Okay, folks, we have a new guest speaker today (or guest poster if you want to be literal). Welcome Shampa Bagchi, CTO of ConvergeHub. I've known Shampa for about three years - since ConvergeHub (then called Converge Enterprise) was a contestant in CRM Idol. She and her co-founder and husband Manash Chaudhuri have built a very good small business focused CRM/customer engagement platform. I've stayed in touch, even done a little bit of consulting with them, but mostly have been able to watch their platform evolve to something worth considering.
In the course of my discussions with them, I found out something else. Shampa not only was able to build a really good product, but also can write and has some seriously well-evolved ideas on how a small business can be engaging. We hear it a lot for the enterprise, but not as much for the small business - yet the customer dealing with the enterprise in one way, might be the same person trying to engage with a small business in some other fashion.
As a result I asked Shampa to write something for me on this very subject: How should a small business think about customer engagement? Her response is right here, right now.
Take it away, Shampa!
As a little girl I used to go grocery shopping with my grandfather whenever I visited him during my summer breaks. It was a sleepy little village-town with only a couple of stores. I still remember the owner of the tiny grocery store. He had a cheerful smile, asked me about my studies, and always gave me a candy treat. There was a bigger fancier store nearby, but guess which one my grandfather went to? Yes, the 6-year old me made sure of that.
More decades have passed since then than I care to think about, but I haven't forgotten that friendly store owner who cared enough to remember which flavor of lollipop his little customer liked.
In today's brave new world of shiny technology, sleek marketing and up-to-the-second analytics, if businesses could just capture the magic of that small store owner who treated his customers the way they wanted to be treated and could make all his customers feel special regardless of their size, they could win over any customer and retain them effortlessly.
I think it is this magic -- the intangible feeling you get when someone has anticipated your needs and provided for it, when they didn't really have to but cared enough to do it anyway --that forms the essence of 'Customer Engagement'. Once a business is able to form that emotional connection with a customer, the relationship is transformed from being a 'business-to-customer relationship' to being a 'human-to-human relationship'. To me, that is the holy grail of Customer Engagement for any business, big or small.
What is Customer Engagement?
We are living in exciting times when the very nature of business is undergoing a paradigm shift due to the empowerment of the Customer.
This revolution in customer empowerment is largely fueled by the advances in technology in the last decade, which have caused a major shift in the balance of power between the Buyer and the Seller, or the Service Provider and the Service Consumer. We have gone from the days where a business had complete control over the customer, mainly due to lack of information on part of the customer (anyone remember the car buying experience in the pre-digital age?) to today, where a single negative tweet or Facebook post from a dissatisfied customer has the power to reverberate around the world and bring about a PR disaster for a business, a disaster from which the business may have to spend years and millions of dollars to recover.
In this shifting landscape, businesses are increasingly embracing the concept of Customer Engagement and building processes and strategies to engage the empowered customer at every stage in the customer journey.
Gallup defines Customer Engagement as the emotional connection between your customers and your company.
Another definition of Customer Engagement is the attracting and influencing of customers and potential customers in order to hold their attention and encourage them to participate in a long term relationship.
What this says is that simply knowing your customers and potential customers or even "satisfying" them at some level is no longer enough. Companies must now provide exceptional experience at every stage of the customer's or potential customer's journey, beginning from brand Awareness when the potential customer hears about the brand for the first time, moving on to creating Intention, then Desire, which culminates into Action when a potential customer becomes a customer, and then ideally Advocacy, when customers love the brand and tell others about it.
This means that a customer's "engagement" with a company can be defined as the sum of all interactions that the he or she had across all customer-facing touchpoints of the company. This could be as simple and anonymous as a website visit, or little less anonymous like a newsletter subscription, or more involved like a customer support phone call, or even as involved as an in-person visit. A customer's experience encompasses Sales, Marketing and Service departments, and can involve any customer-facing product, process or personnel of a company. So, in order to offer an engaging experience to a customer, a company should be able to cut across inconsistent departmental views and present a consistent 'face' across all customer-facing departments and channels.
Attributes of Customer Engagement
A customer's "engagement" with a company can be defined as the sum of all interactions that the he or she had across all customer-facing touchpoints of the company. This could be as simple and anonymous as a website visit, or little less anonymous like a newsletter subscription, or more involved like a customer support phone call, or even as involved as an in-person visit.
A customer's experience encompasses Sales, Marketing and Service departments, and can involve any customer-facing product, process or personnel of a company. So, in order to offer an engaging experience to a customer, a company should be able to cut across inconsistent departmental views and present a consistent 'face' across all customer-facing departments and channels.
The key element of Customer Engagement in today's environment is the emotional connection. It is the ability of any customer-facing employee of a company to pay attention to the emotional context of any customer interaction. Customer-facing employees should not only focus on a customer or potential customer's expressed requirements, but should also pay attention his or her implied needs.
It requires businesses to look at every customer touchpoint from a 'relationship focus', which is very different from the 'transactional focus' through which businesses traditionally view customer touchpoints.
