Foundational Review of the Newest Concept in Customer Management
Prof Adré Schreuder
Founder & CEO of Consulta, Founder & Chair of SAcsi
Since the publication of the SERVQUAL measurement instrument in the 1985 Journal of Retailing, the scientific, practitioner and vendor community has seen terms such as Customer Relationship Management (CRM), Customer Experience Management (CEM), Customer Centricity and most recently Customer Engagement (CE) come to the forefront of Customer Management. With the popular acceptance of each of these new terms, there is now potentially more confusion between the terms than ever before. There are vast differences in the understanding and use of these terms amongst scientists, practitioners and vendors alike. This white paper is an attempt to clarify the current confusion and interchangeable use of the terms Customer Experience and Customer Engagement.
A common question during the era when Customer Experience and Customer Relationship Management gained popularity was – “Is Customer Experience the new Customer Satisfaction?” Customer Experience was described in one of the early articles by Kirkby, Wecksell, Janowski & Berg, (2003) where these authors stated:
“Customer Experience Management (CEM) is part of Customer Relationship Management (CRM) and the natural extension of building brand awareness. Where brand gives the promise, CEM is the physical delivery of that promise and is vital in an economy where a brand is increasingly built on value delivered, rather than product features.”
Fundamentally, this question has been answered in an excellent article by Verhoef, Lemon, Parasuraman, Roggeveen, Tsiros & Schlesinger published in the Journal of Retailing in 2009. The relationship between Customer Satisfaction and Customer Experience is addressed in the following reference from the article:
“Yet, despite the recognition of the importance of customer experience by practitioners, the academic marketing literature investigating this topic has been limited. Publications on customer experience are mainly found in practitioner oriented journals or management books … (and) tend to focus more on managerial actions and outcomes…
The literature in marketing, retailing and service management historically has not considered customer experience as a separate construct.”
In hindsight it was almost inevitable that the greater focus on Customer Experience would create more interest in the customer’s involvement in the experience – and consequently Customer Engagement.
This brings us to the question, “Is Customer Engagement just another term for Customer Experience?”
In the following paragraphs Customer Engagement will be discussed from two perspectives, the practitioner community (more specifically industry experts), compared to the scientific community (based on peer reviewed Journal publications on the subject matter).
INDUSTRY PRACTITIONER PERSPECTIVES ON CUSTOMER ENGAGEMENT
In a recent article in CustomerThink (Nov 2014: source), Bob Thompson explores the distinction between Customer Experience and Customer Engagement. The article makes it clear that industry experts do not agree on what exactly Customer Engagement means. The following experts were asked about their understanding of the term:
The President of Strativity – Lior Arussy defines Customer Engagement as “…the efforts that companies make to reach out and obtain some form of customer connection. The engagement may be limited to a purchase or a whole detailed discussion.” Whilst the very respected Bruce Temkin from the Temkin Group states – “Customer Engagement is something different, it’s a behaviour and attitude, an outcome of Customer Experience.”
I am supporting the Bruce Temkin view that CE is the outcome of Customer Experience, whilst the easy-to-the-point description from Colin Shaw simply describes CE as “…how you engage with customers. By engaging with them you give them an experience.” The contribution from Paul Greenberg – author of the top selling book “CRM at the Speed of Light: Essential Customer Strategies for the 21st Century” adds another very clear explanation – “The ongoing interactions between company and customer, offered by the company, chosen by the customer.”
What we can conclude from the Bob Thompson article and the contributions of industry experts, is that the following terms are important in finding a practitioner’s perspective on Customer Engagement:
- Reach out
- Customer connection
- Behaviour and attitude
- Outcome of Customer Experience
- Ongoing interactions
- Offered by companies & chosen by customers
- How you engage with customers
- What you hope customers will do for you
- Relationship between your brand and your customer
- Advocacy - to become a ‘fan’ of your brand
There seems to be conflicting views where some practitioners and industry experts attach an emotional connection to Customer Engagement, whilst this is part of what other experts would include in the understanding that Customer Experience is the perception (which includes the emotional experiences) that customers have of all their interactions with an organisation (with reference to how Bruce Temkin generally describes it). Another popular practitioner view is that Customer Engagement is synonymous with the digital savvy customer and the phenomenal growth and use of social media – some commentators referring to it as Social CRM.
In conclusion, my research also showed that practitioners and industry experts have adopted the terms of co-creation, crowdsourcing and gamification into the Customer Engagement domain. This is particularly evident in the popular discussion around viral campaigns on Facebook, Twitter and YouTube.
