In many cases, marketing and sales professionals, executives and leaders are talking about customer engagement when meaning loyalty and vice versa. Often, these terms are mixed up and confused. Although they are strongly connected, because both are essential for a strong, customer centric organization and sustainable development in terms of customers, turnover and decrease of churn, we do talk about different things. In order to understand customer engagement, it is important to see the difference between these two terms.
Loyalty vs. Engagement?
Loyalty is a business term that is typically integrated within the marketing departments and hardly touches other parts of a company. Where companies focus on setting up targeted loyalty programs while incentivizing purchases, we believe that a loyalty program should go beyond transactional rewarding. Loyal customers are brand ambassadors that are able to let your company grow without investing a lot of money into attracting new customers. Loyalty is a mechanism that keeps your customers with you, that lets them spend more with every purchase, enforces customers to become brand promotors and influence other persons in your target audience and attract new customers.
So, loyalty is an essential part of the marketing approach and should involve a wider scope than just transactional rewarding, for example: reward customers for sharing your brand on social media, incentivize customers to contact you via a Video-to-Video channel, give benefits on member-get-member activities and reward customers for subscribing to and reading your newsletters. This all will have a large impact on the decrease of churn rates, increase in average spend and attracting new customers. But to be able to organize this and reward beyond the scope of transaction, a bigger ecosystem and program is required: Customer Engagement.
In contrary to ‘loyalty’, ‘customer engagement’ focuses on a wider scope than the marketing approach to generating loyal customers, the real ambassadors. Customer engagement involves not only marketing, but also sales and service. The cycle of sales, service and marketing is the essential core to develop a seamless customer engagement approach. In customer engagement, we more often talk about the development of a full customer centric ecosystem, rather than setting up a loyalty program. At every possible touchpoint of a customer with an organization, their experience, satisfaction and involvement are at main focus to activate engagement. By adding several, interactive tools to optimize service in a proactive way, it is possible to step-by-step loyalize customers. This is not only possible by giving some points to customers (which is something all companies can do), but by servicing and surprising in all stages of the customer journey. In the most optimal automated flywheel, sales turns into service and service into sales, empowered with the right marketing activities and channels, just by giving the right focus to your customers and applying innovative tools that give the customer the feeling of appreciation, uniqueness, support and being seen or heard.