An engaged customer is a return customer

Managing Customer Engagement Behaviours

Engaging customers with your firm is good for business. You can even go as far as having the customer do part of the job – like using the self-scan in the supermarket. But how do you encourage and manage this effectively? And are there any pitfalls?

Customer engagement behaviours (CEBs)

Firms striving for long-term profitability can strengthen customer relationships by getting their customers more engaged with the firm. One way to do this is to introduce practices to manage different forms of customer engagement behaviours (CEBs). Examples include:

  • Referral rewards (e.g., Bank of America paying customers for referrals),
  • New product and service development platforms (e.g., ‘My Starbucks Idea’ where customers can post new product / service ideas), and
  • Customer communities (e.g., Weight Watchers meetings where people give and receive advice on losing weight).

Customers performing services

As part of her doctoral research study, Dr Katrien Verleye (Ghent University) and Professors Deva Rangarajan (Vlerick Business School) and Paul Gemmel (Ghent University) conducted a study of management practices to encourage more effective and efficient CEBs. The study focuses on the nursing home sector, but their findings can be extrapolated to a broader general audience.

Prof Deva Rangarajan: “The main focus of our study was to investigate how organisations can lead customers to deliver part of the service themselves (for example, having travellers download their boarding pass before they go to the airport).

“This of course streamlines the service process for the company. But there are many more benefits as well. Research shows that the more customers are involved or engaged with a company and its provision of services, the happier the customers are with the outcome – and this draws them back to the company again.”

A word of caution

“At the same time, companies are cautioned to handle customer involvement skilfully,” Prof Rangarajan explains. “If the customer confuses the process, the result could be more stress for the company’s personnel in putting things right again. Setting expectations is one of the ways companies can manage the process. Our study investigates what managers should do to engage customers – and how they should manage this engagement, both towards their customers and towards their employees.”

Educate your customers and your employees

This research helps managers of services with a broad network of customers and stakeholders improve existing CEB management practices and develop new practices that are beneficial for the firm and its stakeholders.

“There are many ways in which you can engage customers,” says Prof Rangarajan – “ranging from doing part of the job themselves, to providing positive word-of-mouth (essentially ‘advertising’), to giving feedback and suggestions to the company.”

The key message for practitioners? “When we want to engage customers, we must educate them in what we expect of them when they wish to do a part of the job themselves. At the same time, prepare your employees for the fact that, whether they like it or not, more and more customers are going to become involved. So, educate them in how to handle stressful situations, and how to receive feedback and turn it into a positive force.

“Many firms recognise the importance of generating deeper and more meaningful customer-firm connections. This research suggests that efficient and effective CEB management practices help business practitioners engage not only their consumers but also the broader network of customers and stakeholders. By discussing managerial processes that help firms build strong customer-firm relationships, we bring firms a step closer to a more relational view.”

Source: 'Managing Engagement Behaviors in a Network of Customers and Stakeholders: Evidence from the Nursing Home Sector' by Katrien Verleye (Doctor in Applied Economics, Ghent University), Professor Paul Gemmel (Ghent University) and Professor Deva Rangarajan (Vlerick Business School). Journal of Service Research 2014 17:68 originally published online 2 July 2013

Accreditations
& Rankings

Equis Association of MBAs AACSB Financial Times Economist Intelligence Unit