FOUNDATIONAL (SCIENTIFIC) PERSPECTIVES ON CUSTOMER ENGAGEMENT
Customer Management (CM) has evolved drastically and marketing discipline, the subject domain of Customer Behaviour, Customer Satisfaction and most lately Customer Engagement, has been significantly impacted. In the digital social society which is growing at a rapid rate daily, customers interact easily with other customers and organisations through instantly accessible social platforms and new interactive media.
According to Jenny van Doorn and colleagues (Journal of Service Research (3) 2010) Customer Engagement is frequently measured in the marketing research industry, but the scientific community has not focused on Customer Engagement as a separate construct in Customer Management prior to 2010.
The role of Customer Engagement is recognized to be of major influence against this background. The scientific community regarded this important enough to devote special attention to the subject matter amongst others, through special editions of scientific journals as the Journal of Service Research did in 2010. The initiative was lead under the editorial guidance of Peter Verhoef (University of Groningen, Netherlands), Werner Reinartz (University of Cologne, Germany) and Manfred Krafft from the University of Münster in Germany. In their introductory article in this special edition, Verhoef and his colleagues considered Customer Engagement as a behavioural manifestation toward the brand and or company that goes beyond the actual transaction.
Foundational Perspective organisations on Customer Engagement
The article in the special edition of the JSR (Journal of Service Research) that contributed most to a better understanding of Customer Engagement (Van Doorn et al, 2010) shares a conceptual model of the antecedents and consequences to customers, companies and society.
As a basic point of departure Customer Engagement clearly focusses on specific behaviours of customers that would represent different levels, duration and intensity of engagement. This would amongst many other typical forms of engagement with organisations include:
- Word-of-mouth (WoM)
- Helping other customers (self-help communities)
- Blogging, writing & contributing reviews
- Social enactment of frustrations (flaming)
- Increased exercising of customer rights of fairness through legal action and Consumer protection legislation/forums
- Customer feedback
The Van Doorn conceptual model of Customer Engagement groups customer behaviour into five dimension of behaviour (See figure 1):
- Disposition (Valence) is the manifestation of positive and/or negative emotions (i.e. positive recommendation)
- Modality (Form) refers to the manner (ways) in which the customers use their resources to express their engagement (time, money, effort)
- Scope deals with the duration (temporal or ongoing) and geographic focus of the engagement (to selected other customers or on a website/social platform)
- Nature of impact takes the form of immediacy, intensity, breadth and longevity of the impact on the company and or brand.
- Purpose refers to the goals of the customer that takes the form of three questions:
- Who is the engagement directed at?
- To what extent is it planned?
- To what extent are the customer’s goals aligned with the company goals?
The conceptual model clearly shows the three categories of causes (antecedents) that impact
Figure 1 – Conceptual Model of Customer Engagement Behaviour
Customer Engagement behaviour, and the resultant consequences of the behavioural manifestations. Both the antecedents and consequences relate to the customer, the company (or brand) and other context specific factors.
Firstly, from a customer perspective any engagement behaviour could result from the nature of the customer’s satisfaction, trust (and commitment), identity, customer goals, available resources (time, money) and the perceived costs (effort) and benefits. The resultant engagement behaviour will have cognitive- (memory), attitudinal-, emotional-, physical-/time based, and identity- (moral, kindness, helpfulness) effects on the customer.
Secondly, the company will also have specific influences on the likelihood and nature of Customer Engagement (also recognizing the moderating reciprocal effects of company and customer on each other). Amongst others the brand characteristics and personality, firm reputation, size and diversity of value proposition, information usage and processes and type of industry will affect the engagement behaviour of customers. The consequences of Customer Engagement behaviour on the firm would range between financial-, reputational-, regulatory-, competitive-, employee- and, product- effects.
Context specific factors such as the economy, environment, political, social and technological factors would impact on the likelihood and nature of engagement behaviours, whilst the consequences could range between consumer welfare, economic surplus, social surplus, cross-brand and cross-customer effects.
The moderating inter-relational effects of customer, company and context specific factors will also impact on the likelihood and nature of Customer Engagement and is best seen when a company or brand reaches viral status in the dissemination of information, recommendation, sharing or liking of the idea, by one customer to another and effecting a community of customers and companies alike.
Another very important moderating effect is the phenomena of co-creation. The idea of co-creation was first introduced in the ground breaking work of Steven Vargo and Robert Lusch when they started publishing a new conceptual foundation for the service science, called Service Dominant Logic (SDL) that stand in direct contrast to current and still prevailing paradigm of a Goods Dominant Logic (PDL).
The article "Evolving to a new dominant logic for marketing" (Vargo, Stephen L. and Robert F. Lusch, 2004, Journal of Marketing, 68 (January),1-17) became the most cited article in the Journal of Marketing since 2000.
