Customer engagement is the topic of the day. With the growing excitement around Web 2.0, how we attract and develop relation-ships with our audiences has taken on new imperative.

Customer engagement is the best measure of current and future performance; an engaged relationship is probably the only guar-antee for a return on your organisation’s or your clients’ objectives.

The interactive experience that digital media provide has trans-formed our ability to engage with our customers and clients. Digital media are flexible, offering us opportunities to capture more data, faster than any other medium. But how effective are we in engaging our customers? How ready are we to exploit our chosen medium? And what will future customer relationships look like? These are questions that this report goes some way towards answering.

To further aid our understanding of customer engagement, I would like to offer up this definition:

The key word here is investment. How do we persuade our customers that we are worth their time, effort, money and commit-ment? We won’t be able to engage everyone, and we must accept that those who do engage with us will do so to different degrees and in different ways. Customer engagement isn’t a nirvana that

can be reached; it is a process of developing and nurturing rela-tionships.

The results in this survey indicate how organisations today are undertaking this task.

If it isn’t already, we predict that the process of customer engage-ment will become one of, if not the, central focus of your digital activities in the coming years. We hope that you find the infor-mation provided here valuable as you develop and extend your engagement strategies.

Our ambition is to conduct the online customer engagement survey annually in order to provide a valuable benchmark for organisations of all kinds to assess their state of readiness and effec-tiveness in this area. We welcome your feedback on the survey and would love to include examples in future reports of how you have used the data to further your organisational aims.

Lastly, it is essential that I thank my colleagues: Nathalie Roth-schild, Theresa Clifford and Dave Chaffey, as well as my CEO, Rob Killick, for his inspiration and support, Eileen Pevreall for her encouragement and Ashley and Linus at E-consultancy, who made the survey and this report possible.

cScape Customer Engagement Directorr.sedley@cscape.com

* An adaptation of a definition provided by Ron Shevlin (http://marketingwhims.

blogspot.com/2006/04/disengaging-from-arfs-definition-of_05.html)

Customer Experience and Customer Engagement have become increasingly important in recent years because of growing competition across all sectors and lower switching costs for customers. If people are not getting the kind of service they want, whether online or offline, then they have never been more inclined to go elsewhere.

For many organisations, effective customer engagement is a prerequisite for customer loyalty and retention. Success in this area can also drive acquisition as a result of recommendations from other customers.

Increased use of digital channels by consumers has presented new challenges for businesses because they need to ensure that they are delivering an online experi-ence which is in keeping with their brands and joined-up with what is happening in-store or via call centres.

A consistent approach and smooth execution both online and offline is there-fore crucial for retaining customer loyalty and is also necessary for ensuring that brands are enhanced by a positive experi-ence rather than damaged by inconsisten-cies.

Of course, this is easier said than done because it often involves so many different departments and functions within organi-sations. The nirvana of a “single customer

view” is frequently beyond reach for reasons which are explored in this report.

The challenge of engagement has become even greater in the so-called world of Web 2.0 where the customer voice is amplified across the internet more loudly than ever and brands are losing the power to dictate their agenda.

Communication between businesses and customers is now flowing more freely in both directions, with organisations under pressure to make sure they are lever-aging new technologies to improve rather than tarnish the brand experience.

Emerging digital platforms and tech-nologies now present an unprecedented opportunity to connect with audiences but, at the same time, there is more oppor-tunity for things to go wrong and for those mistakes to become public.

It is hoped that this report provides a useful benchmark for organisations to see how they compare to their peers and also to provide a context for understanding relative strengths and weaknesses, as well as oppor-tunities and threats in an exciting age.

Although many organisations are expe-riencing difficulties in optimising customer experience, this study is intended to be a positive report about the aspirations and opportunities for companies.

This cScape-sponsored Customer Engage-ment Report, is based on the findings of a survey carried out in October and November 2006.

More than 800 respondents, all internet and / or customer experience professionals, both ‘client-side’ and from agencies, completed the survey which contained questions about customer experience meas-urement, methods of customer engagement and barriers to effective delivery.

