Customer’s Engagement Value

Nowadays, customers value organisations that offer them unique and personal experiences that are accompanied by their services and products. As stated otherwise by Peelen & Beltman (2013) “The value of the organisation is not intrinsic to the organisation, but rather resides within the customer”. The customers’ value of a product is therefore very important for a company, but how can we measure the importance of this customer’s value? And how can tour operators implement this within their strategy to attract new customers or extend the value of existing customers?

The customer’s value can be explained with the CEV theory of Kumar et al. (2010). CEV means Customer’s Engagement Value and it clarifies the creation of value by customers. This cannot be measured by the purchases of a customer only; it includes behavioural characteristics as well. Examples of these characteristics can be positive or negative reviews. The customer’s engagement value can be divided into 4 components:

  • customer lifetime value (CLV);
  • customer referral value (CRV);
  • customer influencer value (CIV);
  • and customer knowledge value (CKV).

All of the values mentioned above are important to implement within a company’s strategy. CLV is all about the future probability for a company; how many purchases will an existing customer make in his or her life with the company. The CRV is important because it will generate future revenue for a company. CRV can be accomplished by rewarding customers for making referrals. As Kumar et al. (2010) mentions: “providing at least some of the reward to the receiver of the referral seems to be more effective for customers who have stronger ties to others in their network”.

The customer influencer value is connected to the CRV. Each time a customer affects another person’s behaviour by for instance Word of Mouth will influence their own CIV. And finally the CKV explains about a customer’s feedback or ideas for improvements or innovations (Kumar, et al., 2010).

As explained above the Customer’s Engagement Value can be measured by these 4 components and it will be valuable for a tour operator to implement these within the strategy for customisation of their products and services. Satisfied customers (CLV) will more likely pass on their knowledge to acquaintances and relatives (CRV/CIV) but also to the company (CKV).

A practical example of the customer’s engagement value is a referral program from the Escape Artist (2016). Companies desire loyal customers and this can be achieved by a referral program. As the Escape Artist (2016) mentions: “we are showing our loyalty to you by rewarding your loyalty to us”. The program consists of a $250 credit per referral. On one hand, the customer can earn an extra credit for travelling with the company and they will become more loyal to the company. On the other hand, the company can see the effect of a referral value within the company (Escape Artist Adventure Travel, 2016).

Sources

Escape Artist Adventure Travel. (2016). The Escape Artist Referral Program. Retrieved september 25, 2016, from The Escape Artist: http://www.theescapeartist.com/about/referral-program/

Kumar, V., Aksoy, L., Donkers, B., Venkatesan, R., Wiesel, T., & Tillmanns, S. (2010). Undervalued or Overvalued Customers: Capturing Total Customer Engagement Value. Journal Of Service Research, 13(3). Retrieved September 25, 2016

Peelen, E., & Beltman, R. (2013). The nature of the CRM strategy. In E. Peelen, & R. Beltman, Customer Relationship Management. Pearson Education Limited.

 

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