From a Transactional Customer to a Loyal Customer
What is customer engagement?
According to both academic research and corporate practice, customer engagement behaviour is a key success component for businesses in the long run. Customers who are engaged are far more profitable for a company than those who are not. Firms have traditionally concentrated on building relationships with present customers to influence purchase and repurchase behaviour, classifying consumers with more transactional behaviour as better customers for firm profitability. However, when it comes to customer engagement, customer contribution to the business is not restricted to purchase-related indicators, as engagement behaviour leads to new product ideas or referrals of new consumers, for example. As a result, customer engagement goes beyond transactional customer valuation to encompass both transactional and non-transactional measures.
As stated, transactional customers are those who contribute directly to the sales of the company by purchasing the goods. This might seem positive in achieving maximum profit but it might last only for a short while. These customers are significant because they are current consumers and importantly, they contribute to revenue. Analysing their purchasing behaviour, we might see that their purchasing activity is motivated by promotions or sales, vouchers, cash back or coupons. When there is no catch for them to push their purchasing action, the number of sales contributed will be smaller. Having promotions, sales, etc are worthful to attain new customers but targeting for repurchasing of goods, brands have to deliver values and qualities to retain them. Providing values and good qualities continuously will make customers feel that the relationship is significant and not just treating them merely as transactional customers. The next step for them is to nurture a strong, long-term relationship with your brand. This is in favour to retain the customers and make repeating sales which eventually shows an increase in customer loyalty.