The report shows a significant gap between what organisations are aspiring to in order to engage their customers and deliver an optimal customer experience, and the reality of what they are doing, or are able to do, in order to meet these goals.

In the new digital age and the world of Web 2.0, there are more channels available to engage and communicate with customers. But while there is an unprecedented level of opportunity for organisations, the changing landscape also creates new challenges when attempting to create a consistent end-to-end experience.

While relatively new technologies and features such as Ajax and user-generated content are either being used or are “on the radar”, the reality is that many organisa-tions are struggling to organise themselves to deliver a basic level of customer experi-

ence and customer engagement even across existing channels and technologies.

The level of customer experience across channels is difficult not only to measure, but also to implement. Without the right kind of cross-channel measurement and benchmarking in place, this is even more challenging to get right. The difficulties encountered vary depending on the size of organisations.

The gap between the aspirations and the reality is caused by barriers which fall into a range of categories, including technical issues and those relating to company culture and leadership.

In particular, supplier-side respondents (generally agencies) believe that there is a lack of boardroom buy-in which causes difficulties in delivering the best possible customer experience. Company respond-ents recognise these issues to a degree, but it is the agency respondents who see this, along with lack of management vision, as being a particular handicap for organisa-tions.

Just under half of company respondents said that they only occasionally measure customer experience (“and not as often as they should”), with a further 9% saying that they never measure this at all.

31% do this “whenever they can”, while a further 13% say they are evangelists.

Two thirds of in-house respondents said that their organisations measure customer satisfaction on a regular basis, whether weekly (12%), monthly (18%), quarterly (20%) or yearly (16%).

Some 30% said that they never, or very infrequently, measure satisfaction.

There is a gap between what organisa-tions realise is important and what they are actually doing in practice.

64% of company respondents believe that joined-up online and offline experiences are essential for engaging with their audience.

However, some 60% of companies are either not very advanced at mapping customer experiences and identifying touch-points (36%), or admit they have to start looking at this because they are not doing it all (24%).

Half of company respondents say they regularly work in cross-functional teams. Agencies believe that companies, gener-ally speaking, rarely do this. In terms of company responses, 5% said they were seamless, with 45% working in cross-func-tional teams “with a few gaps”. Some 34% said that they only worked in cross-func-tional teams “occasionally”, with a further 14% saying they are not joined up at all.

However, only 2% of agency respond-ents said the majority of their clients were seamless and only 17% said there were typi-cally just “a few gaps”. About half (49%) said that the majority of clients only occa-sionally worked in such teams, with 27% saying that their clients are not joined up at all.

Half of respondents believe that personal-ised experiences are essential for audience engagement, with a further 44% believing they are useful.

Despite the perceived importance of personalisation, 37% of company respond-ents are not providing personalised online experiences at all.

The vast majority of company respondents believe that frank and open discussions about products and services are essential or useful (50% and 46% respectively).

Soliciting user-generated content (UGC) is regarded as essential by 29% of compa-

nies and as useful by 47%. However, 24% do not believe that facilitating UGC is important.

In terms of what companies are “doing now” to engage their customers, email (78%), natural search (65%) and paid search (62%) are the channels or technolo-gies most commonly utilised.

In terms of what is being planned in the next 12 months, user-generated content (42%), Rich Internet Applications / Ajax / Flash (36%) and Corporate Blogs (35%) are the most likely to be on the company agenda in the next 12 months.

There is an eagerness to embrace new channels & technologies (Web 2.0-type technologies and innovations) in spite of difficulties in getting some fundamen-tals in place in order to build a seamless customer experience (for reasons explained in the “barriers” section below).

