Sales & Marketing

Customer engagement: key to driving business growth

9 min read

27 March 2012

Sara Murray, founder of Confused.com and Buddi, discusses best practice for small business growth through meticulous customer engagement.

Good customer service is not the sole province of large companies. Modern technology has empowered small businesses to be as – if not more – responsive, reactive and personalised in their dealings with customers as their FTSE 100 counterparts. This could be anything from listening out and reacting to dissatisfied customers on Twitter, or sending a birthday mailer when your customer database reminds you its coming up.

I was therefore somewhat surprised to read research from the Epson Business Council finding that only 29 per cent of British small business owner/managers thought that customer service will be a critical market differentiator in the current climate – less than half the amount of our European peers. From my experience gained from building Confused.com and buddi, customer engagement is absolutely vital for building lasting, profitable customer relationships.

In order to be effective in a year of volatility, uncertainty and continued cost-cutting, at home and in business, companies will have to work harder to engage customers to persuade them to stay loyal in a competitive environment. After all, a cheaper online option is only a click away. So if you’re a micro business and unsure where to start, here are a few suggestions:

Set out your points of differentiation clearly

Being “cheapest” as a point of differentiation can work for some, but for many it is a zero-sum game – businesses need some margin to turn a profit. In a commoditised market, such as the price comparison market we were in for Confused.com, those points of differentiation need to be explicit. To do this well, you need a fantastic understanding of your customer base – research here is worth its weight in gold. Use those insights to refine your proposition without trying to be all things to all people, and you’ll find you have a more loyal and more focussed customer base as a result. 

Before cutting price and margins, look to alternate payment strategies!

Money may be tight, but people are still spending on things they value where they can. At times, this may be more of a struggle than others; so if your business model allows, investigate hire-purchase, subscription and leasing purchase options. Customers often prefer the lower up-front cash requirements and tax benefits these options can bring, and, if you can improve loyalty, it can help reduce your need for more costly new customer acquisition strategies. Crucially, it avoids the need to erode your margins through bouts of discounting.

Face-to-face interaction never goes out of fashion

Having set up a number of small businesses, most people rapidly realise that everything is your responsibility. It’s too easy to get mired in the daily operations of the business and find it’s been weeks since you last spoke to a customer. The research sadly backs this up: in 2011, UK businesses were spending only 29 per cent of their week having face-to-face time with our customers, down on 2010’s figure. Small business growth is underpinned by word of mouth and failing to speak to your customers directly will be detrimental to business growth in the long run. Of course, technology can assist this process but there is no substitute for face to face meetings. If you have to keep things online, use Skype or some other video conferencing service to increase the richness of your interaction.

You will need to automate some of your customer care – get the systems right

The only way to keep tabs on a growing customer base, particularly for a dynamic e-business, is to have the right systems in place. Worryingly, Epson’s research highlighted that less than a third of micro businesses (30 per cent) have a sophisticated and up-to-date customer database: around one in ten have no database at all. Trying to keep everything under control with manual ledgers and spreadsheets when your competitors are paying attention to what customers are saying on Twitter will put you at a significant disadvantage. The little black book has become the customer relationship management platform, and those without adequate systems in place will struggle to deliver effective customer service. 

Take care of your online presence

There’s an unwritten truth that all business owners know about customers; they’ll generally tell three times as many people about an unhappy experience than they would about a positive one. With the advent of social media channels such as Facebook and Twitter, these experiences can be broadcast globally within a matter of minutes. Even the smallest of small businesses should set up basic monitoring on the key social networks to ensure that what’s being said about you online can be managed; whether that management involves correcting factual inaccuracies, appeasing unhappy customers, sharing a customer plaudit or just being part of a conversation about an industry you are passionate about. 

Co-create: remember the customer from the very beginning of your product development process

Again, thanks to the advent of social media, it’s possible to engage with customers from the outset of the product development process. If you’re a local café and you found you were selling out of soup one day and not the next, you could engage with your customers – in store or online – about what they liked about one soup or another and evolve your menu accordingly. If you provide products or services to parents, you could engage with your customers on parenting forums to discuss specific pain-points, validate the issues you’re trying to address or evolve your offerings as needs be. Whether you go through this process digitally or in the real world, it’s vital you do it, and play the successes back to the customers. 

Don’t become too confident too quickly

In a time of uncertain economic development, customer engagement is vital to the wellbeing of any business. I was surprised that less than a third of UK businesses agreed that customer engagement will be critical to the sustainability of their business. From a personal perspective, working to mitigate the exposure of myself and my ventures to financial and reputational risk, I place a huge emphasis on nurturing key customer relationships by getting involved with key accounts. It’s too easy for customers to find alternative suppliers who are willing to go the extra mile. Customer service should be the watch word for all businesses – it takes years to develop good strategic relationships with customers and seconds to lose them!

And finally… be playful and inventive when engaging your customers

There are few things as unexpected and delightful as a business making an effort to get you to smile. Whether that’s a fashion e-tailer getting people to send in images of themselves in their t-shirts and them featuring them as “models” on their website, a surprising act of goodwill, a special and amusing reward for customer loyalty, or a particularly innovative and engaging Facebook app or competition. Coming up with new ways to add value, solve problems, make people’s lives a little easier and sometimes surprising them – can have a huge impact on how people see your brand.