Demystifying Customer Engagement: Toward the Development of a Conceptual Model

Page 1 of 9 ANZMAC 2009 Demystifying Customer Engagement: Toward the Development of a Conceptual Model Linda D. Hollebeek, The University of Auckland Business School, Email: l.hollebeek@auckland.ac.nz Abstract: After making substantial contributions to the literature in related fields including (social) psychology and organisational behaviour, the engagement concept is emerging in the marketing literature with preliminary analyses indicating that engaged consumers may exhibit greater loyalty to focal brands. Despite these advancements, the conceptual nature of engagement and its relationship with other, interrelated marketing constructs are debated. This paper aims to address this gap by reviewing relevant literature, proposing a customer engagement conceptualisation and associated conceptual model, which may be used to guide future research in this area. Key words: Customer engagement, brands, relationship quality, loyalty

ANZMAC 2009 Page 2 of 9 Demystifying Customer Engagement: Toward the Development of a Conceptual Model Engagement: Introduction & Conceptual Foundations The limitations of conventional marketing constructs (e.g. perceived quality and customer satisfaction), in explaining and predicting consumer behaviour outcomes, including loyalty, are widely acknowledged (Taylor & Baker, 1994; Sureshchandar et al., 2002). The literature suggests that although satisfaction is a necessary step in loyalty formation [it] becomes less significant as loyalty begins to set through other mechanisms (Oliver, 1999: 33). It is the examination of such other mechanisms that are of interest in this paper, with a specific focus on the emerging customer engagement concept, which may be a superior predictor of customer loyalty relative to traditionally-used marketing constructs (Bowden, 2009; Patterson et al., 2006). The engagement concept has its roots in a variety of parent disciplines including (social) psychology and organisational behaviour (Achterberg et al., 2003; May et al., 2004). In the organisational behaviour literature, employee engagement has been used as a means to explore and explain organisational commitment and citizenship behaviours, and has been subsequently applied as a predictor of financial performance (Saks, 2006). Engagement has also been found to enhance morale, cohesion and rapport via psychological contagion processes (Salanova et al. 2005). Within this stream of literature, Kahn (1990: 700) defines engagement as task behaviours that promote connections to work and to others, which may be expressed physically, cognitively and/or emotionally and which serve to increase employee motivation (May et al., 2004). In sum, in the organisational behaviour literature, engagement has been found to potentially generate a number of positive consequences at both organisational and individual levels including attitudes, intentions and behaviours (Saks, 2006). It has also been positively linked to outcomes such as job satisfaction, low absenteeism, high organisational commitment, superior customer-related performance and customer evaluations (Salanova et al., 2005; Harter et al., 2002). As a result of the valuable insights offered by investigations of engagement across various parent disciplines, academic interest in the concept is emerging in the marketing literature (Bowden, 2009; Heath, 2007). Within the discipline the concept is typically applied as customer engagement (Bowden, 2009; Patterson et al., 2006), reflecting customers relevant individualand/or context-specific levels of engagement with particular objects, such as brands (Sprott et al., 2009), products or organisations (Patterson et al., 2006). A review of specific engagement conceptualisations offered in the literature is provided in section 2. The potentially significant predictive power of customer engagement to loyalty is thus starting to become documented in the literature, albeit so far largely restricted to conceptual relationships (Bowden, 2009). The marketing literature broadly, suggests customer value as a key antecedent to loyalty, which may be conceptualised using a cost/benefit evaluation (Netemeyer et al., 2004; Zeithaml, 1988) where costs include those purchase-related (non-) monetary perceived costs (e.g. time, effort). Perceived levels of customer value, constituting overall brand-related experience (Brakus et al., 2009), are thought to represent important drivers of customer loyalty, which may be affected substantially by relevant customer engagement levels. Customer engagement is thus expected to be important in explaining and/or predicting customer experience, perceived value and/or loyalty outcomes. This paper is structured as follows. First, based on a literature review, a conceptualisation of engagement is proposed in section 2, followed by a discussion of the 1

