Which is the more powerful marketing asset, customer engagement or customer loyalty?
It’s not a question of which is more powerful. Both have power. And both are parts of a greater whole. The extent of their power and the success of their impact will depend on what you wish to accomplish.
By strict and simple definition, customer loyalty comprises transaction-focused interactions driven by some kind of incentive—it’s the act of getting something for doing something. This can be a powerful driver of behavior, a strong indicator of performance, and a solid measure of success. Loyalty typically focuses on immediate, measureable results that can be tracked to a fiscal or behavioral outcome. However, these outcomes do not necessarily correlate with a brand’s ability to recognize its customer base as a marketing asset.
Customer engagement, on the other hand, is the totality of a customer’s experience and relationship with a brand. Engagement is every interaction—every conversation a consumer has with or about your brand, every moment she spends in your store or on your website, every feeling and opinion she has and shares about you, every referral, every complaint…and yes, every transaction.
As such, engagement is harder to manage and more difficult to measure. Yet it creates a completely new marketing task force on your behalf, one that has chosen itself and constitutes your target audience. Engaged consumers become representatives and stewards of your brand. More than that, they reflect aspects of your business personality in a holistic, multidimensional, human way that traditional marketing tactics can’t.
Loyalty: For good measure
Loyalty is a vital part of your customer relationships. Its value lies in its concrete measurement of behaviors that impact your bottom line: how much and how often a customer purchases from you; how long has he been a customer; what is the breadth of his purchase behavior. These behaviors represent a critical aspect of marketing by allowing you to track your successes and challenges. You can measure profits, rank your competitiveness, count transactions, track levels of behavioral involvement, and so on.
Businesses that grew up on a foundation of behavioral loyalty will see the definite, immediate, and clear power of customer loyalty. For some, purchase behavior is the only key to demonstrating successful marketing. But it just one part of your overall customer relationship. A loyalty-focused approach won’t do much to guarantee ongoing customer satisfaction, which is the crux of success for marketers and brand owners.
Engagement: For the long term
Customer engagement is a force to be reckoned with. It is the totality of the experience and relationship that you have with your customer and that your customer has with you. Now, enabled by social media, engagement takes on an entirely new meaning, with both an immediate and far-reaching impact.
If customers have a great experience, they can share it with their network instantly, opening the door to additional prospective customers who may not otherwise be reached. They may end up influencing others to make similar choices and decisions. If customers have a bad experience the same holds true, but the scope is broader and the stakes are higher.
Engagement gives you a heightened awareness of your brand’s overall success in the market, enabled by tools that allow you to listen to what your customers say and want, understand your brand from a customer perspective, track market trends, and gain insights into customer attitudes and behaviors that were impossible to know even five years ago.
Loyalty and engagement: The deliberate balance
Now is an unprecedented time to tap into your customer base to engage, listen, take feedback, and respond. After all, customers are the key to everything: success, failure, demand, product improvement, complete market shifts. Boundaries between businesses and customers are shifting, and the customer/brand relationship is becoming more egalitarian, more conversational, and more human.
Your greatest strength is your customer base. And its cultivation relies on a balance of loyalty and engagement. A loyalty approach allows you to initiate tactics that create immediate customer interactions, and gives you opportunities to measure tactical success. You can continue to drive behavior beyond transactions by building emotional connections with customers that keep them not just satisfied, but faithful in the knowledge that your brand is better, more attentive, and more engaged with and appreciative of them.
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Tom Belle, Gage
Tom Belle is president and CEO of Gage, where he works with clients including 3M, Microsoft, Thomson Reuters, and United Healthcare. Belle has spent nearly his entire career working in marketing and digital agencies. “I’m one of the lucky few who is doing exactly what I’ve always wanted to do,” he says. Prior to Gage, Belle was EVP of Carlson Marketing where he oversaw the company’s entry into retail loyalty practices. He also managed Carlson’s expansion into Asia Pacific and was the relationship and engagement manager for Delta, Hallmark, and IBM. Gage is constantly thinking about work—something that naturally happens when one owns a business. Still, he unwinds by fishing with his grandchildren. “Big catch or small, it’s just terrific being alone with them and gazing at the wonder in their eyes when they reel one in.”
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