Digital Marketing Strategy, Implementation and Practice PDF

DIGITAL MARKETING STRATEGY, IMPLEMENTATION AND PRACTICE Seventh Edition Part 2 Digital marketing strategy development...

DIGITAL MARKETING STRATEGY, IMPLEMENTATION AND PRACTICE Seventh Edition Part 2 Digital marketing strategy development Chapter 6 Relationship marketing using digital platforms Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Chapter 6 Relationship marketing using digital platforms Main topics Using social media to improve customer loyalty and advocacy The challenge of customer engagement Customer lifecycle management strategy Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  The goals of marketing orchestration Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Using social media to improve customer loyalty and advocacy. ( 1 of 4) What is social media marketing and why is it Important? Social media marketing is based on how we can use consumer-to- consumer (C2C) interactions to increase awareness of our brand through social media amplification while minimising negative mentions. Social media amplification: A method of increasing awareness of a brand through organic and paid sharing of social media updates via social networks as organic social posts and adverts are displayed in the Stream of social network users. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Using social media to improve customer loyalty and advocacy. ( 2 of 4) What is Social CRM? is the process of managing customer-to-customer conversations to engage existing customers prospects and other stakeholders with a brand and so enhance customer relationship management. - This framework shows the value of social media in collecting customer insights across different business function. The scope of each area shown in Figure 6.1 is: 1- Marketing: Monitoring, analysis and response of customer conversations through social listening tools. 2- Sales: Understanding where prospects are discussing selection of products and services offered by you and competitors and determining the best way to get involved in the conversation to influence sales and generate leads. Within B2B, LinkedIn is an obvious location that should be monitored and used proactively to generate leads and sales, a technique known as social selling. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Using social media to improve customer loyalty and advocacy. ( 3 of 4) 3- Service and support: Customer self-help through forums provided by you and neutral sites. 4- Innovation: Using conversations to foster new product development or enhance online offerings is one of the most exciting forms of social CRM. 5- Collaboration: This is e-business collaboration within an organization through an intranet and other software tools to encourage all forms of collaboration that support business process. 6- Customer-experience: This references the use of social CRM to enhance the customer experience and add value to a brand, which is implied by many of the other aspects above. It gives the examples of using VIP programmes offering collaboration between customers with shared characteristics to add value and create advocacy. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Using social media to improve customer loyalty and advocacy figure 6.1. ( 4 of 4) Source: Altimeter (2010) Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  What are the main social media platforms? ( 1 of 3) These are the main types of social platforms available to you: 1. Social networks: In most countries, the core social platforms where people interact through social networks are Facebook, Instagram and Snapchat for consumer audiences, LinkedIn for business audiences and Twitter for both. 2. Social publishing and news: Nearly all newspapers and magazines, whether broad or niche, now have an online presence with the option to participate through comments on articles, blogs or communities. 3. Social commenting in blogs: A company blog can form the hub of your social media strategy and you can look at tapping into others’ blogs, whether company or personal or through blog outreach. 4. Social-niche communities: These are communities and forums independent of the main networks. 5. Social customer service: Services such as Get Satisfaction (wwwÆgetsatisfactionÆcom), as well as companies’ own customer-support forums, are increasingly important for responding to customer complaints, particularly in some sectors such as mobile phone and network providers. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  What are the main social media platforms? ( 2 of 3) 6. Social knowledge: These are reference social networks such as Yahoo! Answers, Quora and Wikipedia. They show how any business can engage its audience by solving their problems and subtly showing how products have helped others. 7. Social-bookmarking: Bookmarking sites such as Delicious (wwwÆdelÆicioÆusÆcom) are today relatively unimportant. 8. Social-streaming: Rich and streaming media sites including photos (e.g. Pinterest), video and podcasting. 9. Social search: When Google+ was launched search engines incorporated more social features such as voting for sites via a Google+1. With the wane in popularity of Google+ in recent years, these features are seen less commonly today. 10. Social commerce: Mainly relevant for the retail and travel sectors, social commerce involves reviews and ratings on products and sharing of coupons on deals. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  What are the main social media platforms? (3 of 3) Source: Smart Insights (2015) Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬ Social media activities requiring management: Activity 1 Define listening and reputation strategy Activity 2 Transform the brand through social media Activity 3 Acquire new customers using social media Activity 4 Increase sales to existing customers Activity 5 Enhance customer service through social media Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Social media activities requiring management: Activity 1: Define listening and reputation strategy: To develop a social media listening approach, you need to understand social media usage for each of. Your audience: who they are, how they participate, what they’re saying and sharing. Your activity: through official social media channels and interactions through your site, but also through employee mentions. Your competitors: for direct and indirect competitors, you need to review how their activities compare to yours; Online publishers and other key intermediaries: these are a form of indirect competitor and are also important as influencers. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Social media activities requiring management: Activity2: Transform the brand through social media. To fully exploit social media across the functions shown in Figure 6.2 will require companies to make large changes to their brand, company structure and how everyone in the company communicates. Some key areas for delivering this transformation are: Set scope for social media activities. Review social media capabilities and priorities. Governance: define who is responsible for social media. Review the personality of your brand and setting a vision. Activity3: Acquire new customers using social media: For most marketers, the ultimate appeal of social media marketing is to use it to increase sales through reaching new prospects and converting them to customers. