The missing link: Customer engagement and KPIs

I've had one mantra since I began in the CRM/CX/CE space -- which in time correlates to the beginning of the Big Bang -- and that goes like this:

If a customer likes you and continues to like you, they will continue to do business with you. If they don't they won't.

Yet there is irony in that statement. Because as simple as it is to understand -- and it is simple -- it is very complex to execute against it properly. The reason -- in an Alanis Morissette sense of irony (meaning not really ironic) in this case -- it is ironic again -- is quite simple. Human beings are individuals and what makes them "like" you differs in each case -- one at a time. That is what makes it all so...complicated (Damn. Another shoutout to yet another early 2000s pop star -- Avril Lavigne).

Yet, it is more imperative than ever that your business or the company that you work for understand and plan to make customers "like" them (or you). Hmmm. Not easy when most people spent 2020 being anxious, worried, unhappy even miserable, and distracted but still doing business at a record pace -- though on the consumer engagement side as much or more due to survival and the deflection of boredom and repetition than out of happiness, though I'm just saying that anecdotally. Since that's not the subject of this post, I'm not checking the data on it. So agree with me, show me the data that disagrees with it or just let it ride for the purposes of this introductory narrative.

That gets me to Steve Bocska. Again, go with the flow, please. Steve is the CEO and founder of PUG Interactive -- a company that is focused on providing the technology to substantially increase the stickiness of customer and/or employee engagement. What makes what they do really interesting is really where they come from. Steve was a significant player (meaning influential practitioner) in the video gaming industry and has a strong entertainment background. Thus he approaches things from that lens. He looks for emotional drivers and the kinds of successful engagement that makes you "like and continue to like" the company that the customer or employee are involved with.  That is SO damn smart in this era because as of now, if you haven't figured it out, we've moved from an era driven by the left brain -- metrics, benchmarks, KPIs, and mathematical ROI -- to one that is being driven increasingly by the right brain -- behavior, emotional states, real time activity and response, etc. That said, even with that happening, we still need to be able to measure the success or not of that planning and intersection by the company of the customer's behaviors driven to an outcome that both are looking for.

So, Steve has come up with a system that has a really (once again, Alanis Morissette-style) ironic acronym (see if you can spot it) and I wanted y'all to hear what he's thinking about it. This is an interesting concept because it accounts for behaviors and actually plays well with advocacy and loyalty measures and programs. 

If at the end of his guest post, you think you'd like to participate in his research, please note that he provides a link for you to do just that -- and you should do just that. Oh, and if you get the ironic acronym, explain to me somewhere -- here in a comment or via LinkedIn or Facebook, etc, what made it that. 

Game on, Steve!!

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Oh, how the world has changed.
Not long ago, it was very rare to find big brands actively prioritizing community retention, loyalty, and motivation ahead of more traditional marketing and advertising functions. The concept of customer engagement was a novel afterthought, holding a distant second place to the flashy ad campaigns proudly launched by mega agencies like Ogilvy, McCann, and MullenLowe for top brands such as P&G, McDonalds, and Coke.
But fast forward to today and we have a completely new reality. Gone are the days when catchphrases like "Where's the beef?" sold burgers, "The Most Interesting Man in the World" could influence beer choice, or "Just Do It" taglines would inspire us to buy sneakers. Now, the majority of premier brands recognize the need to shift gears and take a more sophisticated, strategic approach involving cross-media channels, advanced technologies, unprecedented creative design and often calculated risks. The old mindset of "what's our campaign this quarter?" has been replaced by a long-term view of the customer-brand relationship and acceptance of the need to invest in lasting programs -- and even technology platforms -- designed to retain customers and maximize community engagement.
I've noticed this new awakening for roughly the past decade, led largely by hungry challengers including Burger King, lululemon, Emirates, Nandos, Pepsi, and Netflix testing the boundaries of what was even possible. These brands were among the first to skillfully leverage social media platforms to create "dialogue campaigns," inviting their customer communities to wear their emotions on their sleeves and opt-in to a more sincere, honest relationship. For the first time, customers could align themselves personally with the brand in ways that, in extreme cases, could even reach a point of self-identifying with their values. This emphasis on prioritizing relationships has only accelerated in recent months during the global health crisis, with unprepared companies scrambling to find ways to re-engage and restore lost sentiment with customers suddenly pulled forcibly away from social or in-person contact with them.
Yet in the face of these efforts to foster healthier brand-customer relationships, a burning question remained -- without a reliable way to measure the engagement health of a community, how can you evaluate success? In the absence of metrics that could quantify the strength of the customer-brand relationship, it's nearly impossible to know how well a program or initiative has made things better for the company. This blindspot begs another question -- how can you assess whether there have been tangible business outcomes, positive ROI, or any justification for large-scale investments to improve customer engagement?
Fortunately, that knowledge gap is closing.
We've been driving key research in this area with the primary aim to validate our proprietary Steve's Net Engagement Score (SNES) methodology in the real-world, and more importantly, uncover the relationships that exist between the degree of healthy engagement in a customer community and key enterprise/business success outcomes.
While "clicks" as a marketing metric may still be of interest in certain contexts, Steve's Net Engagement Score goes beyond this approach by offering a defensible method for measuring the true engagement health of the community based on three primary psychological and behavioral factors. These include the presence of 1) interesting choices, 2) consequential actions, and 3) time pressure. By maximizing the SNES "numerator" (interesting choices x consequence x time pressure) and minimizing the "denominator" (raw clicks), you get a larger SNES score which in turn indicates a higher degree of community engagement.

