Building and maintaining customer relationship via digital marketing and new technologies for small businesses during the COVID-19 pandemic

Esha Thukral and Vanessa Ratten

Introduction

Digital transformation is pushing businesses to change their business models and constantly reevaluate their ongoing operations and adapt to the new market realities. Digitalization has radically changed our working world and will continue to do so. Today, emails are a predominant mode of day-to-day communication instead of classical letters. Technologies are becoming more and more equipped in recognizing speech, emotions, and gestures paving the way for people to communicate with machines intuitively (Hippmann, Klingner and Leis, 2019). Thus, digital technologies are now transforming customer lifestyle and habits.

Businesses are built on relationships, as two-thirds of a company’s competitive advantage comes from its customer experience (Morgan, 2019). The more one communicates with the consumers and solves their issues, the more loyal customers become, and having loyal customers is one of the biggest assets for any business as they are the source of continuous revenue generation for a business. Therefore, businesses too, are incorporating technology to establish customer relationships to suit the consumer lifestyle and habits.

Customer relationship management (CRM) is a sum of all the activities, strategies, and technologies that a business uses to interact with the current as well as potential consumers. CRM not only assists companies in creating customer loyalties and enhancing customer satisfaction but also efficiency and profits (Kulpa, 2017). Therefore, the service and relationship marketing literature has for long recognized the importance of managing and developing customer relationships, and research on customer loyalty, customer perceived service, customer satisfaction, etc., is extensive (Heinonen and Michelsson, 2010). However, there is limited research on building customer relations in a digital context as technologies are continuously evolving and its uses are continuously explored.

A whirlwind of disruptive digital forces is in play

‘The customer is King’ has been the popular mantra in the marketing and sales department and so to ignore the disruptive forces in action when the rules of customer engagement/relationship are changing would not be a strategic move

Building and maintaining customer relationships 101 on the part of businesses. Therefore, to continue attracting and retaining the customers, businesses need to recognize these changing dynamics and adapt accordingly.

Four major forces that are changing the business environment are: (Deloitte Digital, 2019)

Customer demographics and behavior: Customer behaviors have radically changed especially within the last decade. Companies too have to keep pace with the changing behaviors and preferences of the customers and adapt their marketing and sales strategy accordingly to meet the changing needs of the consumers. Contemporary consumers are well informed (e.g., online comparison sites, peer validation, and smart recommenders), fast-paced, picky (rely on online reviews), always connected (uses smartphones, wearables, and corresponding technology at all times), tech-savvy. There is a strong desire for self-service, e.g., they want the convenience to access relevant information without a customer service representative, but also expert consulting once they need it. Thus, they demand more than just goods and services, they are looking for experiences, and convenience.

New business models:As customers’ expectations and behavior changes, companies too experiment with new business models to create new revenue streams. Some well-known examples include Spotify using the Freemium business model, Netflix using revenue models through relatively low monthly subscriptions. In both the aforementioned businesses, model’s continuous customer engagement is needed to generate a sustainable revenue stream and turning recent adopters to loyal customers. If for any reason customer expectations are not met, they are most likely to leave the company. Therefore, building long-lasting relationship with customers is crucial.

Technological advances .’Technology is at the heart of Digital Customer relationship management. Technology is integral to meeting the evolving needs and expectations of customers. These days consumers prefer personalized services that make life easier and seamless. To provide personalized services, advanced computing techniques can be used to harness volumes of personal data (e.g., search, social, geo-tagged sensors, payments, shopping carts, speech) to create the magic behind new hyper-personalized experiences (Accenture, 2017).

The Desire for Transparency .-Over the years, the marketing budget has increased substantially and is further expected to increase, since the priority of traditional media decreases, more than 50% of the marketing budgets are expected to be spent on digital marketing by 2023. The increase in marketing budget will eventually put more pressure on the top management who are responsible for overall customer experience to justify their growing expenditure and provide transparency about the return on investment. Customer relationship management leaders will be relying more on digital communication channels to be able to generate reliable, valuable customer data, and establish advanced analytics capabilities to demonstrate the effectiveness of CRM measures (Deloitte Digital, 2019).

Organizations and marketers need to take account of the disruptive forces in action and channel it to their advantage and stay at the leading edge of emerging technologies. Businesses need to incorporate technology and use it as a competitive advantage like Netflix defeated Blockbuster in the chase of market share just by adopting the change, similarly, Amazon.com changing the way we buy books and thus disrupting distribution channel by introducing Kindle. Marketers who are averse to change or are not ready to adapt and use new technology will be left behind in the chase of market share (Petersen, Person and Nash, The Customer is in Control, 2014).

Since the change is inevitable, the need of the hour is to have an agile marketing approach, this enables the organizations to review the performance of the campaign frequently and iterate accordingly. According to the article published by Mckinsey & Company, ‘Agile, in the marketing context, means using data and analytics to continuously source promising opportunities or solutions to problems in real-time, deploying tests quickly, evaluating the results, and rapidly iterating’ (Edelman, Heller and Spittaels, 2016).

