CorpComms Magazine

Virgin Mobile sends customers sexy knickers. Internet savings bank ING Direct sets up ice rinks outside shopping centres, and Vodafone sends technicians onto online forums for mobile phone geeks.

These are not just examples of the latest marketing wheezes, sales gimmicks or ritzy brand promotions. The name of the game nowadays at consumer-focused companies is not just attracting footfall or revenue but competing vigorously to 'engage' with customers. While customer service is often reactive, customer engagement can be proactive, with a view to building loyal and lasting relationships.

The Customer Engagement Report issued by publishing firm E-consultancy in partnership with interactive agency cScape defines customer engagement as 'repeated interactions that strengthen the emotional, psychological or physical investment a customer has in a brand'.

The goal is achieving the Holy Grail of sales: the sort of loyalty that means firms no longer have to compete for all customers on price. The John Lewis Partnership, comprising supermarket chain Waitrose and department store John Lewis, is a good example of this. Last year, Waitrose was recognised as the top high street retailer for customer service in an annual survey by consumer charity Which?, based on scores from a 10,000-strong panel of shoppers for quality of products, customer service, in-store experience and convenience.

Indeed, Waitrose and John Lewis have taken the top two spots in the survey for the last three years. 'There's no single tactic in terms of how we engage customers,' says Dara Grogan, head of communications at Waitrose, who says much of the attraction lies in the firm's almost unique partnership model. 'A lot of it is about how we do business and what our brand means. It's about our quality service and our quality product offering. Our quality service is about our partnership business model and the fact that all our partners are co-owners in the business and so have a vested interest in ensuring customers are happy.'

Reaching out
Fortunately for businesses that don't choose to operate a partnership model, Grogan has a few other customer engagement tips to offer - though they are hardly rocket science. 'Our branches are less cluttered than those of other companies, and they offer a very clean and calm environment,' she explains. 'We don't have strip lighting in our stores. These are small things, but they all add up.

'Plus, our marketing is quite sophisticated. It is more about information than buy-one-get-one-free offers. We have just had the 5,000th recipe on www.waitrose.com, and we have blogs. We do email customers but we don't bombard them with text messages. We deal with our customer data in a very sensitive way; we don't even have a loyalty card.'

Even if the Waitrose and John Lewis model is so polished it looks effortless, there is plenty of effort going on elsewhere. Virgin Mobile has recently launched a loyalty scheme called Crave to encourage pay-as-you-go customers to feel more engaged with the company.

'For every £100 they spend on calls, they get £10 toward a free handset,' says customer contact manager Sarah Fletcher. 'We also offer 20 percent off haircuts at Toni & Guy. If you go to our website and type in your telephone number, you'll see 12 offers that are available to you - and we look to change them every quarter.

'We have given out free La Senza knickers, for example. All you have to do is be a customer and you get free things. We work very hard on customer engagement. It involves lots of communication. We email our 1.2 mn customers and send text messages to pay-as-you-go customers. We are actually using text messages more and more now because they have such a great response rate. And when we ring customers with upgrade offers at the end of their contracts, we have a 90 percent conversion rate.'

Different strokes
Unlike the John Lewis Partnership, Virgin Mobile is a relatively new business. Its customers are also younger and the firm is in a chronically disloyal product sector, with many mobile phone user s regularly switching between providers to get the best deal. ING Direct is similar. It was set up from scratch as a completely new business, attracting more than 1 mn customers within five years. Part of its success is offering savings interest rates that are competitive, while not necessarily being the best on the market. Like Virgin, it also seeks to engage with customers by being a fun brand with a simple, uncluttered proposition.

'We have held events in experiential marketing,' says Martin Rutland, head of corporate communications. 'We have been to shopping centres and set up mobile ice rinks; we have had face painting for kids; we have taken over shopping centres. We are not looking to sell products at these events - it's just a very good way of meeting and engaging with customers.'

One common link between Virgin and ING is that they both couple customer engagement initiatives with those designed to engage staff. At ING Direct, this stretches to offering staff incentives such as free Indian head massages during breaks and free bike hire.

'If you're serious about engaging customers, you also have to engage your staff in the process as they are your interface with customers,' explains Debbie Palmer, head of customer services at Triffid, a branding and corporate communications agency based in Leeds and London. 'You have to work with your staff on how they interact with people because that has the potential to either enhance or tarnish your brand proposition.'

A stage further is getting involved in customer engagement initiatives that use peer-to-peer communities to approach interest groups connected to your company's products. Vodafone, for example, has technical staff who log into online forums for people interested in areas of mobile phone technology like 3G networks or a certain type of phone.

'People visit these sites to share tips and talk about their mobile phones and help each other,' says Vodafone senior media relations consultant Samantha Botting. 'But sometimes other customers cannot help, so over the last two years we have been actively scanning these forums. Our people go onto these sites and say they are from Vodafone and if they find that someone has a question about a Vodafone product or service, they ask whether they can help.'

Softly, softly approach
Botting says this kind of interaction needs to be handled carefully if it is not to backfire. 'People on online forums are quite wary of customer service people from big companies on forums because they think it is just going to be corporate babble, so it needs to be something that's really going to help our customers,' she says. 'We go in very tentatively and it is completely transparent. We are building a lot of credibility through this approach. Phone users in these groups really like this way of operating.'

Linus Gregoriadis, head of research at E-consultancy, believes this peer-to-peer internet networking will take customer engagement to a different level. 'We're now living in a world of word-of-mouth influence, so organisations need to work much harder to make sure feedback from consumers is being both heard and acted upon,' he says.

E-consultancy's 2008 global survey of 1,000 people found that 90 percent of company respondents believe online customer engagement is either essential or important to their organisations. The most frequently cited benefits for bodies implementing customer engagement initiatives over the last 12 months are improved customer loyalty and increased revenue. Some 86 percent of respondents say a consistent online and offline customer experience is essential or very important.

'The most enlightened firms aren't just paying lip-service to what consumers are saying,' says Gregoriadis. 'They're facilitating interaction between their customers and changing their organisational processes so the voice of the customer is being heard when products are being designed and services are being conceived.

'When companies get it right, they can rely on their customers to do their advertising for them, thereby reducing the need for advertising spending. 'Now that's a virtuous circle if ever there was one.'

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