The basic contrast between a Goods Dominant and Service Dominant logic is shown in Table 1 below.
The third premise in the table (referring to involving customers in developing customized, competitively compelling value propositions) introduced amongst many other consequences the concept of co-creation, and thus stands central to the Customer Engagement concept.
Table 1 – Contrasting a Goods Dominant Logic & Service Dominant Logic
FOUNDATIONAL DEFINITION BASED ON INDUSTRY EXPERTS AND SCIENTIFIC INPUTS
A year after the special edition in the Journal of Service Research the scientific community reacted with the first foundational definition of Customer Engagement. In this section I will attempt to integrate the seminal work of Brodie et al. (JSR, 2011), industry experts and my synthesis of all the sources referenced in this paper.
Brodie and his co-authors investigated the role of Customer Engagement’’ (CE) in co-creating customer experience and value. Of particular interest to this white paper is the five fundamental propositions (FPs) proposed to be used as the foundational base to develop a general definition of CE. They also differentiated the concept of Customer Engagement to distinguish it from other relational concepts such as customer participation’ and customer involvement.
In Figure 2 an illustration of all the concepts and terminology used in the integrated foundational definition and description of Customer Engagement is shown. The inner focal point represents the five fundamental propositions and is surrounded by the terminology and concepts added by industry experts.
The five fundamental propositions developed by Brodie et al are used as foundation to create a comprehensive and integrated understanding of the concept of Customer Engagement.
Fundamental Proposition 1
CE is essentially a psychological state, which is a result (outcome) of interactive customer experiences with a brand, product, or organisation within ongoing service relationships that extend beyond the mere transaction or purchase.
Fundamental Proposition 2
The psychological states of Customer Engagement occur within a dynamic, iterative process of service relationships that co-creates value. The process could be short- or long term, stable or variable.
Figure 2 – Graphic illustration of Integrated Foundational Definition of Customer Engagement
Fundamental Proposition 3
Customer Engagement is central in a conceptual understanding (nomological network) of service relationships. The relational antecedents include ‘‘participation’’, ‘‘involvement”, ‘‘flow’’ and ‘‘rapport’’.
The relational consequences include: ‘commitment’, ‘trust’, ‘self-brand connections’, consumers’ ‘emotional attachment’ to brands and ‘loyalty’. The service relationship consists of propositions offered by companies and value/benefits chosen by customers.
Fundamental Proposition 4
Customer engagement takes the form of relevant cognitive, emotional, and behavioural dimensions in a multidimensional nature that will manifest as context-specific expression and/or stakeholder-specific expression. Context specific expression could be customer feedback, word-of-mouth and spontaneous advocacy. Whilst stakeholder specific expression would be the loyalty and commitment to a brand, and the specific things that a customer would do for a company (i.e. provide assistance/advice to other customers in a customer community).
Fundamental Proposition 5
There will always be a specific set of situational conditions that will frame the likelihood and nature of Customer Engagement
and affect the different levels of cognitive, emotional, and/or behavioural intensity of the manifestation of engagement behaviour.
Many industry experts and opinion leaders agree that most modern economies have experienced a disruptive power shift. The former power of companies has moved to the power and choice of customers. Customer Engagement is evident in the degree to which customers will award companies with higher levels of commitment and loyalty by their behavioural manifestation of engagement with the brand and company of choice.
• Kirkby, Wecksell, Janowski & Berg, (2003) “The Value of Customer Experience Management”. Strategic Analysis Report, March 2003 • Verhoef, Lemon, Parasuraman, Roggeveen, Tsiros & Schlesinger. (2009) “Customer Experience Creation: Determinants, Dynamics and Management Strategies”. Journal of Retailing 85 (1), 31–41 • Bob Thompson. CustomerThink (Nov 2014: http://customerthink.com/customer-experience-vs-customer-engagement-a-distinction-without-a-difference/) • van Doorn J, Lemon K N, Mittal V, Nass S, Pick D, Pirner P, and Verhoef P C. (2010), “Customer Engagement Behaviour: Theoretical Foundations and Research Directions”. Journal of Service Research13(3) 253-266 • Verhoef P C, Reinartz W J, Krafft M, (2010) “Customer Engagement as a New Perspective in Customer Management”. Journal of Service Research 3(3) 247-252 • Vargo, S L. and Lusch, R F. (2004), "Evolving to a new dominant logic for marketing." Journal of Marketing, 68 (January),1-17 • Brodie R J, Hollebeek L D, Juric B, and Ili ́1. (2011) “Customer Engagement: Conceptual Domain, Fundamental Propositions, and Implications for Research”. Journal of Service Research 3(3) 252-271.