Digital strategy a clear winner during COVID-19

In a very short period, COVID-19 has overwhelmed our lives and livelihoods. The pandemic has caused disruptions to many businesses across the globe due to lockdown and social distancing measures. On the one hand, some companies had to completely stop their operations, such as movie theaters and tourism operators. Whereas others had to alter their business practices by adopting ‘work from home’ as the new normal (Meyer, 2020). When people all over the world are in isolation, avoiding in-person contact, businesses will have to become more and more reliant on digital technology and digital strategy to establish contact with the customers. Digital mode is a clear winner, especially now as COVID-19 has created a new normal marked by, social distancing and self-isolation.

Due to COVID-19 prospective, customers are less open to the idea of meeting face to face, and everyone is clueless as to when things will go back to normal or whether this will lead to a long-term change. The world we live in is characterized by uncertainty, fluidity, and change; therefore, resilient business strategies are essential for a road to economic/business recovery and a key factor in resilience is adaptability. Adapting may mean exploring new channels over the web or social media platforms where introductions can be made, and customer relationships can be fostered. And as long as businesses create an appropriate action plan and robust digital marketing strategy, there is no reason why it should just serve as an emergency fill-in but could continue to provide long-term value when the world eventually gets back to normal (Marr, 2020).

Building and maintaining customer relationships 103

This is already reflecting in China, where 55% of customers are intending to permanently shift to e-commerce (Diebner, Silliman, Ungerman and Vancau-wenberghe, 2020).

Sitecore: customer experience maturity model

As customers are becoming more tech savvy, they expect the same from the businesses. To establish customer loyalty an appropriate action plan is needed. A proactive approach would be to use the customer experience maturity model by Sitecore as a framework for determining the current stage where customers fall and accordingly setting goals for future improvement. The model not only acknowledges the value of creating long-term customer relationship but also takes into account that maturity level of the customers (as customers are more mature/informed in terms of shopping than they were before). The model identifies three levels of customer maturity: attract, convert, and advocate, and seven strategies initiate, radiate, align, optimize, nurture, engage, and lifetime customer that span the cycle from new customer to lifetime loyal customer.

Attract

Initiate

The main objectives at the initiation stage are:

• • To create a web/online presence with all the general information about the company.
• • Focus is on search engine optimization to attract more visitors.

Radiate

The main objectives of the Radiate stage are:

• • To expand the organization’s digital presence across various channels.
• • Reach customers through social media channels with context-appropriate content
• (Petersen, Person and Nash, Stage 1-Initiate and Stage 2-Radiate, 2014).

Align

The Align stage objectives are:

• • Demonstrate how digital goals drive strategic as well as marketing objectives. At this stage, the content becomes focused on customer behavior.
• • Create an Engagement Value Scale (EVS) that measures whether a marketing effort has successfully penetrated/attracted the customers. For example, a campaign or a page that has garnered high engagement value has a high relevance/importance to customers
• (Petersen, Person and Nash, Stage 3-Align, 2014).

Convert

Optimize

The main objectives of this stage are:

• • Optimize your digital presence to get higher engagement by focusing on creating relevant experiences for the customer (use personalization). Personalization includes many tactics; it can be as simple as using customer names after they log in.
• • Optimize marketing efforts by measuring marketing performances across channels
• (Petersen, Person and Nash, Stage 4-Optimize, 2014).

Nurture

The key objectives of this stage are:

• • Evolve from multichannel to cross channel communication with a customer-centric, approach, digitally listening to the behavior of the customers, and responding in individual customers’ preferred channels like behavioral targeting. It is a technique which is used in online advertising wherein data from visitors browsing pattern are used to display relevant advertisements, offers, and campaigns.
• • Make considerable use of automated channels and personalized email marketing. For example, reminding the customer about abandoned shopping cart, etc.
• (Petersen, Person and Nash, Stage 5-Nurture, 2014).

Advocate

Engage

The Engage stage objectives are:

• • Integrate both online and offline data by creating a central repository via Cloud. It helps in giving a holistic view of each customer. This helps in enhancing the quality of customer communication and responsiveness. It further supports a customer-centric technique to help prioritize sales and marketing strategy when dealing with different customer groups. This information can then be used to manage, measure, and keep track of marketing, sales, and customer service activities as they relate to the customer. Overall, it builds greater customer loyalty and better customer experience.
• (Petersen, Person and Nash, Stage 6-Engage, 2014).

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Lifetime customer

The main objectives of this stage are:

• • Creating an exceptional customer experience so that customers’ loyalty can be established.
• • Use real-time data to anticipate customers’ action and needs to enhance customer experience.
• • Maintain the competitive advantage by being the fastest, agile, and adaptable in testing new initiatives.

