Companies that fully engage with both customers and employees tend to significantly outperform their competitors, nationally renowned business scholar V. Kumar said during his Eminent Scholar Lecture on Tuesday, March 6.
An acknowledged expert on marketing research methods, Kumar is Regents Professor and the Richard and Susan Lenny Distinguished Chair Professor of Marketing at the J. Mack Robinson College of Business at Georgia State University. He has consulted with IBM, Comcast, Proctor & Gamble, ING, Prudential, Wells Fargo, Pitney Bowes, Chick-fil-A, Polo Ralph Lauren, Allstate, Home Depot, Equifax, AT&T, Exxon, American Airlines, DuPont and other high-profile corporations.
Kumar presented his findings on engagement marketing to an audience at Rudder Forum. The Mays Business School co-sponsored the lecture with the Hagler Institute for Advanced Study at Texas A&M University. Kumar served as a Faculty Fellow with the Hagler Institute in 2016-17.
While many executives recognize the value of engagement marketing, Kumar told his audience, few completely understand the concept or its complexities. To assist them, Kumar and his colleagues have conducted and published research into how engagement marketing actually works in the business world. They also have developed methods for helping companies to improve their engagement with customers and employees.
Research shows that engagement differs significantly between customers and employees, Kumar said. He defined customer engagement as the “total value provided by customers to the firm through their behavior and interaction.” Customers provide this value by interacting with the company, talking about its products and services with their peers, discussing the company on social media and providing feedback to the company to help the firm improve its products or services.
The engagement process begins with the customer simply buying products or services from the company, Kumar said. Over time, the quality of these transactions may develop a sense of trust and commitment within the customer. But true engagement goes beyond customer satisfaction, resulting in a deep emotional attachment to the company and its brand.
Research shows that fully engaged customers visit a company more often and spend more money than do disengaged customers. This is true across the entire market, from customer electronics to fast food, from retail banking to hospitality, Kumar said, and holds for manufacturing and service companies as well as for business-to-business and business-to-consumer models.
As for employee engagement, Kumar defined this as “a multidimensional construct, which comprises all the different facets of employees’ attitudes and behaviors toward the organization.” These facets include employee satisfaction with the company, commitment to the success of the company, personal identification among employees with the company, loyalty to the company and overall employee performance.
“Employee engagement can make everything that is good better and everything that is bad less so,” Kumar said. “When employees are fully engaged, all the positives go up and all the negatives go down.” This includes profitability, productivity, customer service, product quality, safety, turnover, theft and absenteeism, he said.
To explore the various aspects of a company’s engagement among customers and employees, Kumar and his colleagues developed a series of quantitative research methods, along with a system for scoring the results in four categories: super-engaged, moderately engaged, somewhat engaged and disengaged. They then studied 120 large companies that trade on US stock exchanges by surveying their customers and employees.
Only four of the 120 companies were super-engaged with customers and employees, the study found. The researchers also discovered these super-engaged companies significantly outperformed their peers, including in profitability.
“It is not enough to just engage with customers or just to engage with employees,” Kumar said. “To perform at high levels, a company must fully engage with both customers and employees.”
About the Hagler Institute for Advanced Study: The Hagler Institute for Advanced Study was established in December 2010 by The Texas A&M University System Board of Regents to build on the growing academic reputation of Texas A&M and provide a framework to attract top scholars from throughout the nation and abroad for appointments of up to a year. The selection of Faculty Fellows initiates with faculty nominations of National Academies and Nobel Prize-caliber scholars who align with existing strengths and ambitions of the University. To learn more, visit http://hias.tamu.edu.
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