Gartner has highlighted the four key attributes of Customer Engagement as:
- Active Customer Engagement Through Social, Mobile and Traditional Channel Alignment
- Emotional Customer Engagement Through Transparency and Trust
- Rational Customer Engagement Through Greater Customer Participation and Knowledge Availability
- Ethical Customer Engagement Through Demonstrated Commitment to Fairness With Employees, Partners, Customers and Community
[Gartner, The Four Attributes of Customer Engagement.]
What stands out here is the common theme of encouraging customers to have higher levels of interaction with the business, making all information available for the customer, opening up all channels for the customer to interact on and allowing the customer to choose the channel that he or she is comfortable with, and in general creating an open, honest and trustworthy environment for everyone.
This is in direct contrast to how businesses would traditionally operate where minimizing customer interactions and cost cutting were the main focus, information was given out on as-needed basis, and ethics was certainly not a priority.
The main challenge here is the shift from transactional-based contact to a relationship-based contact and from a tactical approach to a strategic approach. In a tactical approach, businesses seek to solve, or at least respond to, the immediate problem that the customer is facing, at the lowest possible cost to handle the interaction. Cost reduction is the main goal, while trying not to deteriorate the level of customer satisfaction. A strategic approach, on the other hand, aims not only to solve the immediate problem, but also understand the context of the interaction and address any underlying issue.
For example, let's take a scenario where a customer calls complaining that a product he purchased is not working and it turns out that he just didn't know how to use that feature. In the traditional transaction-based approach, the customer service rep would only stay on the call long enough to prove that the product is working.
In a relationship-based approach, however, the agent would identify that the underlying issue is that the customer was not able to figure out how to use the product. As a result of analyzing the context, the agent could take various actions including a) schedule a quick demo or training for the customer b) noting that the user manual may need more clarification and passing this observation the concerned department c) passing this input on to product design or technical team, which may result in more robust and user-friendly product in future.
This approach is certainly not a recipe for cost-cutting, as it may result in a much higher cost for this specific interaction. But it does help the company in multiple ways by ensuring:
- The customer will remain a customer.
- He may buy more products and services from the company.
- He may spread good word about the product and the service and encourage others to become customers.
- Revision of user manuals reduces customer service calls from other customers.
- The product or offering is improved for future customers.
This transition from a transactional economics to customer relationship economics, although beneficial, is not an easy change for most companies, and the majority of businesses are struggling to get their arms around it and come up with a definitive strategy for customer engagement. Business leaders understand that the main source of revenue growth will come from existing customers, but are also finding that their organizations are not prepared to handle the challenges of customer engagement that is needed to retain existing customers.
To meet the challenge, Gartner research shows that nearly three quarters of companies expect to increase technology spending on customer experience in 2015; and that customer retention and growing existing customers are the top two drivers of customer experience investments.
Customer Engagement for Small Businesses
A lot is being said about the importance of having a Customer Engagement strategy and most enterprise companies are at least thinking about it if not already implemented it. Given that customers who are fully engaged represent a 23 percent premium in terms of share of wallet, profitability, revenue, and relationship growth over the average customer, this is not surprising.
However, for most small businesses, customer engagement is still a concept that is out there. There has not been any significant push from small businesses to drive customer engagement. The reason could be that small businesses face some significant challenges that are unique to them.
Some of the unique challenges that small businesses face are:
1) Getting and Keeping Customers - Small businesses often find it tough to attract prospects and retain customers. With a small marketing budget and no credible brand name, attracting new business and growing revenue is a challenge.
In State of Small Business Report 2015, Growing Revenue was named as one of top two business challenges by all small business surveyed in every category. In the same report, 'Improving existing customer experience & retention' and 'Investing in new customer acquisition activities & methods' were named as the top two strategies to achieve expected revenue growth.
2) Lack of Resources - A major challenge of small businesses is the lack of resources. Cash Flow is always a challenge for small businesses, and time, manpower and focus are also in short supply.
3) Lack of long-term planning - Smaller size businesses tend to concentrate on solving the immediate problem in hand. Very often small businesses seem to be in a survival mode, more focused on putting out the next fire, rather than planning for the long-term business growth. This narrow focus on immediate and urgent challenges, rather than on important long-term growth opportunities, is a very real problem for small businesses, something that can put them in a rut and threaten their very survival in the long term.
4) Lack of Knowledge and Skills - Due to limited manpower in a small business, employees need to wear multiple hats. The importance of having in-depth knowledge in certain areas, or investing in training to gather that knowledge is often overlooked.
5) Client dependence - Small businesses often tend to have a few major clients and depend completely on them. While having big accounts that pay well is a good thing, if a big account suddenly leaves, a small business may not be able to cope with the sudden loss of revenue. This means that, on one hand, small businesses need to invest in improving relationships with their existing customers. On the other hand, small businesses need to diversify their client base so that if one client pulls out it should not spell doom for them.
6) Management/Founder dependence - Many small businesses start with one or two founders and tend to be overly dependent on them. As the business grows, it becomes necessary for other employees to take over key areas. While top management should retain visibility in every aspect of the business, especially the customer facing ones, they should not have to personally handle every task and every customer relationship.