Interesting choices

The concept of interesting choices is very important in SNES because when a user makes a contextual choice, it reveals a meaningful preference. These choices can come in many forms, the most basic including explicit options whereby the person is asked to self-select into a broadly defined user categories, like "vegetarian, omnivore, or carnivore," or "thrill seeker or couch potato." Even more nuanced choices can reflect more subtle or insightful preferences, typically chosen from a larger pool of options and/or carefully presented to reveal a user's psychographic attributes such as attitudes, interests, beliefs, values, opinions, and lifestyles.

Consequential actions

The second factor, consequence, is a measure of the impact of a choice. It can have long-term implications involving trade-offs, compromises, or in severe cases, sacrifices. This is an extremely important consideration when looking to heighten engagement, and quantifying consequence requires an expert understanding of the psychological drivers in action and how those drivers impact the focus and attention of the user. Some consequences are trivial and have little effect on engagement, like a minor annoyance of losing a few minutes of effort because you had to start something over. Other consequences can be quite dramatic and severe, involving great risk to power, wealth or even life, which dramatically elevate the sense of focus or engagement.

Time pressure

The final factor, time pressure, is well-studied and involves the psychological stress that occurs when there is a real or perceived lack of time available to complete a task or obtain a result. Time pressure sharpens our immediate focus. When the pressure is low, engagement is reduced since a user can take their time and give careful consideration to their options. But when time is scarce, engagement is heightened as reactions tend to be impulsive and more likely to lead to regretful outcomes.

The idea to combine these three concepts into the SNES metric arose from a desire to provide reliable insights, accountability, and transparency. It was also intended to support investment decisions for the growing number of loyalty, recognition, and engagement programs being undertaken by our client companies -- brands such as Kotex, CityExpress Hotels, NewEgg, and Sisal Lottery. For nearly a decade, we've supported these customer engagement projects, always with the intent of driving customer engagement to new heights and stronger business outcomes. Since our clients' definition of "success" was often somewhat nebulous ("Boost our sentiment, mindshare, and brand love!"), I've always been a bit uncomfortable going public with sweeping claims of success. But deep down inside, as the investments grew along with the stakes for our success, I knew that demands for our accountability were just around the corner. Hence, the SNES as an objective measure of customer engagement health was born.
 
Engaged customer communities today are the single biggest primary competitive driver keeping the world's most successful companies ahead in their categories. These include top global brands like Starbucks, Amazon, Apple, Hyatt, Oracle, KPMG, Accenture, and Sitel, just to name a few. These companies have, almost universally, adopted a philosophy of maintaining strong customer-brand relationships as a core strategic priority, and their resulting success speaks for itself. Of course, the problem is unless you work at these companies most people don't even know what a fully engaged community looks like -- or what to even look for. 

Also: Best CRM software in 2021

Our continuing research in this area has shed light on the relationship between a customer's level of engagement and desirable business outcomes. We've discovered many key insights about the customer's response to engagement and motivation mechanics and their positive effect on key business outcomes like conversion rates, purchase frequency, basket size, and customer lifetime value. This is the first major step towards breaking open the industry's understanding of these complex relationships within digital customer engagement strategies. I'm excited, but also a bit nervous. The idea of bringing a higher degree of accountability and transparency to measurable program impacts and justifying returns-on-investment is a thrilling proposition. But it's also worrying, because we really don't know what we'll find. Regardless of the outcome, truth and understanding is the cornerstone for progress and the only path forward if we want to collectively improve our craft.

We're currently advancing our research by calculating "customer engagement health" benchmarks using our SNES across a broad range of industries to provide marketing researchers with a useful baseline against which all future customer experience and engagement projects can be evaluated. Primary data collection for the study is expected to conclude in late April 2021, with the preliminary report released in May 2021. For more info or to request to participate in the study, please email info@puginteractive.com.

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Great stuff, sir.  A final note: CRM Watchlist 2022 registration remains open and I would encourage you to register ASAP. Please send me an email at paul-greenberg3@the56group.com requesting the registration form or asking me any questions about the competition, now in its 16th year.