Companies are most likely to segment their customers according to the value to their organisation (44%), demographics (43%) and customer lifecycle (39%)

The biggest five barriers to a magnificent customer experience are deemed to be:

1) Lack of resources / time (regarded as being a “great barrier” by 66% of company respondents)

2) Disconnected systems & technologies (50%)

3) Lack of skills and training (38%)4) Lack of finances (37%)5) Lack of regular processes and / or

suitable methodology (36%)

For comparison, figure 34 shows the top five barriers as perceived by supplier respondents:

1) Lack of resources / time (64%)2) Lack of skills & training (56%)3) Lack of boardroom buy-in (49%)4) Organisational culture (44%)5) Lack of regular processes and / or

suitable methodology (44%)

It is apparent from this analysis that lack of boardroom buy-in and organisational culture are seen to be more pressing issues by agency respondents than by companies themselves.

The difference is particularly note-worthy for lack of boardroom buy-in, with 49% of agency respondents believing this

to be a major barrier compared to 30% of company respondents.

From the company perspective, the greatest barriers to investing in technology that improves customer engagement are:

1) Lack of implementation skills (perceived as a great barrier by 37% of company respondents)

2) Lack of management vision (36%)3) Inability to prove ROI (35%)

The agencies see the same factors as the top three barriers but in a different order, and to a different degree [figure 36]:

1) Lack of management vision (57%)2) Inability to prove ROI (55%)3) Lack of implementation skills (39%)

Agencies are perhaps more aware of lead-ership issues holding back client organisa-tions than companies are themselves.

Lack of management vision is seen as a particularly major problem by agencies, cited as a great barrier by 57% of supplier-side respondents.

More than 800 respondents took part in the 2007 Online Customer Engagement survey, sponsored by cScape. The exact figure was 805.

The 800+ respondents were fairly evenly split between “client-side” employees (i.e. those working as part of in-house teams) and those who work for agencies and consultants (i.e. suppliers of some descrip-tion). For the record, there were 391 in-house respondents and 414 respondents from the second category.

For the purpose of the two streams of analysis contained within this report, in-house or client-side responses are described as company findings (meaning organisations generally, including government bodies and charities, but excluding suppliers). The data from agencies, suppliers and consult-ants is described as agency findings.

The questions asked of respondents were positioned slightly differently depending on which of these two streams they fell into. Individuals working for companies answered questions about their own organi-sations. The agency respondents were asked to answer questions on the basis of what “the majority of their clients” were doing.

The results for each question are split according to the two streams of respond-

ents. The differences make for interesting reading and together the streams give a useful “state-of-the-nation” picture of where companies are at generally.

Respondents were asked if they were based in the UK, rest of Europe, North America or “Other”. About 70% of respondents are based in the UK.

For the main analysis, we have included all respondents together, irrespective of location. There is not enough non-UK data to make robust comparisons between different geographies although, at an indic-ative level, the answers point to more simi-larities than differences across the different regions. (See figures 2 and 3)

We believe that company revenue informa-tion is the most enlightening area for cross-tabulation and have included analysis by annual revenue (for the company results) in the main body of the report. We have not included this slice of the supplier-side responses as we do not feel it adds as much value. The respondents are nicely split across the different turnover bands, which enables a meaningful analysis of the differ-ences in results depending on company turnover. (See figures 4 and 5)

(See figures 6 and 7). Cross-tabulation by number of employees yields similar results to analysis by company turnover, as one would expect. An analysis of the whole survey using this cross-tabulation is avail-able from E-consultancy on request.

Just under half of company respondents said that they only occasionally measure customer experience (“and not as often as they should”), with a further 9% saying that they never measure this at all. [See figure 8 below].

There is a marked discrepancy between what in-house respondents say about the extent of their customer experience meas-urement and what supplier-side respond-ents believe is the case for the majority of their clients.

A total of 44% of company respond-ents say they are either “evangelists” in this respect (13%) or that they measure customer experience whenever money and time allow them to (31%).

However, only about a quarter of supplier-side respondents (26%) put the majority of their clients into these two categories (6% and 19% respectively), with two thirds believing that their clients “only occasionally measure customer experience and not as often as they should” [see figure 9 below].

