Customer Engagement and Customer Experience: Defining the Difference

Prost! It’s the 183rd Oktoberfest in Munich. Thousands of beer lovers have gathered to experience all-things Bavarian. But in the end what makes a good Oktoberfest? What adds up over time to make people want to don their Lederhosen and go back again and again? With the misty memory of a world seen through the bottom of a Stein, how do people end up feeling, apart from tipsy? This is a story to define the difference between customer engagement and customer experience, distinguish one from the other and define both. Some of this is drier than the average pretzel so as a serving suggestion maybe grab one of those beers. We’ll warn you when you might need to take a refreshing swig.

In a land not so far away (München) it doesn’t matter how much beer you’ve drunk, the inconsistent use of ‘customer experience’ and ‘customer engagement’ have blurred everyone’s understanding. It’s giving us all a headache. And that’s without the very loud Oompa music.

To stop the room spinning we’re provding some clarification on definitions.

Definition of Customer Experience

Forrester defined customer experience as “How customers perceive their interactions with your company.”

Paul Greenberg clarified by quoting Bruce Temkin: “The perception that customers have of their interactions with an organization.” 

So, it’s interaction-based and the measure is customer perception. We agree. And we agree with Paul’s clarification that this is different from customer engagement. It’s the same as visiting just one tent at Oktoberfest, you’re missing the big picture and the fun you could have from visiting a lot more of the festival.

Here’s a nice diagram to show you our thinking:

Forrester’s definition is the first foundation layer. It’s an essential ingredient, like hops in beer. Customer engagement however is the whole thing, including the yeast and sugar.

Hence there is a difference between Customer Engagement and Customer Experience.

Definition of Customer Engagement

Paul Greenberg defined customer engagement as “The ongoing interactions between company and customer, offered by the company chosen by the customer.”

At Thunderhead we agree, but we put more emphasis on the mutual exchange of value in our definition of customer engagement: “An on-going, value driven relationship between a customer and a business, which is consciously motivated according to the customer’s reasons and choices.” (We wrote the book on Customer Engagement so we should know.)

As you can see from the diagram above of what makes up customer engagement, our definition includes at its base how a customer perceives their interactions with your brand (CX). CX is a sub-set of customer engagement. However, customer engagement provides a broader context for how to drive value for your brand and for your customers. A customer could spend many minutes happily interacting with a brand through a variety of touchpoints, each experience taking them closer to their end goal. Within one transaction, or interaction, a customer may perceive they are satisfied. However, as our research shows, all it takes is one negative experience to damage the memory of the entire experience and the association with the brand, which ultimately leads to a disengaged customer.

In the same way that Bavarians have generally moved on from wearing Dirndls and Lederhosen, CX is evolving as the full omni-channel customer journey and the broader context of Customer Engagement are acknowledged and understood. Understanding the customer journey as a whole is a source of more value than looking at any separate, individual positive experiences along that journey. Focusing on individual experiences at isolated points of interaction will not lead to a value-driven ongoing relationship that meets the expectations of the customer. At the core of increased ROI is the organising principle of measuring customer experience at the journey level as opposed to looking only at transactional touchpoints.

(Mouth feeling dry? Take a swig from your Stein…)

We agree with the boffins at McKinsey in their Five ‘No Regrets’ Moves For Superior Customer Engagement: “Customer engagement … should not be confused with the customer experience; engagement goes beyond managing the experience at touch points to include all the ways companies motivate customers to invest in an on-going relationship with a product or brand.  More customer interactions across more touch points are shaping the degree of engagement a customer feels with your company … companies that learn to design and execute effective customer-engagement strategies will have the advantage; the others will lose ground.”

To improve ROI brands need to think beyond individual interactions and focus on the customer journey.

Once you’ve recovered from your Oktoberfest hangover you’ll be ready for next week’s blog which looks at how to measure the value and ROI of customer engagement.