Page 3 of 9 ANZMAC 2009 conceptual relationships and hallmarks of engagement relative to other, interrelated constructs in section 3. The paper concludes with a conceptual model and series of future research directions presented in section 4. Toward a Conceptualisation of Customer Engagement Bowden (2009: 65) defines customer engagement as a psychological process that models the underlying mechanisms by which customer loyalty forms for new customers of a service brand as well as the mechanisms by which loyalty may be maintained for repeat purchase customers of a service brand. The author thus differentiates engagement dynamics across existing, as opposed to new, customers. Patterson et al. (2006) define engagement as the level of a customer s physical, cognitive and emotional presence in their relationship with a service organisation, thus matching the three-partite conceptualisation of engagement widely-adopted in the organisational behaviour literature (Saks, 2006; May et al., 2004). In addition to Patterson et al. (2006), Bowden (2009) also acknowledges the particular applicability of engagement in service contexts which typically, are characterised by a level of interactivity e.g. between frontline service personnel and customers (Bolton & Saxena-Iyer, 2009), thus implying that engagement has a two-way, reciprocal nature (Robinson et al., 2004). Figure 1: Key Engagement Aspects Figure 1 shows five key aspects of engagement (Ilić, 2008). Engagement is acknowledged as a potentially highly context-specific variable that may impact on consumer choice (Heath, 2007) in relation to particular engagement objects such as brands, products or organisations (Patterson et al., 2006). Engagement is further recognised to represent a dynamic process occurring over time and thus potentially characterised by distinct phases (Bowden, 2009) and/or differing levels (Sprott et al., 2009). In addition to representing a process, engagement may be measured at particular levels at specific points in time (i.e. engagement outcomes). Based on a literature review, engagement in the present research is defined as the level of expression of an individual customer s motivational, brand-related and context-dependent state of mind characterised by a degree of activation, identification and absorption in brand interactions. Implicit in this conceptualisation is the three-partite taxonomy of cognitive, behavioural and affective engagement elements respectively (Kahn, 1990; May et al., 2004). While the engagement dimensions of activation, identification and absorption originate from the organisational behaviour literature (Schaufeli et al., 2002; Salanova et al., 2005), Patterson et al. (2006) argue for applicability of these concepts in customer engagement settings. Adapting Schaufeli et al. s (2002) and Patterson et al. s (2006) definitions, these concepts are defined as follows: Activation represents a customer s level of energy and mental resilience while interacting with a brand (e.g. employees, the firm, other customers), willingness to invest time/effort in one s role as a customer and persistence even in the face of difficulties. Second, identification refers to the degree of perceived significance, inspiration and pride in one s role as customer. Third, absorption refers to the level of concentration/engrossment in one s role as a customer. At high absorption levels one perceives time to pass quickly and has difficulty detaching oneself from one s role as a customer, e.g. by continuing to think about the brand post- 2

ANZMAC 2009 Page 4 of 9 brand interactions. The present engagement conceptualisation is focused on customers direct, physical contact-based brand interactions (Brakus et al., 2009), as opposed to indirect interactions, which may occur e.g. by observing a brand through mass communications. Relationship of Engagement to Other Marketing Constructs Engagement has been shown interrelated, and thus conceptually similar, to several other marketing constructs (Patterson et al., 2006; Bowden, 2009) listed in Table 1. Based on a literature review, definitions are provided for each concept in addition to the posited nature of relationship and key distinctive facet(s) relative to engagement. Table 1: Customer Engagement & Other Marketing Constructs Construct Definition Relationship to Engagement Involvement An individual s level of interest & personal relevance Antecedent to engagement in relation to a focal object/decision in terms of one s basic values, goals & self-concept (Zaichkowsky, 1985; Mittal, 1995). required prior to the expression of a customer s relevant engagement level. Interactivity Flow A variable characterised by some form of customerfirm interaction (Bolton & Saxena-Iyer, 2009). A state of optimal experience characterised by focused attention, clear mind, mind & body unison, effortless concentration, complete control, loss of selfconsciousness, distortion of time & intrinsic enjoyment (Csikszentmihalyi, 1990). Rapport Perceived level of harmonious, empathetic or sympathetic connection to another, which is viewed in some way as congruent to the self (Brooks, 1989). A sense of genuine interpersonal sensitivity & concern (Ashforth & Humphrey, 1993). Value Creation Brand Experience Perceived Quality Customer Satisfaction Co- Level of perceived value created in the customer s mind arising from interactive, joint &/or personalised activities for & with stakeholders (Dall Olmo-Riley & dechernatony, 2000; Prahalad & Ramaswamy, 2004). A subjective, internal consumer response (sensations, feelings & cognitions) & behavioural responses evoked by brand-related stimuli (design, packaging, identity, comms. & environment (Brakus et al., 2009). A consumer s appraisal of a product/service s overall excellence/superiority (Zeithaml 1988; Parasuraman et al. 1988). A customer s overall evaluation of the performance of an offering to-date (Johnson & Fornell, 1991; Gustaffson et al., 2005) Antecedent to engagement required prior to the expression of a customer s relevant engagement level. Conceptually similar to the Absorption dimension, yet flow may act as an antecedent state to short-term peak experiences not directly captured by absorption (Patterson et al., 2006) Engagement consequence in human-based customer/brand interactions (new customers); Possible antecedent to engagement for existing customers. Consequence of engagement in cases of human-based customer/brand interactions. Consequence of engagement, which in contrast to the latter does not presume a motivational state (Brakus et al., 2009: 53). Consequence of engagement particularly in service &/or value co-creative contexts. Engagement consequence with a potential positive relationship between these (cf. Saks, 2006). 3