The agency responses are useful because they give a good indication of what organi-sations are typically doing. There are three possible conclusions to draw from this difference between company and agency

respondents. (This difference between the two streams is also apparent with regard to the extent of measurement of customer satisfaction, customer loyalty and likeli-hood to recommend)

a) The client-side respondents participating in this survey are more bought into the importance of customer experience measurement than “the average company”.

b) Companies are not measuring the customer experience as much as they think they are.

c) Companies are measuring customer experience more than agencies give them credit for.

Table 1, on page 10, shows that organisa-tions with a turnover of more than £150m are the most likely to be customer experi-ence evangelists. Just under 70% of compa-nies in the £10-£50 million category admit to not measuring customer experience as much as they should.

There is typically more commitment to the customer experience as companies get larger. Of course, the larger the company, the greater the challenges are in terms of providing a seamless end-to-end experience.

Two thirds of in-house respondents said that their organisations measure customer

satisfaction on a regular basis, whether weekly (12%), monthly (18%), quarterly (20%) or yearly (16%) [see figure 10].

30% said that they never, or very infre-quently, measure satisfaction.

Organisations are more likely to measure satisfaction than customer loyalty or likeli-hood to recommend.

The slicing of this data by turnover [table 2] shows that smaller organisations (under £50 million turnover) are the most likely to be the ones that very infrequently or never measure satisfaction, particularly in the £10-£50 million category.

Answering on behalf of their clients [figure 11], agency respondents believe that measurement of customer satisfaction is less widespread. The number of these agency respondents who said that customer satis-faction was measured very infrequently, or never, amounted to 45% (compared to the 30% figure for the in-house respondents).

Company respondents are less likely to measure customer loyalty than they are to measure satisfaction. Just over half of respondents measure loyalty regularly (either on a weekly, monthly, quarterly or yearly basis) compared to two thirds who measure customer satisfaction regularly.

All the time, we’re evangelists

Whenever we can (money and time allowing)

Occasionally, but if we’re honest not as much as we should

Never Don’t know / not relevant

Total

<£10 million 7.69% (5) 30.77% (20) 52.31% (34) 9.23% (6) 0% (0) 65

£10-50 million 3.85% (1) 19.23% (5) 69.23% (18) 7.69% (2) 0% (0) 26

£50-150 million 3.03% (1) 42.42% (14) 51.52% (17) 3.03% (1) 0% (0) 33

>£150 million 15.58% (12) 31.17% (24) 45.45% (35) 7.79% (6) 0% (0) 77

Not relevant / Don’t know

21.74% (10) 32.61% (15) 32.61% (15) 10.87% (5) 2.17% (1) 46

Total 29 78 119 20 1 247

Overall Percentage*

12% 32% 48% 8% 0% 100%

Weekly Monthly Quarterly Yearly Very infrequently

Never Don’t know / not relevant

Total

<£10 million 13.85% (9) 13.85% (9) 12.31% (8) 20% (13) 26.15% (17) 9.23% (6) 4.62% (3) 65

£10-50 million 7.69% (2) 3.85% (1) 15.38% (4) 11.54% (3) 53.85% (14) 7.69% (2) 0% (0) 26

£50-150 million 12.12% (4) 12.12% (4) 21.21% (7) 18.18% (6) 27.27% (9) 3.03% (1) 6.06% (2) 33

>£150 million 7.79% (6) 19.48% (15) 31.17% (24) 16.88% (13) 16.88% (13) 6.49% (5) 1.3% (1) 77

Not relevant / Don’t know

19.15% (9) 19.15% (9) 21.28% (10) 17.02% (8) 12.77% (6) 6.38% (3) 4.26% (2) 47

Total 30 38 53 43 59 17 8 248

Overall Percentage*

12% 15% 21% 17% 24% 7% 3% 100%

Over the last few years, companies have sought to measure more than just satisfac-tion and loyalty, often because they believe that there are other metrics which are more closely aligned with their business goals.

As well as measuring customer loyalty, which is inextricably linked to customer retention, some companies are also meas-uring, among other things, the likelihood of their customers to recommend their product or services.

A total of 44% of company respondents regularly evaluate their customers’ likeli-hood to recommend. A similar number (45%) never, or very infrequently, do this.