For example, Amazon filed a patent for a predictive analytics system that predicts what product purchases are likely to be made in the near future in a specific area. This enables it to ship items to the specific area and reduce delivery cost and arrival time.

(Petersen, Person and Nash, Stage 7-Lifetime Customers, 2014).

The importance of using an appropriate model cannot be overlooked in establishing customer relations or enhancing customer experiences, whether it is the aforementioned model or any other model. It helps a business in assessing which stage their customers fall and accordingly design a future path for themselves and their customers. The model provides the leader of the organization with the compass, map, and an engine to get to their destination, which is enhanced customer relationship. However, without a model organization’s effort will be scattered and disjointed, leading to no definitive outcome.

Case examples to build customer relationship via new technologies

In the digital age, customer experiences affect customer retention rates and eventually help build long-term customer relations. Businesses are using various ways/modes to connect with customers. Below are some of the case examples to build customer relationship via new technologies:

Digital presence: Meet your customers where they are: Customers are experiencing a new normal where it is impossible to conduct activities in a normal fashion, like dining out with friends and a trip to the grocery store are either prohibited or is risky. Consumer needs have shifted and it can be supported by statistics. Online penetration in China has risen by 15—20%. E-commerce sale in Italy has gone up 80% in a single week. Demand and popularity for digital experiences will continue to increase, and businesses who act promptly and innovate their business models to help customers navigate through the crisis will eventually gain a strong competitive advantage over others. In the new normal, it is not just about the company’s digital presence it is also about providing a great customer service experience to its customers (Diebner et al., 2020). Amazon is an excellent example of e-com-merce model. It not only meets the need of the customers by having an extended market reach as they sell a variety of products like apparels, footwear, health products, etc. but also provides personalized shopping experience to its customers by using data to track their behavioral pattern.

Social media presence: Customer relationship management is about getting closer to the customer by staying in touch, and Social media platforms present opportunities to engage with the customers. Social media is the most efficient channel to distribute information, promote products or services, and expand the consumer base. Customers like to socialize, exchange information/ideas over social networks, and the information/ ideas shared by the customers can be used by companies to develop products that better satisfy the need and wants of the clients (Elena, 2016). PlayStation has a whooping following on Twitter. It is one of the most followed brands. According to UnMetric, PlayStation has seen 376% growth in followers in the past 5 years alone from 2014 to 2019, 12 million followers have joined. One of the reasons is that the brand is quite active on the platform, regularly posting content to engage the followers, launching game trailers, streaming live events. Even during COVID-19, the brand garnered some positive image with its #PlayAtHome campaign, motivating users to stay at home by downloading its ‘Unchartered: The Nathan Drake Collection’ and ‘Journey’ games for free and almost ten million people did download (Gilliland, 2020).

Cliatbots:They are powered by artificial intelligence that can understand the queries of the customers and answer accordingly. It is like an automated conversation system, which has become increasingly sophisticated. When a business is considering a decision to use chatbots or virtual agents, business leaders must examine what kind of companies are best served by chatbots, and how to integrate them into their existing customer service system. For companies that deal with a large volume of customer service requests for them the effect of using Chatbots can be huge, this way companies can improve their service levels, as bots are available 24/7 and are faster at answering customer queries than humans (Kannan and Bernoff 2019). The global chatbot market is expected to reach SI.23 billion by 2025. Numerous companies are using Chatbots and have been successful in engaging customers. Companies that use Chatbots successfully are Dominos, Starbucks, Sephora, and many others.

Sephora, the retail store, uses chatbots to improve customer service. After the success of their app through Kik (messaging app), they have now introduced some additional interactive features in the app to further

Building and maintaining customer relationships 107 enhance the customer experience. The two services that they have introduced are

Sephora Reservation Assistant: This enables the customer to interact and make an appointment with the beauty specialists by sending a message to the chatbot. The chatbot is equipped with smart learning capability, which makes interaction smooth as the chatbot understands the language used by the customer to make interaction easier (conversational commerce).

Sephora Color Match: It uses augmented reality to help customers choose the colors. The user will have to simply hold and face the camera, and the shade will be selected for the user from the Sephora line of products. It can also help match cosmetics with the outfit of the user.

Augmented Realitytit embeds virtual objects in real environments. Augmented reality is set to be a $50 billion industry by 2024. It can allow customers to try products before they purchase them (Business.com, 2020). Gucci added an augmented reality feature to its application where the user can point the app at their feet, which will enable them to see Gucci sneakers on their feet (Kaplan, 2020).

Conclusion

To conclude, it can be said that businesses must shift to the practice of experience marketing. This simply means to always take into account the forces of change in play (digitalization or emerging new technologies, changing customer behavior/motivation) and constantly adapt and align marketing strategies and content continuously to enhance customer relationship. Thus, businesses should use an agile approach to maintain a competitive advantage.

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