RBC AI Summit Workbook

Driving Customer Engagement

At its core, customer engagement is about building lasting relationships -and not just one-off transactions. The goal is to establish a feedback loop wherein customer data informs product development, marketing strategy, product issue fixes, customer service, etc. At the most basic level, client engagement enhances awareness (e.g., brand recognition). However, awareness alone is not enough; customers' experiences with your company must be satisfying. It does little good for a customer to be aware of you as that one annoying advertiser and a lot of good for a customer to remember you as having quick customer service.

Indeed, customer engagement is key to retention, stronger, longer-lasting relationships, and client loyalty. Eventually, engaged customers can also become advocates, recommending the brand to others and leaving positive reviews / testimonials. Correspondingly, customer engagement drives firm growth by prioritizing the quality of relationships with existing customers, not just acquiring new ones. Furthermore, customer engagement can be leveraged to shape strategic directions; for instance, including customers in the early stages of the innovation process leads to higher- quality innovations^[1]. Below, we discuss three efforts businesses can make to improve client engagement.

1. Automate Client Communication

Automating routine client interactions using specialized software tools has become essential for improving efficiency and customer satisfaction. For instance, email marketing platforms allow businesses to create and schedule automated email campaigns, segmenting audiences based on demographics, behaviors, and purchase history. These platforms further support lead scoring and workflow automation and offer in-depth analytics to assess campaign effectiveness.

Similarly, SMS campaign tools send automated reminders and promotions by text message. Unlike emails, however, SMS campaigns are best suited for short but time-sensitive information, as customers are more likely to open text messages than emails and expect those texts to be brief and to the point. Another valuable tool for automating client interactions is chatbots. These programs are powered by natural language processing, making them capable of answering frequently asked questions, recommending products, and completing basic transactions. For best results, chatbots are integrated with customer relationship management (CRM) systems, allowing personalization of responses based on customer data. Together, chatbots, email marketing platforms, and SMS campaign tools save companies time when reaching out or responding to customers. Moreover, automation enables businesses to scale their communications, reaching more clients without a corresponding cost increase.

2. Personalize Customer Experiences

Tailoring interactions with individual customers enhances engagement and satisfaction. Customers feel better understood and served when companies personalize product recommendations, promotions, and even the tone / words used during customer service interactions. Indeed, customers report that personalized experiences are required to gain loyalty^[2].

The key to personalization is CRM systems. By tracking detailed customer information— including demographics, purchase history, browsing behavior, responsiveness to past campaigns, feedback, and even specific values like eco-consciousness - CRMs allow companies to craft more relevant interactions. This data-driven approach makes it possible to offer tailored product recommendations (like reminding a customer to replenish a recurring order), create dynamic email content that reflects a consumer's purchase history, and provide special discounts to customers who reported an issue. With these tailored touches, companies foster stronger connections and increase customer retention.

3. Connect on Social Media Platforms

Social media platforms offer businesses powerful ways to connect directly with clients. Flashy, big-ticket approaches include sponsorships with influencers, user-generated content campaigns (e.g., inviting customers to share how they use a product), and live-streamed events. However, any business can foster closer connections by responding to posts, messages, and comments, sharing real-time updates (like flash sales), conducting polls, and using social listening tools to gauge public sentiment about its brand. Throughout these interactions, the following best practices are essential:

1. Know your audience

2. Maintain a consistent voice and posting schedule

3. Prioritize quality over quantity

4. Utilize visuals effectively

5. Respond to customer messages promptly

6. Use hashtags judiciously

With these tactics and practices, businesses can create meaningful and memorable connections with their audience.

Measuring Customer Engagement

Companies need key performance indicators (KPIs) to measure the effectiveness of engagement tactics. Common KPIs include open rates, which show the percentage of recipients who opened an email or SMS; click-through rates (CTR), which measure how many recipients clicked a specific link; net promoter score (NPS), which indicates the likelihood of customers recommending your business to others; and social media metrics such as likes and shares, which reflect audience approval and their willingness to recommend the company to others. Other important metrics include new follower's rates, unsubscribe rates, and website visits. Analyzing these indicators helps businesses refine their marketing strategy by revealing which content types, subject lines, and messaging styles engage customers most effectively.

Beyond interaction metrics, companies should track revenue-related indicators like repeat purchase rate, which measures how many customers make a second purchase after an initial interaction. Similarly, conversion rates from personalized recommendations help determine the success of tactics like product recommendations and replenishment reminders. Businesses can also monitor customer lifetime value (CLV), the total revenue a customer is expected to generate over time. Notably, CLV often highlights the need to invest in engaging existing customers instead of chasing new ones, helping companies avoid the “leaky bucket” problem^[3] (Afshar, n.d.).

Finally, companies can use service effectiveness metrics to measure how well they deliver support and meet customer needs. Response time, which tracks the speed of replies to messages, posts, and comments, is linked to customer satisfaction, as prompt responses demonstrate attentiveness and respect for the customer's time. First contact resolution (FCR) is another key metric, indicating the efficiency with which customer issues are resolved in the first interaction. Case deflection, which measures inquiries prevented through proactive tools like FAQs, self-service options, and social listening, also reflects service effectiveness by reducing demand on support teams. Together, these interaction, revenue, and service metrics provide a well-rounded perspective on customer engagement, allowing companies to optimize their strategies for connecting with, retaining, and supporting customers.