I'll bet you wish you had a dollar for every time you heard someone stress the importance of customer engagement. It's one of the latest buzz phrases to hit the marketing profession. Everyone seems to think customer engagement is important, but no one seems to know how to measure it, let alone act upon the insight derived from it. Without rigor behind both measurement and execution, customer engagement will be nothing more than a passing fad waiting to recede into the appendix of a Marketing 101 textbook once the latest and greatest concept comes along.
What seems to be lost in the discussion is the fact that if customer engagement doesn't translate to bottom-line impact, it's of no use. The key, then, is to focus on engagements that provide mutual value to you and your customers. Easier said than done—but no less important.
We were also able to develop detailed profiles of the company's most valuable site visitors, as well as those who offered the greatest opportunity for value growth.
I've seen first hand how one of the largest media companies struggled to tackle this concept with its online user base. Its web site model—primarily advertising-supported through a combination of content sponsorship; run-of-site ad buying; and a third-party ad network—was profitable but far from optimized.
The problem is that the company was defining customer engagement based on page views. (A page view is when a person brings up a single page on a web site, no matter how many links or ads are on the page.) The more pages a web visitor viewed, the higher was that person's engagement score. This definition, though, was hampering the company's web marketing and ad sales efforts. That's because in the branded sponsorship model, it didn't matter how many pages a user viewed. The price was fixed. Similarly, with excess ad inventory sold as "remnant space" or by a third-party ad network at a significant discount, the ad revenue didn't reflect the number of pages a visitor clicked on. At the same time, the page views gave marketing little visibility into whether or not its efforts to increase engagement through specialized content, video, blogs, polls and promotional activities were driving bottom-line benefits to the company.
When we began working with the company, we started by redefining its approach to measurement. We wanted the measurement to account for the value derived from each engagement through the development of a customer-value model. By tying dollars to pages viewed and other revenue-generating customer activities, we were able to assign a dollar value to each engagement activity—clicking on a page, participating in an online chat, responding to a poll or playing a game—allowing us to properly weight the engagement measure to better understand the correlation between engagement and value.
Real value
Using the client's ad server logs and ad sales database, we were able to go back and map ad impressions and the associated CPM (cost per thousand ad views) of each impression to individual web site visitors. This served the basis of analyzing a web user's historical (indirect) value to our client. With this calculation complete, we then went back and looked at the relationship of page views to value and identified that there was relatively little correlation.
Through the use of online behavioral data (page views, clicks, content affinity) and offline demographic data, we were also able to develop detailed profiles of the company's most valuable site visitors, as well as those who offered the greatest opportunity for value growth.
Marketing now had insights to inform a redesign of the navigational structure of the site that best suited those high-value customer segments. In addition, marketing had greater insights into how to more precisely engage segments that had relatively lower value but represented high potential value. To better track web-user engagement and value on a go-forward basis, we implemented a proprietary customer value heat map reporting tool. This multi-dimensional reporting tool allows our client to monitor key drivers and changes in both web user engagement and value on an ongoing basis.
The increased insight into the user base also uncovered an opportunity for ad sales. It allowed ad sales to offer advertising clients access to a more targeted group of web users. A better understanding of user profiles, content interests and past click behavior and response allowed advertisers to select user segments that were of greater value to them for more targeted advertising. Advertisers now had the option to purchase advertising inventory (impressions) at a customer-segment level. This flexibility allowed them to better align campaign objectives and creative elements with subsets of the web site user base to ensure they are reaching the right audience in the right manner and, thus, enabling them to make more efficient use of their advertising dollars.
This new product strategy allowed the media company to sell access to subsets of its user base at premium rates, regardless of the individual site navigation paths and engagement patterns of the users. To bring this strategy to life, the segmentation logic behind the targeting has been pushed to the company's ad server so that users can be scored and targeted in real time.
The media company is now able to provide the more niche content users find engaging at a much more profitable level. At the same time, the company is providing greater value to its advertisers by offering a more targeted advertising solution. A true case of a win-win-win.
Customer engagement can be quantified but only if your approach is grounded in bottom-line reality. As with any strategy, there must be some financial gain for your company to allocate resources against it. When viewed through this filter, with a focus on mutual value, engagement strategies can deliver significant results to your organization.