Customer Engagement

Companies have recognized the importance of customers when creating and sustaining their competitive advantage. In nowadays’ networked business world, collaboration with customers and other companies has become the focus of value creation activities and most importantly, to create value through product innovation. Traditional perspective on customer engagement has been firm-centric, viewing customers as passive recipients of innovation and value creation activities, information flowing to one direction only from a firm to customers (Prahalad & Ramaswamy, 2004). There is a lack of customer understanding and little emphasis on active dialog that would engage customer communities, prospects and other potential customers. Internet has become a powerful platform of collaborative innovation and customer engagement due to its speed,

reach and flexibility. Companies can utilize various internet based mechanism to facilitate customer engagement in co-creation process. Virtual communities enable active dialogue with customers tapping into the social aspect of customer knowledge thus serving as a powerful platform for collaborative innovation.

(Sawhney, Verona & Prandelli, 2005).

The term “engagement” has been used extensively in social sciences, psychology and organizational behaviour leading to various approaches and definitions. However, only in recent years customer engagement has received more attention in marketing and service literature as well (Brodie, Hollebeek, Jurić & Ilić, 2011). Vivek, Betty and Morgan (2012) focus on the behavioral aspect of customer engagement defining it as “the intensity of individual’s participation in and connection with an organization’s offerings and/or organizational activities, which either the customer or the organization initiate” (2012, 127). Similarly, Van Doorn et al. (2010) focus on customer’s behavior that center on a brand or a firm, beyond purchase resulting from motivational drivers. Furthermore, Bowden (2009) and Brodie et al. (2011) view customer engagement from a psychological perspective.

According to Bowden (2009) customer engagement is a psychological process that forms customer loyalty for a new customer as well as for a repeat purchase customer of a service brand and is concerned how loyalty can be maintained.

Brodie et al. (2011) base their conceptualization of customer engagement on foundational premises of the S-D logic by Vargo and Lusch (2008), defining it as

“a psychological state that occurs by virtue of interactive, cocreative customer experiences with a focal agent (e.g. a brand) in focal service relationships” (2011, 260). Moreover, Hollebeek (2011) view customer-brand engagement as a customer’s motivational state of mind that is characterized by cognitive, emotional and behavior activity towards a brand.

Customer engagement is suggested to improve the performance of an organization, increase sales, profitability and competitive advantage (Hollebeek, 2011). Engaged customers can play a key role in marketing providing referrals of products and services, participate in the innovation process and co-create value and experiences (Brodie et al., 2011; Prahalad & Ramaswamy, 2004). Engaged

customers can a source of knowledge and can support firms in ideation and development of new products and services, existings brands and in trial of beta products (Van Doorn et al., 2010). According to Van Doorn et al. (2010) customer engagement behaviors include word-of-mouth activity, recommendations, online reviews and/or blogging, which from a firm’s perspective can be classified either positive or negative based on the valence of the content. The level of customer engagement may also be determined by relative resource endowments such as time, effort and money. However, in general engaging customers tend to increase loyalty, satisfaction, trust and commitment (Hollebeek, 2011; Brodie, Ilic, Juric & Hollebeek, 2013). Engaged customers exhibit stronger connection and emotional bonding with a brand and belonging to a community generates affinity and feelings of empowerment (Brodie et al., 2013). Overall, customer engagement has cognitive, attitudinal and behavioral consequences for many different stakeholders e.g. competitor’s customers in additional to a focal firm and a customer. (Van Doorn et al., 2010). The below model by Vivek, Betty and Morgan (2012) incorporates the cognitive, emotional, behavioral and social elements of customer engagement when an individual is interacting with a brand and/or a product both within and outside of exchange situations.

FIGURE 11. Theoretical Model of Customer Engagement (Vivek, Betty & Morgan, 2012).

The success of a firm is determined by its ability to understand customer engagement process and how trust, involvement and affective commitment is developed in the mind of customers. Managers should be concerned of how to measure the level of engagement and develop strategies to establish influential emotional bonds between brands and customers (Bowden, 2009). Firms may develop processes and engagement platforms online to support customer-to-customer dialogue and consumer learning (Van Doorn et al., 2010). The changing role of a customer is suggesting that firms might not be able to create products, services alone, but should increasingly invite communities in their operations to explore the potential of customer knowledge and to create value (Jaakkola &

Alexander, 2014). A firm should consider customer engagement from a a goal alignment perspective. If a customer’s and a firm’s goals are aligned, customer engagement behavior is more likely to have a positive impact on a firm’s performance and overall customer experience. On the contrary, if there is a misalignment between goals and this is not communicated properly, customer

engagement behavior may have negative outcomes (Van Doorn et al., 2010).

When customers are passionate about the brand and/or the product, feel empowered and sense ownership over the offering, they are more willing to contribute to the success of the firm (Jaakkola & Alexander, 2014). The key challenge is to understand the dynamics of customer engagement and how it changes and evolves over time. Therefore a firm should proactively manage customer engagent process, identify and react to changes in customer behavior and evalue these against both its short- and long-term objectives. (Van Doorn et al., 2010).