A Framework for Engagement – Background

There has been a tremendous amount of discussion around the Engagement topic that started here and fragmented into a bunch of chunks and related topics, including here, here, and here.  I have also had a lot of one-on-one correspondence in and around these topics through e-mail lately, and while thinking through all this, realized there’s a lot going on but there may be a “can’t see the forest for the trees” scenario building here.

In other words, the discussion is so focused around Tactical measurement issues that folks may not be seeing how “Engagement” is an important part of a much bigger Strategic idea, and that fact should influence the way people think about Engagement, if this whole concept is ever going to be more than just a pile of exotic Tactical metrics lying around.

Now, I realize people want to measure Engagement, particularly on-site Engagement, for lots of different reasons that may not have to do with Marketing Strategy.  I think it’s the nature of people with technical backgrounds to think very Tactically.  Many of these folks are more concerned about usability or something closer to “customer experience”, or the general appeal or stickiness of a web site.  And that’s certainly OK with me, and important work. 

But this post is not for you folks. 

This post is for the more Marketing-oriented analysts and managers, many of whom have technical backgrounds and have done an amazing job of learning about Marketing.  Really.  I wish Marketing folks would take the time to learn as much about Technology as these technical folks have learned about Marketing.

Marketing is much more than the Tactical stuff, like Advertising, Branding, conversion, and all that.  At least to some of us old folks.  Marketing has traditionally had a Strategic role, which means it sets up the business model and ensures that the “product”, whatever that is, directly addresses the marketplace and audience, that the product is built to sell – and stick.

Those of who are interested in Engagement from this more Strategic level of Marketing, this post is for you.  And just as an aside, we’re not talking about fuzzy Branding and social media Engagement stuff here (You’ve got to engage your customers!  Really!  It will be good for business!), we’re talking about real world, provable, profit and loss Database Marketing (here’s how to increase profits by measuring and acting on Engagement).

In the mid-eighties some academic folks published thought pieces around a data-driven marketing approach they sometimes referred to as Relationship Marketing.  In 1992, a pretty famous Silicon Valley guy named Regis McKenna published a book called Relationship Marketing, which put forth a framework and real life examples of how it all worked, mostly focusing on B2B. 

Essentially, the idea behind Relationship Marketing is that rather than segmenting customers by age, income, product, and so forth, you segment them by where they are in their relationship with the company; you create a Marketing Strategy that is customer-centric instead of business-centric.  The core Strategy was this: if you communicate with customers based on where they were in their Relationship with the company, the communications would be more relevant to the customer, so your marketing would be more successful and profitable over the long run. 

Customer-centric.  Relevant.  I’m not kidding.  Check it out on Wikipedia if you don’t believe me; you will be shocked at the concepts and language used.  It all should sound very, very familiar to you when you read it…

It gets better.  To do this Relationship Marketing thing properly, you have to understand what the Customer LifeCycle is.  Lifecycles are literally a measurement of engagement and dis-engagegment between the customer and the business.  The idea was if you could measure these engagement / dis-engagement cycles, you could tell when things were going well or poorly between the customer and the business, then proactively take action to correct problems and issues.  Further, if you got very good at recognizing these cycles and patterns, you could actually anticipate / predict problems and take corrective action before the customer had a negative experience.

So it’s 1993, and I’m sitting in the middle of the greatest interactive experiment to date on the consumer side – Home Shopping Network.  And I’m thinking, if this Relationship Marketing Strategy works so well in B2B, why wouldn’t it work for B2C?  The data will be different, the metrics different, the trigger behaviors different, the Tactics different, but the Strategy, the Relationship Marketing Strategy – wouldn’t that work?  Particularly when we’re so interactive with the customer?  Shouldn’t it work even better when there is direct and sustained interactivity with the customer?

You wouldn’t believe how well it worked, at many different levels of the company.  Customer Marketing programs with unimaginable response rates.  90-day ROMI numbers of 400% or better on a consistent and sustained basis – using offline marketing.  That’s how well it worked.  The magic of using Control Groups to measure campaign profitability allowed us to capture every bit of incremental profit that was derived from re-engaging the customer – even if they didn’t respond directly through the campaign itself, but through another channel.

So, these conversations about customer-centricity, relevance, and engagement have been taking place for over 20 years in Marketing Strategy.  The challenge with this model - and probably why it isn’t more widely known – has been the data, it’s a very analysis-intensive model, as you might expect.  

In B2B, McKenna’s ideas grew into what is now known as Contact Management or Sales Force Automation.  On the B2C side, I guess CRM was supposed to be the ticket, but somehow (until recently) these folks forgot about how critical the analytical part of the equation was to the success of the Relationship Marketing concept.

As far as online goes, we have the data,  but until fairly recently the online space has been so all about Brand and Advertising, not Relationships.  Now the Web has decided it will be all about Relationships, which is very cool.  The web is perfect for that approach, (um, can you say interactivity?) and it’s perfect for a Relationship Marketing Strategy.

I’ll get into the Implementation of a Relationship Marketing strategy tomorrow in the next post.

4 Responses to “A Framework for Engagement – Background”

  1. You seem to juxtapose advertising\branding vs relationships. Dont you believe that advertising\branding is one, in some cases a big one, element in the relationship customers have with the brand/company/product?

    I mean Apple may have excellent customer service, every contact with its employees might be a memorable experience, but would you disagree that the branding of Apple, Apple as a sign and as meaning (as created by branding, advertising, product packaging and design), has played a crucial role in the emotional bond (and hence relationship) its customers have with the company?

    I many of course be talking about the same thing as you are using different words.

  2. Jim Novo says:

    I wouldn’t exclude advertising, branding, packaging from being a part of the relationship, no. And some business models can’t afford to have a relationship directly with customers, nor is it clear customers want such a relationship (most non-premium packaged goods). So advertising / branding / packaging is the only alternative these companies have.

    Apple is a good example of a company that views Marketing from a Strategic perspective, the “advertising campaign” starts way before any media is bought – it starts with the design of the product. If more companies involved skilled Marketers in product and service development, we’d have more companies like Apple.

  3. [...] February 27, 2008 In online discussions of ‘customer engagement’ one sometimes reads about a distinction between preventing disengagement and encouraging engagement. Although most commentators focus exclusively on the latter there are some (Jim Novo, Erwin Ephron) that dare discuss the former. I think the distinction they bring to our attention is very useful in furthering the development of the concept and practice of customer engagement. [...]

  4. It took a while but I get it now! :) See my other comment on your post about control groups.

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