Customer Engagement - The Need For Customer Engagement

The Need For Customer Engagement

CE-marketing is necessitated by a combination of social, technological and market developments:

1. Businesses are losing the power to dictate the communications agenda: The effectiveness of the traditional 'interrupt and repeat' model of advertising is decreasing. In August 2006, McKinsey & Co published a report which said that by 2010 traditional TV advertising will only be one-third as effective as it was in 1990. This is due to:

• Customer audiences are smaller and specialist: The fragmentation of media and audiences and the accompanying reduction of audience size have reduced the effectiveness of the traditional top-down, mass, 'interrupt and repeat' advertising model. The adoption of new media. Forrester Research's North American Consumer Technology Adoption Study shows people in the 18-26 age group spending more time online than watching TV. In response to the fragmentation and increased amount of time spent online, marketers have also increased spending in online communication. ContextWeb analysts found marketers who promote on sites like Facebook and New York Times are not as successful at reaching consumers while marketers who promote more on niche websites have a better chance of reaching their audiences.

• Customer audiences are also broadcasters: A company's position is no longer just inside consumers' minds. As they increasingly speak their minds with the power for circulation and permanence of CGM, businesses lose the power of shouting over everyone else. Instead of trying to position a product using a couple of static messages that will themselves become the subject of conversation amongst a target market that has already discussed, positioned and rated the product, companies must join in. This also means that consumers can now choose not only when and how but, also, if they will engage with marketing communications; they can rely on CGM. In addition new media themselves provide consumers with more control over their advertising consumption.

2. Decreasing brand loyalty: The lowering of entry barriers (such as the need for a sales force, access to channels and physical assets) and the geographical widening of the market due to the internet have brought about increasing competition. In combination with lower switching costs, easier access to information about products and suppliers and increased choice customer loyalty is hard to achieve.

The increasing ineffectiveness of TV advertising due to the shift of consumer attention to the internet, the ability, within new media, to control advertising consumption and the decrease in audience size is bringing about a progressive shift of advertising spending online.

The proliferation of media that provide consumers with more control over their advertising consumption (subscription-based digital radio and TV for example) and the simultaneous decrease of trust in advertising and increase of trust in peers point to the need for communications that the customer will desire to engage with. Stimulating a consumer’s engagement with a brand is the only way to increase brand loyalty and, therefore, "the best measure of current and future performance".

CE is the solution that marketers have devised in order to come to terms with the social, technological and market developments outlined above. In a nutshell, it is the attempt to create an engaging dialogue with target consumers and stimulate their engagement with the brand. Although this must take place consistently both on and off-line, the internet is the primary vehicle for doing so.

CE marketing begins with understanding the internal dynamics of these developments and, especially, the behaviour and engagement of consumers online. That way, business opportunities can be identified. As Max Kalehoff suggests, consumer-generated media should play a massive role in our understanding and modelling of engagement. The control Web 2.0 consumers have gained must, and will be, quantified through 'old school' marketing performance metrics.