This is becoming an increasingly impor-tant metric now that customers have unprecedented ability to spread the word either positively or negatively about a brand.

There used to be an adage that a customer would tell several people if they had a good experience but would complain to quite a few more if they had a nega-tive one. In the world of viral email, blog-ging and social networks, your customers (whether evangelists or severely disgruntled brand terrorists) can reach thousands, even millions, of other people.

Web Analytics is the most commonly employed method of understanding customer experience, practised by 70% of company respondents [see figure 16].

The use of web analytics has become much more sophisticated in recent years as ownership has moved from IT depart-ments to marketers who are using data and insights to help drive their businesses forward.

More organisations realise the impor-tance of connecting analytics with the customer side of the equation, and this trend is underlined by its popularity as a means of understanding customer experi-ence across companies of all different sizes [see table 3].

The other most commonly used methods of understanding customer experience are Feedback from Customer-facing Staff (used regularly by 47% of in-house organi-sations), Customer Surveys (43%) and Competitor Monitoring (33%). Usability Testing is another important area and it is clear from the verbatim answers that this is a widely used method of understanding the customer experience.

Regularly Infrequently Never Total

<£10 million 66.67% (42)

20.63% (13)

12.7% (8)

63

£10-50 million 64% (16)

32% (8)

4% (1)

25

£50-150 million 65.62% (21)

28.12% (9)

6.25% (2)

32

>£150 million 76.62% (59)

22.08% (17)

1.3% (1)

77

Not relevant / Don’t know

70.21% (33)

23.4% (11)

6.38% (3)

47

Total 171 58 15 244

Overall Percentage*

70% 24% 6% 100%

The diagram below [figure 18], created after an analysis of verbatim responses about difficulties and issues relating to the meas-urement of customer experience, illustrates the variety and extent of problems faced by organisations. These problems have been categorised into different groups.

There are some important differences between those barriers highlighted by in-house organisations and those cited by supplier-side organisations as key barriers for their clients.

But firstly the similarities: There are two areas which are flagged up as key problem areas by both sets of respondents.

Firstly, lack of resources (both budget and time) is observed as a major obstacle in the way of measuring customer experience and is acknowledged both by organisations and by agencies.

Organisational incoherence, culture or (lack of ) will is another area cited as prob-lematic by both sets of respondents, partic-ularly for multi-channel organisations that are wrestling with the issue of how to measure the experience consistently across different channels.

In terms of differences between company and agency respondents, a lack of skills, experience and understanding is a problem area flagged up mainly by agency respond-ents. So while companies and agencies agree

that lack of resources and organisational culture can be major stumbling blocks, agencies believe that there is a lack of skills and experience within organisations.

The instability of customers or products is perceived as more of a barrier by client-side respondents than by agencies, who do not see this as a major issue.

It can be concluded from the charts below that a majority of organisations still need to take some basic steps in order to give them-selves a chance of providing a joined-up and seamless customer experience.

Some 60% of companies are either not very advanced at mapping customer experi-ences and identifying touch-points (36%), or admit they have to start looking at this because they are not doing it yet (24%).

This is clearly an area that companies must focus on, especially in light of page 18 below which highlights that 64% of respondents believe that joined-up online and offline experiences are essential for engaging with their audiences.

Further analysis, specifically looking at those respondents who believe that joined-up online and offline experiences are an essential area, shows that there are similar

proportions of respondents who are either not very advanced at mapping and identi-fying touch-points, or not doing it at all.

There is a major difference in responses to this question depending on whether the respondents were client-side or supplier-side.

In terms of company responses, 5% said they were seamless with 45% working in cross-functional teams “with a few gaps”. Some 34% said that they only work in cross-functional teams “occasionally”, with a further 14% saying they are not joined up all.

However, only 2% of agency respond-ents said the majority of their clients were seamless and only 17% said there were typi-cally just “a few gaps”. About half (49%) said that the majority of clients only occa-sionally worked in such teams, with 27% saying they are not joined up at all.

In short, there is a lot less red shading in the agency chart [figure 22] than there is in the company chart [figure 21].

