is clear that mapping experience does have a very tangible

impact on the ability to engage with customers. Figure 58 shows to what extent companies are

mapping customer experiences, and compares this based on how successful organisations feel

their customer engagement strategy has been in the last year.

Of the companies who said their customer engagement strategy has been “very successful” or

“quite successful”, 46% say they are “very advanced” or “quite advanced” at mapping their

customer touch-points. For the companies who have not been successful, only 14% are quite

advanced and none are very advanced. Almost half of these companies (47%) are “not very

advanced” at mapping and a further 39% “need to start doing this”.

The agency perspective [Figure 59] is similar, although more supply-side respondents (51%

compared to 40% of companies) say their customer are “not very advanced” at mapping

experience.

Companies

Figure 57: How advanced is your organisation at mapping customer experiences

to obtain a single view of the customer?

Response: 249




Figure 58: Mapping customer touch-points by success of customer engagement

strategy

Agencies

Figure 59: Typically, how advanced are your clients at mapping customer

experiences to obtain a single view of the customer?

Response: 301

Voice of the expert

“As we‟ve been saying since the first Customer Engagement Report three years ago, it is important

to map customer experiences across different touchpoints. The research shows that organisations

that are doing this are significantly more likely to have successful customer engagement

strategies.”

Linus Gregoriadis, research director, Econsultancy




7.5.3. Challenges related to measuring and understanding

customer engagement

In an “open” question, respondents were asked what the biggest challenges to measuring and

understanding customer engagement are. The most frequently cited response was around lack of

budget, time and resources.

Related to the lack of resources is senior management buy-in, as budgets for social media and

customer engagement can only increase as decision-makers within the organisations are able to

recognise the value contributed to the business.

However, in these turbulent economic times (and with budgets under additional pressure), it is

becoming even more paramount to understand where return on investment is coming from and

the sources of profitability. There is a greater drive to prove what works - and what doesn‟t - using

hard, tangible metrics.

The internal silos present within many organisations are also preventing some companies from

measuring customer engagement in a holistic way.

A handful of respondents also mentioned the lack of knowledge and specific skills.

Challenges – measuring and understanding customer engagement

“Lack of budget and time, and lack of experience within the organisation.”

“We have very complex multiple customer and service types. Our business areas are fairly siloed. We don't have a

CRM so it is difficult to bring all of the information that we might have in one place.”

“[Challenges are] lack of joined-up practices across the organisation; lack of online marketing knowledge within

the team leading on this; internal rivalry around supporter lists; legacy systems; apathy.”

“[A challenge is] providing evidence and metrics to senior management on how online engagement activities can

have an impact on: credibility, trust, and revenue in offline events and workshops.”

“Lack of tools and time.”

“It's not a major challenge, but we need to take time out from 'doing' customer engagement, which is fun,

dynamic and insightful - and develop a coherent framework for investment, measurement and process. If we

don't work on the strategy and process, it'll be hard to scale a customer engagement model across a growing

organisation.”

“Senior management buy-in and proof of R.O.I.”

“Time and resources make it very hard to get the kind of structures I'd like to have in place.”

“Intelligent use of web analytics continues to drive us forward but longer term growth can only be achieved by

obtaining different forms of data such as customer surveys and getting more regular, formalised feedback from

call centre staff.”

Company respondents




Voice of the expert

“Successful customer engagement isn‟t about purchasing a set of tools or visiting a bunch of websites with strange names. It‟s about transforming the way your organisation – or the sales and marketing department, at the very least – approaches its work.

“Look at this year‟s survey results: across agencies and client organisations, the approach has been to form a

social media team and then underfund them. Why isn‟t customer engagement great? Not enough time or

resources. What‟s stopping it from getting better? Not enough time or resources. It is remarkable how many

forward-looking companies are willing to adopt the hottest new trend, so long as it doesn‟t cost anything or take

time away from more important business. Is it any wonder such flirtations with new technologies fall short of

expectations?”

Pete Mortensen, strategist, Jump Associates

The agency perspective is similar and illustrative verbatim from some of the free-form answers is

given below. A major challenge is defining engagement and understanding what to measure in the

first place. Engagement in itself is undefined on an industry level. However, many companies

define engagement using the metric “time spent on site”.

However, without clear objectives in the first place, it is difficult to measure success. According to

the agencies, some clients still do not have the right processes in place in order to measure

customer engagement.

Some clients struggle with customer engagement as they are looking for short-term „quick wins‟.

However, it is important to understand that customer engagement is a long-term tactic, and

companies need to undertake a more strategic approach.

Understanding the technology is also a problem for many companies. In this space, the

technology rapidly evolves, which can make it difficult for some companies to keep up with the

rapid changes occurring in the market.

Challenges - measuring and understanding customer engagement

“Lack of understanding around the tools to do this.”

“Most of my clients are smaller SMEs. As such they have limited resources - financial + time. They spend much

of their time 'at the coal face' and while they know some basic theory about CRM etc., they lack the real

knowledge to implement something. Some don't even look at their web stats.”

“Over time, the objectives they have for their digital presence have become vague and confused. If you don't have

a clearly stated set of aims, how can you measure success in any way?”

“What to measure [is a challenge]. Engagement is undefined. For online display, we measure engagement as

'time spent interacting'. 3 sec + is an engagement. On a campaign basis, the definition can change, e.g. an install,

a share, video watch, comment made, registration etc. The jury's out…”

“I work with small to mid-size companies which often are overwhelmed by technology and how fast it is moving.

So, understanding and measuring their customer engagements seems insurmountable at times. Although, most

realize it is essential in this market to measure their engagement with your company, most are not doing it

today.”

“Internal skill set, willingness to engage specialist agencies [are challenges]”.

“Being able to track accurately a given customer across the complete touch point journey and determine what

aspect had which impact.”

“They [clients] don‟t see a direct link between the efforts and their usual marketing metrics and they feel it‟s a

long term journey while most of them are looking for instant results and low investment in time and energy.”

Agency respondents

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