Customer Engagement Marketing

Robert W. Palmatier, V. Kumar, Colleen M. Harmeling, Robert W. Palmatier, V. Kumar, Colleen M. Harmeling

• Publisher: Palgrave Macmillan
• Year: 2017
• ISBN:
  9783319619859
• Topic: Business
• Subtopic: Rapporti con i clienti
• Index: Business

This book provides a synthesis of research perspectives on customer engagement through a collection of chapters from thought leaders. It identifies cutting-edge metrics for capturing and measuring customer engagement and highlights best practices in implementing customer engagement marketing strategies. Responding to the rapidly changing business landscape where consumers are more connected, accessible, and informed than ever before, many firms are investing in customer engagement marketing. The book will appeal to academics, practitioners, consultants, and managers looking to improve customer engagement.

© The Author(s) 2018

Robert W. Palmatier, V. Kumar and Colleen M. Harmeling (eds.)Customer Engagement Marketinghttps://doi.org/10.1007/978-3-319-61985-9_1

Begin Abstract

1. Customer Engagement Marketing

Anita Pansari¹ and V. Kumar²

(1)

Michigan State University, East Lansing, MI, USA

(2)

Georgia State University, Atlanta, GA, USA

Anita Pansari (Corresponding author)

V. Kumar

End Abstract

Customer Engagement: Introduction and Organizing Framework

Managing customers has forever been the primary focus of firms. What has changed is how customers are managed. With the advent of customer and marketing databases, the strategies to manage customers have evolved from transaction to relationship marketing and now to customer engagement. This evolution is evident in the metrics used in the different phases of marketing. Till the early 1990s, managers analyzed customers’ transaction data to develop metrics such as past customer value , share-of-wallet, and recency, frequency, and monetary value of purchases. Managers used only these measures to design strategies to increase customer value and firm profits . However, in the late 1990s and early 2000s, firms realized that customers need more than transacting with the firm which led to managers shifting their focus from transaction marketing to relationship marketing. Firms then aimed at improving customer trust, commitment, and loyalty through better products, services, and loyalty programs. In this era, firms focused on retaining profitable customers by applying the metric of customer lifetime value (Kumar 2008).

Over the years, with the use of social media platforms for marketing activities, marketers realized that it is not enough to only understand how long the customer will stay with the firm but also to understand if there are other ways beyond purchases that customers can contribute to the firm. This led to the rise of the term Customer Engagement in marketing.

Consistent with the developments in the marketplace, this book of Customer Engagement Marketing covers a broad range of strategic issues regarding the antecedents and consequences of customer engagement. It also focuses on understanding customer engagement in different contexts and extending the concept of Customer Engagement. The book comprises 14 chapters which are organized into three parts (see Fig. 1.1) consisting of the antecedents, consequences, and the different contexts of customer engagement.

Fig. 1.1

Organization of the book

However, before we dive into the chapters, it is crucial to understand the basic foundation of customer engagement by focusing on the following questions:

1. a)
   What is customer engagement?
2. b)
   What is the theory driving customer engagement?
3. c)
   How is it different from other customer relationship management constructs?
4. d)
   Are there any benefits of engaging customers?
5. e)
   Are there situations/contexts where customer engagement would be enhanced?

Understanding Customer Engagement

Engagement has been discussed over the past century with various interpretations in numerous contexts. In the context of social welfare, engagement is discussed as civic engagement, social engagement, community engagement, etc. In the business world, it is discussed in a contractual relationship context, and in management, as an organizational activity with the internal stakeholders. In the marketing domain, engagement is associated with the level of an active relationship that a customer shares with a firm and is termed as customer engagement (CE).

Customer engagement has been discussed extensively in the past decade in both marketing academia and the business world. It was the eighth most frequently used buzz word in business in 2014. In the business world, it has been considered a strategy, investment, listening to the customer’s voice, emotional connection, and interaction with the organization beyond what is necessary.¹ Gallup studies indicate that:

• In the consumer electronics industry, fully engaged shoppers make 44% more visits per year and spend $84 more than a disengaged customer.
• Fully engaged shoppers make 44% more visits per year to their preferred retailer than actively disengaged shoppers.
• In casual and fast food restaurants, fully engaged customers make 56% and 28% more visits per month respectively, as compared to disengaged customers.
• In the hospitality sector, fully engaged hotel guests spend 46% more per year.
• In the insurance sector, fully engaged policy owners purchase 22% more types of insurance products.
• In the retail banking industry, customers who are fully engaged bring 37% more annual revenue to their primary bank.²

The above statistics highlight the importance of customer engagement. Customer engagement has been a topic of discussion in marketing academia from 2010 (Vivek et al. 2012; Kumar et al. 2010; Van Doorn et al. 2010; Kumar and Pansari 2016). There have been various discussions, definitions, and arguments about customer engagement. We present a snapshot of those conceptualizations in Table 1.1. The latest definition provided by Pansari and Kumar (2017) provides a holistic view of customer engagement.

