Customer engagement has emerged in the last few years as a topic of great interest to managers and consultants in diverse industries and companies worldwide as evidenced by the large number of white papers, blogs, discussion forums, commentaries, seminars, and symposia generated by a general search for the terms.
Increasing interest in customer engagement has paralleled the continued evolution of the internet and the emergence of new digital technologies and tools that has been dubbed Web 2.0, especially social media like wikis, blogs, micro blogging sites like Twitter, bookmarking sites like del.icio.us, video sites like YouTube, virtual worlds like Second Life, and social networking sites like Facebook, MySpace, and LinkedIn.
The interactive nature of social media with its ability to establish conversations among individuals and firms in communities of sellers and customers and involve customers in content generation and value creation has excited practitioners with its potential to better serve customers and satisfy their needs.
Practitioners have been at the forefront of attempts to understand, define, and build customer engagement. Surveys of managers in private as well as public sector companies across the world sponsored by Adobe, a software company whose stated objective is to develop the tools for companies to connect with customers, indicate that companies are striving to create a high level of customer engagement defined as “an intimate long-term relationship with the customer.
Markets and organizations are alternative mechanisms for satisfying needs and customers can choose to rely on either the market mechanism and buy the product required to satisfy their needs or the organization mechanism to make it . Vertical integration forward into output markets by sellers or backward into input markets by buyers replaces a buy transaction in a market with a make transaction in an organization so the customer makes the product that it used to previously buy.
Customer engagement appears to resemble in terms of intimacy and duration the relationship between parts of the same firm that transact with one another. For instance, one business unit of a firm may make the product required by another business unit of the same firm and also sell the product to customers who are not part of the firm in market transactions. Customer engagement between independent buyers and sellers in market transactions may represent the closest equivalent to the relationship between two parts of the same organization (business units of the same firm) without a merger supplanting market-mediated exchange.