A Complete Guide to Engaged vs Passive Customers

/ 8 March 2024

Gone are the days when brands could rely on passive customers who make occasional purchases but have little interaction or loyalty. Research shows that highly engaged customers buy 90%* more often and spend 60%* more per transaction than normal customers. 

With such eye-catching stats, no wonder that customer engagement has become a prime target for brands across retail, e-commerce, and service-based businesses.

But what exactly constitutes an engaged customer versus a passive customer? And what strategies can help convert those passive shoppers into vocal brand champions? This blog will explore it all.

Two types of customers: Passive customers and engaged customers

Not all customers are created equal, and this can have a big impact on your bottom line. At a high level, there are two general types of customers – engaged vs passive customers. It’s hugely important to understand the difference between the two, and how the discrepancy can affect your organization.

Let’s look at the key character traits so you can spot them: 

The traits of passive customers

Now we know a little more about engaged customers, let’s take a look at their counterparts. Here are a few traits that define passive customers:

❌No brand loyalty

Unlike engaged customers, passive customers do not feel any loyalty towards your organization and are happy to switch brands or products as soon as a better option comes along. Airlines are a great example of where loyalty and brand engagement matters. It’s not unusual for travelers to fly exclusively with their favorite airline, regardless of whether another airline offers a faster itinerary or a lower price. Rewards programs, a good example of gamification, are a huge driver of this loyal behavior. Engaged passengers are also influenced by branding, in-flight customer service and most importantly, a collective feeling that the airline understands their unique needs and values. 

💸Highly price sensitive

As explored above, engaged customers are not necessarily price driven as their decisions are influenced by other, more important factors. In comparison, passive customers have no underlying loyalties or partialities towards a brand, making price a key variable. This means that if your customers are passive and you’re not offering the lowest prices, your retention levels are going to suffer. 

❌No pride or enthusiasm

While passive customers don’t necessarily feel any negativity towards your brand, they are unlikely to share their experiences with others. Word-of-mouth marketing is incredibly valuable and can only be leveraged when customers experience brand engagement and feel a sense of pride, enthusiasm and involvement. 

Key facts about engaged customers 

🔁If it isn’t two-way, it isn’t engagement

The most important element of customer engagement is that it’s a two-way street. If the relationship isn’t symbiotic, it’s not engagement. This means you should always be looking for new ways to listen to your customers and offer them value. 

🎫Fair value exchange is essential

Engaged customers must always be offered a fair exchange of value. For example, asking your customers to sign up for your newsletter and rewarding them with a discount code is a fair exchange of value. Refer-a-friend campaigns are another solid example of a fair exchange of value between a brand and its customers. 

❤Engaged customers are loyal

Loyalty is one of the most valuable traits an engaged customer can exhibit. Not only are loyal customers more likely to return, they’re also an incredibly valuable marketing medium as they tend to share their positive experiences with others. When engaged customers start to advocate for your brand, your retention levels will soar. Advocacy can include social sharing, referral of friends and family, positive reviews and word-of-mouth advertising.

4 steps to convert passive customers to advocates

Developing lasting brand loyalty begins by seeing your customers as individuals, not merely as potential sales. Establishing an emotional bond through personalized, relevant interactions is crucial.

Step 1: Create personalised, relevant customer communications

Lean on data analytics to categorise customers and customise communication for maximum relevance. Observe their purchasing history and online activity to present content and offers that match their interests. And use CRM tools for sophisticated micro-targeting through email, social media ads, and beyond.

💡Top tip: Aim for personalisation that feels like a genuine human touch, avoiding generic, impersonal messaging. Psst. Earned data is the best way to achieve this (more on this later 👇).

Step 2: Develop loyalty programs that value engagement

Motivate customer interactions by offering rewards such as points, early access, and other incentives for their engagement. A layered customer loyalty program can encourage individuals to increase their involvement for greater rewards. You basically need to show customers they are appreciated for more than just their transactions. 

💡Top tip: Top-tier, highly engaged customers might receive exclusive benefits like early sale access, unique content, and special customer experiences. 

Step 3: Always provide exceptional after-sales service too

Just because a sale is complete, that doesn’t mean the customer journey is over. Equip your staff with training and policies that enable them to resolve issues effectively and exceed customer expectations. You can proactively gauge customer satisfaction post-purchase through emails or calls.

💡Top tip: Gather customer feedback to refine your policies and address any concerns. By addressing challenges head-on, it changes a weakness (customer complaints) into a strength for a more positive customer relationship.

Step 4: Encouraging Feedback and Reviews

Regularly conduct surveys with a selection of customers to obtain useful customer feedback for enhancing your offerings. And keep an eye on reviews and respond promptly and publicly.

💡Top tip: Encourage satisfied customers to leave reviews. User-generated content, like reviews, enhances trust and credibility for your brand.

Ultimately, the aim is to create meaningful human connections rather than transactional ones. When customers feel understood, appreciated, and listened to, their emotional connection deepens. Such a bond lays the foundation for enduring loyalty that can weather any market fluctuation.

Understanding the power of earned data

We’ve briefly touched on earned data (a.k.a. First-party data). Essentially, it’s data that customers knowingly and willingly share with you – their preferences and insight into behaviours – in exchange for something from you. For example, it may be a discount or additional service added to their account.

For the brand, earned data is hot property because it creates a more comprehensive and reliable data for understanding customer satisfaction, improving products and services, and developing effective marketing strategies.

Not surprisingly, this is why one of the key goals of customer engagement is to earn data. 

Here’s how to capture earned data

To create a value exchange, there are several best practices you can follow:

🎮Leverage gamification 

From international tourism campaigns to blue-chip banks, leading brands use gamification to engage customers of all shapes and sizes. Nothing encourages a customer to hand over high-value earned data more than fun, interactive and meaningful exchanges of value. Put simply, game mechanics encourage desirable behaviors, increase loyalty and ultimately, transform passive customers into engaged customers. 

🔍Case study: Passive customers to engaged customers 

The digital board game we created for Zizzi Restaurants is a powerful example of how gamification can be used to increase brand engagement, obtain valuable behavior and preference data and unlock additional marketing opportunities by asking customers to refer friends and family.

The results?

  • 3x increase in email click-through rates
  • 1000s of social referrals, Tweets and new followers.

Generate revenue from passive customers today

Passive customers often make up a large portion of an organization’s customer base. This makes them an exciting opportunity for your organization to learn and grow.

At 3radical, we specialize in empowering organizations with the knowledge and tools to convert passive customers. Gamification is a key part of the customer engagement process, with our highly skilled team using techniques to acquire and retain new customers, increase customer loyalty, and encourage advocacy. 

Want to know more about how to increase customer engagement and leverage the power of gamification? To find out more about our customer engagement steps, don’t hesitate to contact our team or request a demo of our gamification platform.

Or, if you’re looking for more insights, take a look at these blogs:

Source: https://vizury.com/blog/customer-loyalty-in-commerce

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