Table 5 below shows that cross-func-tional co-operation is an issue for compa-nies of all sizes, although it is the smallest ones that are most likely to be seamless. Too many companies have departments working in silos which makes it difficult to put customers at the heart of their busi-nesses.

Yes, we’re seamless

Yes, but we have a few gaps

Only occasionally

We’re not joined up at all

Don’t know / not relevant

Total

<£10 million 15.38% (10) 43.08% (28) 24.62% (16) 12.31% (8) 4.62% (3) 65

£10-50 million 0% (0) 53.85% (14) 34.62% (9) 11.54% (3) 0% (0) 26

£50-150 million 9.09% (3) 51.52% (17) 33.33% (11) 6.06% (2) 0% (0) 33

>£150 million 0% (0) 45.45% (35) 36.36% (28) 18.18% (14) 0% (0) 77

Not relevant / Don’t know

0% (0) 40.43% (19) 38.3% (18) 12.77% (6) 8.51% (4) 46

Total 13 113 82 33 7 248

Overall Percentage*

5% 46% 33% 13% 3% 100%

Of the factors listed below, joined-up online and offline experiences are described as essential by most respondents (64% for companies and 57% for agencies).

This is a noteworthy finding in the context of the sections above where it was seen that organisations in general are by no means consistently mapping customer experiences and identifying touch points, or working in cross-functional teams. There is a gap between what organisa-tions realise is important and what they are actually doing in practice.

Half of respondents believe that personalised experiences are essential for customers, with a further 44% believing they are useful. This finding needs to be seen in the context of section 7.3 below where it can be seen that 37% of respond-ents are not personalising the online customer experience at all.

The vast majority of company respond-ents also believe that frank and open discussions about products and services are essential or useful (50% and 46% respec-tively). Soliciting user-generated content (UGC) is regarded as essential by 29% of companies and as useful by 47%. However, 24% do not believe that facilitating UGC is important.

In terms of what companies are “doing now” to engage their customers, email (78%), natural search (65%) and paid search (62%) are the channels or technolo-gies most commonly utilised.

In terms of what is being planned in the next 12 months, User-Generated Content (42%), Rich Internet Applications / Ajax / Flash (36%) and Corporate Blogs (35%) are the most likely to be on the company radar.

Podcasting, Videocasting, Behavioural Targeting, Contextual Advertising and RSS are also on the agenda for many companies.

There is an eagerness to embrace new channels and technologies in spite of diffi-culties in getting some fundamentals in place in order to build a seamless customer experience (for reasons explained in the “barriers” section below).

Companies are most likely to segment their customers according to the value to their organisation (44%), demographics (43%) and customer lifecycle (39%).

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Figure 33 shows that the biggest five barriers to a magnificent customer experi-ence are deemed to be:1) Lack of resources / time (regarded as

“great barrier” by 66% of company respondents)

2) Disconnected systems and technologies (50%)

3) Lack of skills and training (38%)

4) Lack of finances (37%)5) Lack of regular processes and / or

suitable methodology (36%) For comparison, figure 34 shows the top five barriers as perceived by supplier respondents:1) Lack of resources / time (64%)2) Lack of skills and training (56%)3) Lack of boardroom buy-in (49%)4) Organisational culture (44%)4) Lack of regular processes and / or

suitable methodology (44%)

From the company perspective [figure 35], the greatest barriers to investing in tech-nology that improves customer experience are:1) Lack of implementation skills

(perceived as a barrier by 37% of company respondents)

2) Lack of management vision (36%)3) Inability to prove ROI (35%)

The agencies see the same factors as the top three barriers but in a different order, and to a different degree [figure 36]:1) Lack of management vision (57%)2) Inability to prove ROI (55%)3) Lack of implementation skills (39%)

As noted in the previous section, agencies are perhaps more aware of leadership issues holding back client organisations than companies themselves.

Lack of management vision is seen as a particularly pressing problem by agencies [figure 36], cited as a great barrier by 57% of supplier-side respondents.

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