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New Harvard Publications Report: Effective Customer Engagement is Critical

But Obstacles Get in the Way of Businesses Obtaining CX Benefits

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Effective customer engagement is especially critical to businesses today as the world braces for an economic downturn, according to new research from the publishing group at Harvard University. And yet, various obstacles prevent businesses from fully realizing the benefits conferred by efficient and capable CX, the research reveals.

Contained in a report called Future-Proofing Businesses with Modern Customer Engagement, the research is sponsored by Intercom, the proponents of a new way of customer engagement in which all customer communications spring from a single unified platform and source of data to support customer needs, enabling companies using Intercom to grow and for customers of the company to enjoy richer experiences. The report is from Harvard Business Review (HBR) Analytic Services, an independent commercial research unit within the HBR Group, conducting research and comparative analysis on important management challenges and emerging business opportunities. The HBR Group is part of Harvard Business Publishing, a wholly owned subsidiary of Harvard University.

According to the report, 88% of global business leaders surveyed for the research recognize that customer engagement has a significant impact on their organization’s bottom line. Moreover, 92% view effective customer engagement as “very” to “extremely” critical to their organization’s success, even though just 9% say they have excellent engagement today. Less than half are investing in new or improved customer engagement technologies, and only 40% say they are effectively using data to send customers the correct message at the right time via an appropriate channel. 

“As customers engage with leading brands that provide exceptional accuracy in their personalization and recommendations, they’ve come to expect that same level of service from all companies,” says Blake Morgan, author of a 2019 book on providing superior CX, The Customer of The Future: 10 Guiding Principles for Winning Tomorrow’s Business. “Accurate engagement today is more than just knowing a customer’s name—it requires a deeper understanding of their preferences, values, and demographics to show that an organization cares and can provide relevant engagement.”.

Organizations are turning to customer engagement efforts primarily to increase customer loyalty and retention (69%), increase revenue growth and profitability (59%), and improve brand reputation (42%), the report says. However, businesses are encountering obstacles that prevent them from getting the full benefits that come from effective customer engagement.

One obstacle named by the report is poor cross-functional collaboration. Nearly half (44%) of respondents say a lack of collaboration and siloed efforts are the top impediments to successful customer engagement.

A second obstacle is siloed data, with 32% of respondents saying their organizations fail to properly distribute data-driven customer insights throughout the organization, and another 32% saying customer data is siloed or that it is proving difficult to extract insights from data. Furthermore, 60% do not feel they do a good job of using data to tailor communications to customers.

A third obstacle is the scarcity of talent. More than half (56%) of respondents struggle to find the appropriate personnel to manage customer engagement efforts, and nearly three-quarters (73%) of respondents “strongly agree” or “somewhat agree” that their organization is in need of employees with experience and expertise in customer engagement.

Alex Clemente, the managing director at HBR Analytic Services, says the research shows that while business leaders understand the importance of customer engagement, they are bumping into barriers in execution. “Fostering a culture that supports more personalized engagement, eliminating data silos, deploying the right technologies, and recruiting robust talent are all barriers that organizations will need to overcome to achieve effective customer engagement,” Clemente points out.

Karen Peacock, the CEO of Intercom, says engaging one’s customers and delivering deep value for them are key drivers to retention and repeat customers, while also fueling a healthy business. “During times of economic uncertainty, engagement and retention become more important than ever,” says Peacock. “Now is the time to double down on creating an exceptional customer experience—one that’s personalized, contextual, and engaging across the customer journey and doing it in a highly efficient way that saves you money. The businesses who do this are the ones who will thrive and emerge as winners.”

The findings on the value of customer engagement are based on a global survey fielded in April 2022 of 317 business leaders, and conducted by HBR Analytic Services. Respondents were primarily senior- or executive-level management in a broad number of industries, led by manufacturing, healthcare, technology, and financial services.

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