7) Balancing Quality and Growth - In order to scale, a small business will have to find a way to balance Quality and Growth. As a small business grows, it is important to remember that not every email can be personally hand-written, not every widget can be hand-inspected. Tasks will have to be automated and processes will have to be put in place to handle this.
8) Innovation and Adapting to industry shifts - Another challenge of small businesses is that they are more at risk of being disrupted by competitors who are more innovative and are more open to harnessing new market forces and technology shifts. Small businesses often operate in niche markets, and any disruption in that niche makes them vulnerable.
These challenges that are unique to small businesses also make it imperative for these businesses to make the shift from traditional Customer Satisfaction mindset and adopt a Customer Engagement mindset. This will enable these businesses to nurture their most precious resource, the Customer, and at the same time stay ahead of the competition and insure themselves against market disruption.
While product innovation will always be subject to competition, innovation in customer experience endures and creates customer loyalty. It is through innovation in creating a better customer experience that small businesses can stand out from their competitors. And it is by focusing on Customer Engagement, small businesses can gain a competitive advantage over larger enterprises, which by their very nature, tend to be more impersonal and process focused.
When it comes to implementing Customer Engagement strategy, or any company-wide initiative for that matter, small businesses do have some significant advantage over their larger counterparts.
For one, small businesses, precisely due to their smaller size, have fewer process complexities and tend to be more agile. They can adapt to market conditions more quickly which make them better positioned to adopt and implement the shift in mindset across the entire organization.
Small organizations have more centralized decision making and their internal as well as customer facing departments are more coordinated and are willing to work together. They are closer to their customers and can empathize more with their customer's challenges and pain points.
Small Businesses are also less risk-averse compared to large enterprises, and are more open to innovation. They are in a better position to leverage innovative emerging technology offered by smaller IT and technology providers. Becoming early adopters to ground breaking technology products can give them a winning edge over their competitors.
Implementing Customer Engagement in Small Businesses
The first step to implementing Customer Engagement strategy is for business and technology leaders of the organization to work together and evaluate their existing customer-facing processes and technology in terms of how they can fulfill the needs of today's empowered customer and how every interaction with a customer or potential customer can be used as an opportunity to grow the organization.
Here are a few key strategies that a small business will find useful while implementing Customer Engagement initiative in their organizations:
1) Make it an organization-wide initiative - Customer Engagement should be an organization-wide discipline. Transformational customer experience redesign cannot be accomplished without cross-functional inter-organizational collaboration. Businesses should take bold steps and be ready to make sweeping changes across the organization, rather than looking at it from an isolated 'project' perspective.
2) Multi-channel Support - Businesses should thoroughly consider their processes for every channel. They should be able to support the customer or potential customer across any communication medium over which the customer chooses to interact.
3) Single Repository - Having a comprehensive view of the customer is critical for a smooth customer experience. Under no circumstance should a customer have to repeat information that he has already provided. While a customer may choose to interact over any channel, and may switch channels at any time, customer care agents must be able to see a single 360 degree data view of the customer and a history of past interactions, so that they can judge the context of the current interaction.
4) Automate Processes - Automation of processes, both internal and customer-directed, is important. This may include triggering an internal alert based on an action taken by a customer, or sending proactive notifications to customers based on changes that the customer needs to be aware of.
5) Evaluate technology - Small businesses should evaluate their current technology in the light of whether it will be able to support customer engagement strategies. Due to resource constraints, small businesses should evaluate technology that provides majority of these solutions out of the box, rather than having to integrate disparate solutions together.
6) Measure Success - Small businesses should establish performance measuring metrics right at the onset of the customer engagement initiative. Key Performance Indicators (KPIs) should be tied to concrete business benefits like increased sales, higher customer profitability, reduction of support costs over long term, increased sales agent productivity, and so on. Evidence of concrete value is extremely important for small businesses to continue their long term commitment to establishing customer engagement practices in the organization.
Recommendations and Next Steps
In order to effectively run a customer engagement initiative, it is recommended that small businesses appoint a Customer Care Officer who will be in charge of designing transformational customer experiences and will coordinate with the various departments or responsible persons to make it happen. This centralization of responsibility creates the drive to bring about the shift in mindset that is required for an initiative of this nature.
It is also important for small businesses to adopt a long-term perspective. The traditional focus on the next urgent and immediate issue, which is common to most small businesses, can act as a major road-block to a successful customer engagement initiative.
In order to conserve and make best use of their limited resources, small businesses traditionally operate more from a cost-cutting mentality, and rightly so. While splurging on unnecessary shiny gobbledygook gadgets and technology should definitely be avoided by small businesses, a determined focus on cost-cutting in every area may also lead to customer disengagement and loss in revenue. Making a long-term commitment to customer engagement is the all-important first step that the top leadership of a small business must take.
Given the right set of processes and technology, and a gentle (or maybe not-so-gentle) nudge from the top leadership, small businesses can not only shift to the strategic mindset of Customer Engagement, but also use it as a competitive advantage to gain momentum and grow in their markets.