This Week's Herman Trend Alert

Leadership in Normal 2.0

  The Herman Trend Alert

July 8, 2009

Customer Engagement Today and Tomorrow

Consumers are spending less---and expecting more. In the third quarter of 2008, US consumer spending fell by 3.1 percent, the steepest decline since 1980. Concurrently, customer satisfaction is suffering. For the past 18 months, the American Customer Satisfaction Index (ACSI) has also decreased.

The companies that will survive are the ones that engage their customers. Recently, PeopleMetrics issued its 2009 Most Engaged Customers Study. Focusing on aspects of customer engagement, the report ranked the top-performing companies.

The study found "higher levels of customer engagement have a positive impact on the [desired customer] behaviors". Conversely, disengagement has the reverse effect. Specifically, "a fully engaged customer recommends a brand nearly four times more often than does an ambivalent customer". By contrast, an actively disengaged customer will tell an average of three people "to avoid a company and its services". "A fully engaged customer visits that company's website twice as often as an actively disengaged customer and makes three times as many online purchases."

Regrettably, engaging customers is more difficult now than in the past. Across the brands that were assessed in both 2008 and 2009, nearly half (13/27) experienced a significant drop in engagement levels (59 to 50 percent).

The brands found to be the best at customer engagement in rank order were Ritz-Carlton, Google, The Four Seasons,, Cartier, Armani,, Wegman's Food Market, Coach, and Costco. Three stand-out employers on the list are noted for being employee-centered organizations: Ritz-Carlton, Wegman's, and Costco. These employers put workers "firmly in the center of their service and business strategy". Essentially, the winning industries have more reliable service delivery than the lower performing industries.

The big winners in increased engagement were Wal-Mart (14 points) and RadioShack (12 points). In today's economic climate, "getting greater value for one's depleting dollars is paramount".

PeopleMetrics is an organization dedicated to helping clients engage their internal and external customers. To purchase the full report, e-mail

Our forecast is that organizations that take care of their employees during this dangerous period will emerge from this contracted economy with a higher market share and a greater ability to recruit top talent.

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