Today and tomorrow the Customer Strategy Group is hosting its inaugural summit on customer engagement – an intimate, executive conference designed for B2B marketers who manage customer reference programs, advisory boards, and the emerging area of online communities. I will speak later today to about 70 t0 80 marketers and sponsors about “Understanding the Value of Customer Engagement”
Business marketers know customers who give references, participate on advisory boards, and engage in online communities are more valuable than those who are bystanders. But how do you quantify this value and socialize it to the rest of the business – especially in a tight economy when all the focus is on revenue and pipeline? This forum takes a close look at this question. In my presentation, I will introduce a model for measuring customer engagement that includes four components: involvement, interaction, intimacy, and influence. Each component requires data collected from online and offline sources that — when done successfully — give marketers a more holistic appreciation of their customers’ actions while recognizing that value comes not just from transactions but also from actions customers take to influence others. I show how marketing messages become conversations, and dollars shift from media buying to customer understanding, when firms adopt engagement metrics to capture the value of customer relationships
Here are the highlights from the morning keynote sessions I attended:
1) Sean Geehan, who helps B2B executives understand what it takes to drive revenue, growth, and shareholder value. In his work on customer engagement, he has shown that companies that target their customer programs at their “top 20%” customers outperform the market by several factors. He profiles companies like Harris Corporation, HCL, and Oracle in his upcoming book to demonstrate this. He sees firms that specifically target decision makers in customer engagement programs (versus end users or middle management) see retention rates of 90% (vs. 72%) and account growth of 12% (vs. 4%). Most importantly their reference rates are 94% vs 28% — underlining the vital importance of creating customer engagement at the executive level, not simply among worker bees. I think this has BIG implications for community development in B2B.
2) Tim Thorsteinson, President, Broadcast Communications Division, Harris Corporation talked about the benefits of customers engagement in face of the seismic shift in the broadcasting market from conventional, US-based TV stations to cable, satellite, government, international and sports. His division sells video equipment in all these markets and 50% of their revenue now comes from products introduced in last 24 months. (They spend about $90M on R&D). Approximately 10% of customers generate 90% of revenue. His main point is that Harris could not have made this shift successfully without creating an executive advisory board – focused on this 10% — to draw insight from and validate their decisions. And these customers deliver value: EAB members drove 16% of Harris Broadcast revenue in 2009.
Observations: He enjoys fairly exclusive access to his dozen or so EAB members since Harris’ competitors don’t actively pursue customer advisory boards. He says face-to-face, intimate, offsite meetings with deep content – but that also feature a fun, inviting locations or activities — is very important to keeping these relationships strong. No stand-ins allowed; members can’t send substitutes to the meetings. In between Harris uses quarterly conference calls and newsletters to stay in touch. Content includes technical issues, industry trends, but is not salesy. He knows the EAB is successful because networking happens outside – and Tim believes this would continue without Harris’s sponsorship. EAB members talk about how to make their sector more attractive to Wall Street. They also want a seat at the table with other industry leaders, where relevant dialog can happen, and where they can talk about the real business problems they face (not technology/ products.)