Page 5 of 9 ANZMAC 2009 Customer Empowerment Degree of a customer s perceived control of their choices &/or understanding of their environment & active efforts undertaken to exert control (Zimmerman & Warschausky 1998; Wathieu et al. 2002). Trust Consumer-perceived security/reliability in brand interactions & belief that the brand acts in consumers best interests (Delgado-Ballester et al., 2003; Rotter, 1967). Relationship Commitment Customer Value Valuing an ongoing relationship with a specific other party so as to warrant maximum efforts at maintaining it, i.e. a desire to maintain the relationship (Morgan & Hunt, 1994; Moorman et al., 1993) A consumer s overall assessment of the utility of a product/service based on perceptions of what is received & what is given (Zeithaml, 1988). Brand Loyalty Repeated purchases (i.e. behavioural loyalty) prompted by a strong internal disposition (i.e. attitudinal loyalty) (Day, 1969) over a given period of time (Guest, 1944). Consequence of engagement with a potentially positive relationship between these constructs. Consequence of engagement with a potentially positive relationship between these constructs. Engagement consequence with a potential positive relationship with the identification dimension of engagement (cf. Saks, 2006). Consequence of engagement with a potentially positive relationship between these constructs. Engagement consequence with a potential positive relationship between these (Bowden, 2009; Patterson et al., 2006). Table 1 indicates that each of the interrelated constructs addressed is of a conceptually distinct nature relative to customer engagement. Involvement and interactivity are viewed as engagement antecedents, flow as conceptually related to, yet distinct from, the engagement dimension of absorption, while the other concepts addressed are viewed as engagement consequences. The concept of rapport may be viewed as either an engagement antecedent (existing customers who have a pre-formed level of rapport with a brand prior to an ensuing brand encounter; Salanova et al., 2005) or a consequence (new customers who are expected to first engage with the brand whilst only subsequently developing a level of brand-related rapport). This illustrates the emergence of potential engagement differences for existing/new customers (Bowden, 2009). While customer brand experience (viewed as an engagement consequence) includes a behavioural aspect, Brakus et al. (2009: 53) explicitly state that brand experience differs from motivational/affective concepts, including involvement, thus extending to engagement, in that it does not presume a motivational state. By contrast, engagement and involvement alike are based on consumer needs/values motivating the individual toward a specific object, e.g. a brand. The motivational, activation-oriented aspect thus sets engagement apart from brand experiences. Further, while brand experiences are characterised by individuals cognitive, affective and behavioural responses to brand-related stimuli (Verhoef et al., 2009; Meyer & Schwager 1998), engagement allows for the emergence of more proactive, rather than reactive, customer endeavours, e.g. during the service encounter, which may contribute to customer empowerment/value co-creation. Customer experience also encapsulates flow. Peak, in contrast to flow experiences, are relatively ephemeral, yet powerful, personally meaningful and potentially transformative, experiences (Schouten et al. 2007). Table 1 provides further support for the particular applicability of customer engagement in (human interaction-based) service settings (Bowden, 2009; Patterson et al., 2006). Interactivity, rapport, value co-creation and customer empowerment have particular relevance in services typified by human interactive forms. Perceived quality in services is known to comprise five 4

ANZMAC 2009 Page 6 of 9 dimensions: Tangibles, reliability, assurance, responsiveness and empathy (Parasuraman et al., 1988), of which the latter two appear conceptually closest to service customer engagement (Patterson et al., 2006). However, while customer engagement addresses customers activation, identification and absorption, service quality is focused on employee, rather than customer, actions and performance. Customer engagement also allows for the expression of a customer s preferred contextual self (Patterson et al., 2006). Finally, the potential contribution of engagement to customer loyalty is starting to transpire in the literature (Bowden, 2009). Conceptual Model & Future Research Directions Based on the preceding analysis a conceptual model was developed (Figure 2). The constructs of trust, commitment and customer satisfaction collectively comprise the higher-order construct of perceived relationship quality (Dorsch et al., 1998). The model adopts several of the constructs addressed (Table 1), although flow, rapport, value co-creation, brand experience, perceived quality and customer empowerment are not addressed explicitly, yet implicitly in the model (e.g. a level of rapport, co-creation, customer empowerment may be inherent in interactivity; perceived quality may be implicit in customer satisfaction). Customers perceived support/recognition for their efforts (cf. Saks, 2006) may also be implicit in interactivity. Flow was shown to be conceptually distinct from absorption (previous section). Any form of motivational action falls outside the ambit of the more reactive brand experience concept, and as such does not have a direct bearing on customer engagement levels. Figure 2: Conceptual Model Involvement Interactivity Engagement Relationship Quality Trust Commitment Satisfaction Customer Value Loyalty This paper has illuminated the importance of customer engagement, which is in its infancy todate. Despite a recent surge in academic and practitioner interest, little is known regards the conceptualisation and measurement of engagement. This paper has highlighted the need for further research in the potentially fruitful area of (customer) engagement, and proposed a conceptualisation and model for investigation. Relationships between engagement and other, conceptually related constructs were also addressed, indicating that engagement represents a conceptually distinct construct warranting further investigation. 5

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