Customer Retention

Digital Customer Engagement- 7 Trends to Look Out For

June 25, 2020
1:50 pm

If you think the relationship between you and your customers extends no further than the point of purchase – think again.  The way to a customer’s heart nowadays is digital customer engagement.

The modern customer demands so much more. They expect two-way conversations with brands, keeping them interested and making them want to stick around. And they want all that online where they spend big chunks of their everyday lives.

With a clear understanding of digital customer engagement, and how it will develop in the future, you’ll be able to stay one step ahead of the competition.

What is digital customer engagement?

Digital customer engagement is about using digital tools – think social media, AI, data analysis and beyond – to find, listen, and interact with your customers. Every channel or method you use to connect with customers – from the very first touchpoint to well beyond the point of purchase – relates to digital customer engagement.

The idea is to offer customers something of value above and beyond the usual products and services, forging an emotional connection, and strengthening your relationship with them.  

Is digital customer engagement the same as digital customer experience?

Digital customer engagement and digital customer experience are easily confused. In fact, digital customer engagement gives rise to and improves digital customer experience. So, while intimately related, they’re not quite the same thing.

Engagement could take the form of leaving a Facebook comment, talking to a chatbot, or any other active interaction. Whereas digital customer experience – the perception a customer holds of your brand based on their interactions with it – can be entirely passive. And that’s why, ultimately, customers want active engagement, rather than just an “experience”.

Why does digital customer engagement matter

Competitive Strategy in the Age of the Customer
Forrester “Competitive Strategy in the Age of the Customer”

The balance of power has shifted away from brands in recent years and we now find ourselves firmly in the age of the customer.  

As such, relationships between businesses and their customers have moved far beyond a mere transactional exchange. To establish loyalty, you now need to keep your customers interested – and that means keeping them engaged.  

According to Gallup, when it comes to engagement, there are three distinct types of customers:

  • Fully engaged. These customers are rationally loyal and emotionally attached to your brand. Getting their hands on their favored product is a must – anything else just isn’t good enough. Think of them as brand ambassadors, and your most valuable and profitable customers.
  • Indifferent. These customers are emotionally and rationally neutral. When push comes to shove, they’re not overly bothered either way about your product.
  • Actively disengaged. These customers are emotionally detached from your company. They will switch brands and think nothing of it. And if you make it difficult for them, they could well let people know about it.

The data shows that fully engaged customers buy more and demonstrate more loyalty – regardless of whether the economy is good or not. The connection they feel to your brand means they are willing to give more to it.

In fact, a fully engaged customer represents a 23 percent premium on share of wallet, profitability, revenue, and relationship growth in comparison to the average customer. An actively disengaged customer, on the other hand, represents a 13 percent reduction in those same measures.

7 trends in digital customer engagement

Digital customer engagement is growing and changing rapidly and shows no sign of slowing down. To acquire new customers, and retain the ones you already have, you need to keep up. With that in mind, here are seven hot digital customer engagement trends.

1. Technology is driving a “big data” revolution

Top benefits of data analytics
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The amount of information produced in a digital world is truly staggering. And it wasn’t until recently that the ability to properly collect and analyze that information on a large scale really existed. It’s now much easier for brands to keep customers engaged by developing offerings that resonate with them. In fact, a truly customer-centric vision means that your products are effectively developed by customers via their feedback and preferences.

But it’s not just the complexity. The real-time nature of the customer insights allows companies to be agile, quickly acting to keep up with customer desires and expectations to stay relevant. When businesses segment data effectively, they can better understand context and create tailored messaging. For example, data analysis will make it possible to customize your chatbot’s invitations to engage based on the content a user is browsing on your website.  

Of course, there are security and privacy concerns to be addressed. But, provided customer data is protected, a wealth of rich insights will be available to help power up customer engagement.

2. AR is bringing experiences to life

No matter the vertical, competition these days is stiff. Companies need to seek out ever more efficient tools to attract users. Augmented Reality (AR) has risen to the challenge – significantly increasing the recognition of brands, and engaging customers in an entirely novel way.

The global AR market is growing rapidly – expected to reach about $75 billion by 2023. And, Deloitte research shows that most of the mid-market companies already experiment with AR to improve user experience.

This trend is in large part driven by AR’s ability to help your company:

  • Provide extra product information. Scannable QR codes can provide further information about a number of things – such as the product-making process. This could prove particularly helpful as ethical and sustainability concerns rise.
  • Try before you buy. Ikea's app, for example, allows its customers to check how products would look in situ. They can browse the in-app catalogue, choose the item, then drag it around on screen to see how it fits in the room. Expect more of this type of functionality in future, especially in a post COVID-19 world where showrooms and physical interactions may be impacted long-term.

3. A unified customer view creates a holistic experience

Customers no longer stick to one method of contacting brands – they jump between multiple devices and channels. And, they’re no longer willing to have to go back to square one every time they get in touch with a department in your company (e.g. customer support).

That means the information flow within your organization has become of critical importance. But you don’t have to dig deep to see that isn’t always happening. For example, more than 60 percent of failed customer support calls could have been solved with better access to data.

A single, unified customer view has helped companies address this problem and meet the omnichannel needs of customers. While customers benefit from a consistent experience, companies save on time and resources, collect richer data, and increase upselling opportunities.

