Excellent customer engagement is critical, yet companies aren’t delivering it

Creating engaging, personalized customer experiences leads to increased loyalty and retention, according to a new study from Harvard Business Analytics.

It can’t be stated enough: It’s a customer-centric world today and with economic uncertainty looming, engagement and retention are more important than ever. A new report from Harvard Business Analytics makes the case for why companies should double down on creating an exceptional customer experience and work to overcome roadblocks.

The report finds that 92% of survey respondents believe effective customer engagement is “extremely critical” or “very critical” to their organization’s success. Further, 88% of executives agreed that customer engagement has a significant impact on their organization’s bottom line.

Another significant finding was that 36% rated their current customer engagement as “good,” while only 9% said it is “excellent.”

CX should be “personalized, contextual, and engaging across the customer journey—and doing it in a highly efficient way that saves you money,’’ wrote Karen Peacock, CEO of Intercom, which sponsored the report. “The businesses that do this are the ones that will thrive and emerge as winners.”

But today, the report observes, organizations of all sizes struggle to deliver personalized customer engagement at scale and there are many issues holding them back.

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The factors hindering customer excellence

Poor cross-functional team collaboration is a key obstacle. The study found that 44% of executive respondents cited a lack of collaboration and siloed efforts as the top impediments to successful customer engagement.

Executives said disconnected, legacy tech stacks and siloed data are slowing their teams down and preventing personalization, the HBA study said.

“Tech stacks bloated with legacy systems and disjointed tools are slow, inefficient, and lack contextual data needed for personalization. Ultimately, outdated tools impede collaboration and prevent employees from engaging customers in a timely and personalized way,” the report noted.

Another issue for 32% of respondents is that their organizations are failing to properly distribute data-driven customer insights throughout the organization. And 60% of executives don’t feel their organization is tailoring their communications well with their current tools, the report said.

“In addition, many don’t have the strategies, organizational structure, and culture needed. This leads to poor collaboration, lack of alignment, and ultimately, lost customers and revenue.”

There’s also a scarcity of talent: Over half (56%) of executives encounter difficulty finding the right personnel to manage customer engagement efforts.

HBA attributes this issue to the fact that “modern customer engagement is a newer discipline than more established, traditional functions like HR, finance, or IT. It’s not surprising then that one of the key challenges companies are facing is finding suitable talent to fill critical roles—from leadership all the way to execution.”

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Why effective customer engagement matters

In the digital age, today’s customers want and demand easy, proactive, personal and efficient experiences at scale. One of the top benefits of creating engaging, personalized customer experiences is increased loyalty and retention, according to 69% of survey respondents.

And 40% of respondents rely on retention/repeat purchase rates to measure or track the success of customer engagement efforts.

“When departments fail to share information, pool resources and share contextual data and insights, it’s often the customer who pays the price with a lackluster customer experience,’’ the report stated. “And ultimately, it’s the business who will swallow the cost of lost customers and revenue.”

To deal with the impediments, 56% of survey respondents said they are encouraging greater cross-functional team collaboration with the explicit aim of improving customer engagement, the report said.

Doing so requires “functional departments, such as customer service, sales, and marketing, to work together to provide customers with a world-class, cohesive, personalized experience across the customer journey,’’ the report said. “Organizations need to ensure that any investments in technology and cross-collaboration center around a culture that values customer engagement.”

Harvard Business Review Analytic Services said it conducted a survey of 317 executives from a range of industries in April 2022 to explore the value of customer engagement.