Table 1.1

Select literature review on the conceptualization of customer engagement

Study	Type of firm	Type of variables	Conceptual/Empirical	Definition
Bowden (2009)	B2C	Attitude and behavior-based	Conceptual	A psychological process that models underlying mechanisms by which customer loyalty is formed for new customers as well as the mechanisms by which loyalty may be maintained for repeat-purchase customers of a service brand
Van Doorn et al (2010)	B2C	Behavior-based	Conceptual	Customers’ behavioral manifestation toward a brand or firm, beyond purchase, resulting from motivational drivers such as word-of-mouth activity, recommendations, helping other customers, blogging, writing reviews
Brodie et al. (2011)	B2C	Attitude-based	Conceptual	A psychological state that occurs by virtue of interactive, co-creative customer experiences with a focal agent/object (e.g., a brand) in focal service relationships
Vivek et al. (2012)	B2C	Attitude and behavior-based	Conceptual	The intensity of an individual’s participation and connection with the organization’s offerings and activities initiated by either the customer or organization
Hollebeek (2011)	B2C	Attitude and behavior-based	Conceptual	The level of customers’ motivational, brand-related, and context-dependent state of mind characterized by specific levels of cognitive, emotional, and behavioral activity in brand interactions
Kumar et al. (2010)	B2B and B2C	Attitude and behavior-based	Conceptual	(1) Customer purchasing behavior, whether it be repeat purchases or additional purchases through upselling and cross-selling [CLV]); (2) Customer referral behavior as it relates to the acquisition of new customers through a firm-initiated and incentivized formal referral programs [CRV]); (3) Customer influencer behavior through customers’ influence on other acquired customers as well as on prospects [CIV]); (4) Customer knowledge behavior via feedback provided to the firm for ideas for innovations and improvements and contributing to knowledge development [CKV])
Kumar and Pansari (2016)	B2B and B2C	Behavior-based	Empirical	Same as Kumar et al. (2010)
Pansari and Kumar (2017)	B2B and B2C	Attitude and behavior-based	Conceptual	The mechanics of a customer’s value addition to the firm, either through direct or/and indirect contribution

Adapted from Pansari and Kumar (2017, pp. 294–311)

Pansari and Kumar (2017) define CE as “the mechanics of a customer’s value addition to the firm, either through direct or/and indirect contribution.” The direct contribution consists of customer purchases, and the indirect contributions consist of incentivized referrals that the customer provides, the social media conversations that customers have about the brand, and the customer feedback/suggestions given to the firm. Based on the customer engagement theory proposed by Pansari and Kumar (2017), when a customer is satisfied with his/her relationship with the firm and has an emotional attachment to the firm, then it can be said that the customer is engaged with the firm.

Although there are multiple definitions of engagement, confusion prevails on other CRM constructs and CE. For instance, customer experience , customer involvement, customer satisfaction , customer commitment, and so on are frequently misinterpreted as customer engagement. To clarify, customer experience is the customer’s cognitive, affective, emotional, social, and physical responses to the entity, product, and service (Verhoef et al. 2009). This indicates that customer experience is the customer’s response to the firm’s actions, whereas customer engagement is the contribution the customer makes to the firm’s revenue, directly or indirectly. Similarly, customer involvement is the importance that the consumer places on the product/service depending on his/her need. Customer involvement occurs before the customer makes a purchase and customer engagement occurs after the customer has made an initial purchase and has had an experience with the firm. Several other CRM constructs are often misinterpreted as CE. These constructs, while related to CE, are quite distinct from CE. Table 1.2 provides an effective summary of how these are distinct from, yet related, to customer engagement.

Table 1.2

Constructs related to customer engagement

Related constructs	Definition	Measurement (One possible approach)	Relationship to customer engagement (CE)
Customer involvement	A person’s perceived relevance of the object based on inherent needs, values, and interests (Zaichowsky 1985, p....