As the tech required becomes more commonplace, you will find it easier to keep customers engaged in future. Explore software that offers this unified view facilitating an omnichannel experience.

4. IoT is connecting the world

Back in the day, interactions between brands and customers only happened at the point of sale. As a result, companies had far less insight into customer behavior, which in turn meant that customer engagement was very reactive.

That was until the Internet of Things (IoT) came on the scene establishing connections between things, people, and processes that had once been completely siloed. For example, now you can have multiple devices at home or on your person that “talk” to each other, like smartbands and tablets, gathering, analyzing, and exchanging information.

With a web of interconnected devices backed by strong data analytics, an entire new world has opened up. In fact, with Business Insider projecting that there will be more than 41 billion IoT devices by 2027, up from about 8 billion in 2019, the possibilities for customer engagement seem almost endless.

Disney World is already taking full advantage of this tech with a device called the MagicBand. The wristband communicates with thousands of sensors across the park in real time. The system then knows what customers are doing, and what they might need. The bands can even be used as hotel keys and credit cards.

So, consider whether IoT can be used in your niche as well.

5. Social media builds brand personalities and customer communities

Social media trends
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Social media has provided companies with a platform that taps into two of the most deep-seated aspects of our humanity – community and storytelling. Communication has gone from “one-to-many” to “many-to-many” as companies sew the seeds for brand-based conversations among their customers.

Social media has also allowed brands to forge their own personality for customers to connect with.

This engagement is increasingly translating into hard numbers. Mary Meeker’s 2018 Internet Trends Report showed the rising influence that social sharing and discovery is having on ecommerce, especially within the 18-34 age group.

Companies have proved adept at using social media to their advantage. Home furnishings provider Wayfair, for example, lets customers showcase how their purchases look in their home using the hashtag #WayfairAtHome. Links to the featured products are provided to enable others to buy them, cleverly bringing together customer product recommendations and design inspiration.

Instagram post shared by @wayfair as an example of digital customer engagement
Image source

How digital customer engagement through social media develops in future will be largely determined by the new functionality that is made available.

6. AI automation tools keep conversations alive

We live in an “always-on” world. As such, customers want to pick the time and place they engage with brands – and they expect a quick response, too. In fact, according to McKinsey, three-quarters of online customers expect “now” service within 5 minutes of making contact online and almost two-thirds of buyers expect a response within 10 minutes to any marketing, sales, or customer service inquiry.

Human labor alone wouldn’t be able to deliver services this fast, since the cost and lack of resources are simply too prohibitive. Fortunately, AI has stepped into the breach. Two applications in particular have revolutionized customer engagement by automating processes:

  • Chatbots. In recent years, they have taken customer service by storm – conversational bot software can answer up to 80 percent of common enquiries and the global chatbot market is predicted to reach $1.23 billion by the year 2025. But, as machine learning and NLP tech improves, chatbots – many of which are essentially decision trees right now – will become more and more effective at simulating human interactions.
  • Voice assistants. These AI-enabled personal assistants are gaining ground. In 2019, eMarketer estimated that 111.8 million people in the US were using a voice assistant at least monthly – a 9.5 percent rise from 2016. Voice assistants can understand and respond to complex conversations, make recommendations for items or places, and even remind users of events. One particularly famous example is Amazon’s Alexa.

So, if you want to take a stab at automation, start with your customer service processes. A chatbot can answer common queries from your customers in seconds, and also offer instant recommendations.

7. Interactions are getting more and more personalized

In the age of the consumer, the mass-audience view of old is done. Communication and customer engagement has become more individualized. Indeed, 79 percent of consumers say they are only likely to engage with an offer from a brand if it has been personalized to reflect their previous interactions.

Thanks to the enormous strides forward that have been made in big data and communication tools, the parts are now in place to start delivering extensive personalization. Amazon and Netflix are the most high-profile examples of this with their recommendation engines.

But personalization has the potential to power any form of engagement – from creating personalized loyalty coupons featuring favored products, to rendering website content based on individual interests. It isn’t too far-fetched to imagine a future in which every single customer has an entirely unique relationship with a brand.

How can you best harness these trends for your business?

So what does all this mean to you as a business? Well, to make sure you capitalize on these trends and get digital customer engagement right, remember to follow these best practices:

  • Be conversational. Make sure you get a two-way dialogue going with your customers, encourage sharing, reactions, and comments.
  • Be omnichannel. Adopt a unified customer view and be there for your customers – whenever, wherever – to pick up where your previous conversations left off.
  • Be personal. Use data to create unique experiences and show customers that your company “remembers” the previous interactions you’ve had with them.
  • Be real time. Train your team to respond quickly and use automation where needed to make sure you never leave your customers hanging.
  • Be tech-savvy. Choose the best tools to gather and analyze data and communicate with your customers.

Seize the opportunity

Digital customer engagement has come a long way in recent years. But, in the eyes of consumers, companies could still do more – 54 percent of customers think companies need to fundamentally transform the way they engage with them. Doing this will involve using cutting-edge tech to employ the latest strategies. So, if you want to build for success into the future, keep an eye on the trends and, most of all, engage in them.