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Customer Experience vs. Customer Engagement

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In today's hyper-competitive business landscape, customer experience and customer engagement strategy are both critical to ensure and improve customer retention. But why and how exactly do they differ from one another?

This post looks at core aspects of customer experience vs. customer engagement, how the strategies intersect, and the value they provide to build long-term customer loyalty. We'll also look at how organizations can use AI-powered customer experience technologies, specifically intelligent virtual agents (IVAs), to take these strategies to the next level.

Where to Invest? Customer Experience vs. Customer Engagement

Customer experience and customer engagement are two important business concepts often used interchangeably. But they are actually quite different. Customer experience is a broad term that refers to the sum of interactions a customer has with a company over time. Customer engagement, meanwhile, refers to the emotional connection between a customer and a company.

When evaluating customer experience vs. customer engagement, it should not be a one or the other approach. It’s necessary to examine how the two concepts can work together. A positive customer experience can lead to increased customer engagement, which can improve customer retention. Companies that want to build the relationships that improve customer retention need effective strategies for both customer experience and customer engagement.

Customer experience vs. customer engagement definitions

The Business Value of Positive Customer Experience

Customer experience significantly affects how customers perceive and interact with a company. This can work in your favor or cause damages. Unfortunately, 54% of customers say that the customer experience at most companies needs improvement. This data demonstrates an opportunity for organizations to invest in customer experience strategies and salvage customer satisfaction.

Positive experiences can help foster customer loyalty and drive repeat business. Companies should strive to incorporate these positive experiences into their customer experience strategies to improve customer satisfaction and ultimately, business success.

Examples of positive customer experience include:

  • Consistent brand messaging across all touchpoints (e.g., in-person offices, social media, the company website, the contact center, etc.). A consistent brand message can improve customer satisfaction by ensuring that customers receive the same level of service and messaging across all touchpoints. This means that regardless of where a customer interacts with the company, they can expect a seamless experience aligned with the company's mission.
  • Seamless shopping experiences, where agents at the store and in the contact center have access to a customer’s past interactions to inform support. By having access to a customer's past interactions, agents can provide personalized and efficient support tailored to the customer's needs and preferences. This personalized service can help create a positive and memorable experience that builds trust and loyalty.
  • Prompt and helpful customer service interactions, which minimize a customer’s time investment and boost satisfaction. By providing prompt and helpful support, companies can demonstrate that they value customers' time and are committed to resolving issues efficiently. Additionally, prompt and helpful customer service interactions can promote positive word-of-mouth and online reviews. Customers who have a positive experience with customer service are more likely to recommend the company to others or leave positive reviews online. These recommendations can help attract new customers and improve the company's reputation.
  • Personalized and 24/7 self-service options, which grant autonomy to the customer. In addition, personalized and 24/7 self-service options can reduce support costs for the company. Self-service reduces costs by automating tasks and allowing customers to find the information they need without human assistance. Automation and access to information help improve efficiency and streamline processes, while also providing customers with a convenient experience.

54% of customers say that the customer experience at most companies needs improvement

The Role of Customer Experience Management

Decision-makers play an important role in creating high quality customer experiences, which is why customer experience management strategies are important. For reference, customer experience management strategies focus on nurturing customer relationships and pave the way for customer loyalty and repeat business. These strategies achieve customer loyalty and repeat business because they create positive and memorable experiences that exceed customer expectations.

A critical aspect of customer experience management relies on the customer journey. If organizations take time to map out the customer journey and know customers’ preferences, it’s easier to create positive experiences. Hiccups during the customer journey lead to customer churn (the rate at which customers stop doing business with a company). If the goal is to improve customer retention, then churn is the enemy.

If you find yourself asking how to improve customer engagement, start with customer experience. After you check the boxes to provide positive experiences, you’ll be able to drive engagement.

What Is Customer Engagement and Why Does It Matter?

Customer engagement is the way customers feel about a brand, and therefore influences how actively they interact with it. These interactions happen across a variety of channels. A few examples of customer engagement are social media engagement, email marketing campaigns, loyalty programs, customer service conversations, and events or promotions.

The ultimate goal of customer engagement strategies is to improve customer retention. Positive experiences help customers feel connected to brands and encourage them to continue the relationship. In other words, customer engagement helps companies build the kind of loyalty that translates into repeat business.

How to Improve Customer Engagement

Customer experience and customer engagement complement each other. They work together to reinforce the overall customer journey and help improve customer retention and loyalty. And while a positive customer experience may customer engagement with a company or brand, the chain of events is not always the case. For example, effective customer engagement can also be a driver of positive customer experience. Positive customer experience can lead to a deeper connection with the company and better communication between the customer and the business.

AI can help decision makers create new avenues to optimize the customer experience. AI-powered IVAs can create processes that consistently enhance the customer experience. Those insights then inform the communication tools that will help decision makers build the most effective customer engagement strategy.

Knowing customers and meeting them where they are is the best way to improve customer retention. AI-enabled communication solutions help gather useful data that decision makers can apply to improve interactions and deliver on customer preferences. In the realm of customer experience, that means providing customers with conversational self-service options that are fast, easy, and yield positive results. IVAs expand the scope of organizations’ strategies beyond the lens of customer experience vs. customer engagement. They enable comprehensive customer engagement strategies through proactive, personalized outreach that keeps customers involved for life.

When planning how to improve customer engagement, it’s critical to develop a cohesive customer engagement strategy.

 Customer engagement starts with customer journey orchestration and leads to customer retention.

Key Elements of Customer Engagement Strategy

Since an effective customer engagement strategy is closely related to customer experience strategy, it’s easy to get confused. Customer engagement starts with customer journey orchestration and ends with customers becoming loyal brand advocates.

If customer experience is the first consideration, customer engagement is the next step to drive loyalty and help improve customer retention. Engaged customers are more likely to make additional purchases, recommend the company to friends and family, and have a higher lifetime value. They also generate more revenue than normal customers.

Key aspects of a customer engagement strategy might include:

  • Chats in online forums where customers find answers to questions.
  • Loyalty programs that reward and encourage customers to stay engaged.
  • Personalized recommendations tailored to specific customer profiles.
  • Newsletters that nurture customer interest between purchases.
  • Active company social media platforms that encourage customers to share feedback and engage.

To better grasp how a customer engagement strategy can improve customer retention, let's consider how it looks from a customer’s point of view.

Let’s say you are booking flights for an upcoming trip. You opt for a certain airline because it has a great mobile app, responsive customer service, friendly emails, and an impressive loyalty program. These elements create a positive experience and encourage you to continue flying with the airline.

The airline’s ability to deliver repeat positive experiences is part of its customer experience strategy. The company has prioritized how to improve customer engagement, and in doing so, has been able to improve customer retention.

Elevate Customer Engagement Strategies with Mosaicx

Decision makers understand the importance of customer experience and engagement strategies in enhancing customer retention. Mosaicx gives decision makers the tools they need to achieve success. We are an active partner and trusted advisor during the strategy development and execution process. Learn how Mosaicx can support your goals and schedule a demo at mosaicx.com.