Customer experience (CX) and customer engagement (CE) are not the same thing.  

Unfortunately, businesses often view the two terms interchangeably, failing to acknowledge that there is a critical distinction. This difference is essential to understanding how an organization successfully interacts with its customers to build stronger relationships.  

Organizations that feel they are covering all their bases by focusing solely on CX often create unintended negative effects that are at odds with the outcomes they’re hoping to achieve.  

The most successful organizations consider both customer experience and customer engagement but prioritize customer engagement because it underpins the trust on which customer relationships are built. In contrast, customer experiences—such as ATM withdrawals, call center contacts, online interactions, and face-to-face meetings—are important but transactional in nature. They’re not the endgame for building deeper relationships. 

In an industry like financial services where products and services themselves are undifferentiated, the only lever these organizations have available to carve out a unique space with customers is through superior customer service – making sure that every interaction is seamless, positive, and successful. This is particularly true for mid-tier banks and credit unions, who don’t, for example, have a large FX operation that they can use to offset shrinking margins on standard retail financial products.  

Customer Engagement Requires Knowledgeable, Nurturing Frontline Employees  

In BAI’s latest executive report: Michael Upton, chief technology and digital officer of First Tech Federal Credit Union, explains that his institution has been good at facilitating transactions, but they need to do much better in engagement. He goes on to explain that for complex transactions human engagement is the key. Digital channel technologies make commoditized transactions much easier and faster. But when an interaction requires it, there needs to be a seamless transition to somebody who is knowledgeable and nurturing. 

Digital Technologies Alone Won’t Deliver Differentiation 

Also in that report: “There is a complementary action that occurs when a customer is fulfilling their needs digitally but also requires guidance and expertise from an individual. Digital technologies themselves will not provide a point of brand differentiation.” The true differentiator and value proposition is how customers perceive the more complex interactions that require the expertise of a frontline employee. Customers need to have the sense that their financial institution is connected to their lives and can help them navigate the financial complexities in their lives. That is how relationships are built. 

As the mortgage and refi loan environment continues to slow down, lines of business like new small-business accounts will become an increasingly important source of top-line growth at mid-tier banks and credit unions. And since small-business owners invest so much of themselves financially and emotionally into their businesses, a personal connection – a relationship – with their banker is especially important. Having someone they know who is available for support and financial advice is critical. Digital self-service is a minimum requirement for these customers. They also want to see a familiar face rather than being put into an endless calling tree trying to find someone to talk to.

Where to Focus: Think of CX as a part of Customer Engagement 

So, when it comes to Customer Experience and Customer Engagement where should you focus? Organizations need to think about CX as a component of Customer Engagement and maintain a broader focus on the more comprehensive goals of Customer Engagement.  

Another explanation of the relationship between CX and CE comes from Microsoft: “Customer engagement is the ongoing, value-driven, emotional relationship between the customer and the business. It is not the memory of one moment, but the sum of all moments—the customer’s overall emotional connection arising from the totality of experiences with the company. This includes direct, indirect, offline, and online interactions, as well as the actions that the customer might take—posting, emailing, tweeting, liking, recommending, buying and so on.” 

But that begs the question, what exactly is the relationship between Customer Experience and Customer Engagement? When you focus on customer experience, you are often concerned with improving interactions in a specific channel. Particularly digital ones. But in our experience, we have found that this approach often results in negative impacts on experiences in other channels.  

For example, one financial institution that implemented live chat explained the unexpected outcome: “We put in live chat and had to shut it off because we couldn’t handle the additional chat volumes and because it doubled our handle times”.

Customer Engagement:

The Critical Factor in Developing and Retaining Customer Relationships

Customer Engagement Is the Sum of Many Experiences 

Customer engagement on the other hand is a broader concept. It is the sum of many different customer experiences. Engagement is about how the financial institution works with its customers across all channels, over the full customer lifecycle. It is customer engagement that builds and grows the relationship and translates to loyalty, retention, and trust. 

Customer Experience is important for sure. But remember that any one negative customer experience can sour customer engagement and degrade the relationship to the point where the customer may look to switch their primary financial partner.  

The differences are important when considering the three primary types of interactions customers will have with your institution:  

  • Self-service (digital) interactions (ex. Online banking) 
  • A combination of self-service and employee assisted interactions 
  • Employee interactions (ex. one-to-one meetings or call with banking professionals) 

When thinking about the relationship between digital and human-assisted interactions consider these data points from a recent Rivel report: 

  • 62% of consumers want to do common transactions (depositing a check, paying a bill, etc.) with digital banking (web or mobile)  
  • 57% of consumers prefer human assistance for more important transactions (wire transfer, setting up a new account, etc.)  

To truly deliver superior customer service and improve the metrics that matter (growth, efficiency, CX) financial institutions must adopt the holistic view that Customer Engagement provides: 

  • Give customers choices
  • Provide easy access to financial (human) expertise 
  • Empower frontline employees with the information and tools they need to assist customers effectively 

By following this approach, you’ll foster true customer engagement, where the sum of all customer experiences is positive as interactions cross channels and move seamlessly from self-service digital channels to human-assisted ones. 

Read More About Customer Engagement in this BAI White Paper 

If you’d like more information on how Customer Engagement helps build lasting customer banking relationships read this new white paper from BAI on Customer Engagement.  

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