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Social media activities requiring management: Activity 4: Increase sales to existing customers: Applying social media to increase sales to existing customers focuses on developing your customer communications strategy to encourage more social interactions on your site, leading to more social shares to gain the amplification effect. Activity 5: Enhance customer service through social media marketing: Guy Stephens of Foviance (Smart Insights, 2010). He talks about how specific customer-service activities should be managed, including: social listening to identify customers requiring service. outreach to answer customer questions or resolve problems. using service to improve product and service offerings. management of a company’s own service forums or other service platforms such as Get Satisfaction. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  The challenge of customer engagement Customer engagement is sometimes used to refer to engaging customers in the short term, on a single touchpoint, such as whether someone dwells on the site for a significant time or whether they interact with an email. Instead, customer engagement really refers to the long- term ability of a brand to gain a customer’s attention on an ongoing basis. According to Forrester, engagement has four parts, which can be measured both online and offline: Involvement: Forrester says that online this includes website visits, time spent, pages viewed. Interaction: comments to blogs, quantity/frequency of written reviews and online comments as well as comments expressed in customer service. recency, frequency and category of product purchases, and also ongoing engagement in email marketing programmes. Intimacy: This is sentiment tracking on third-party sites including blogs and reviews, as well as opinions expressed in customer service calls. Influence: This is advocacy indicated by measures such as likelihood to recommend, brand affinity and content forwarded to friends. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  The challenge of customer engagement Figure 6.3 shows the wide range of options to interact with customers today via different messaging platforms using marketing automation. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Benefits of using CRM to support customer engagement: Targeting more cost-effectively Permission marketing Mass customisation of the marketing messages Increased breadth and depth of information Deeper customer understanding Lower cost Delivering loyalty programmes Gamification Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Marketing applications of CRM: 1- Sales force automation: Tools to arrange and record customer visits. 2- Customer service management: Representatives in contact centres respond to customer requests for information by using an intranet to access databases containing information on the customer, products and previous queries. 3- Managing the sales process: Supporting sales representatives by recording the sales process 4- Customer communication management: Managing communications integrated across different channels including direct mail, email, mobile messaging, personalised web messages and social networks. 5- Analysis: customers’ characteristics, their purchase behaviour and campaigns can be analysed in order to optimise the marketing mix. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  CRM technologies and data management Three main types of customer data held in a CRM system: Personal profile: These include contact details and characteristics for profiling customers, such as age and gender (B2C), and business size, industry sector and the individual’s role in the buying decision (B2B). Transaction data: A record of each purchase transaction including specific product purchased, quantities, category, location, date and time and channel where purchased. Communication interaction data: A record of which customers have been targeted by campaigns and their response to them (outbound communications). Also includes a record of inbound visits to a website, customer service and support enquiries and sales representative interactions. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Artificial intelligence for marketing 1- AI generated content: 2- Smart content curation: 3- Voice search and conversational user interfaces: 4- Programmatic media building. 5- Propensity modeling. 6- predictive analytics 7- Lead scoring. 8- Ad targeting. 9- Dynamic piecing. 10- Web and app personalization. 11- Chatbots. 12- Re-targeting. 13- Predictive customer service. 14- Marketing automation and dynamic content email. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Artificial intelligence for marketing: The visual in Figure 6.6 defines the many opportunities of applying Artificial Intelligence in marketing, structured around the Smart Insights RACE customer lifecycle we introduced in Chapter 1. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Customer lifecycle management strategy Customer lifecycle: is The stages each customer will pass through in a long- term relationship through acquisition retention and extension. To plan these communications requires consideration of the business goals of engagement using a high-level view of the classic customer lifecycle of select, acquire, retain, extend as shown in Figure 6.7. 1. Customer selection means defining the types of customers that a company will market to. 2. Customer acquisition refers to marketing activities to form relationships with new customers while minimizing acquisition costs and targeting highvalue customers. 3. Customer retention refers to the marketing activities taken by an organisation to keep its existing customers, i.e. to encourage them to buy again or continue a contract that renews for a service. 4. customer extension refers to increasing the depth or range of products that a customer purchases from a company. This is often referred to as - customer development-. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Customer lifecycle management strategy You can see that this framework distinguishes between customer retention and customer extension. Retention involves keeping the most valuable customers by selecting relevant customers for retention, understanding their loyalty factors that keep them buying and then developing strategies that encourage loyalty and cement the relationship. Customer extension is about developing customers to try a broader range of products to convert the most growable customers into the most valuable customers. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Customer lifecycle management strategy Peppers and Rogers (1997) recommended the following stages to achieve these goals, which they popularised as the 5Is: 1. Identification: Learn the characteristics of customers in as much detail as possible to be able to conduct the dialogue. 2. Individualisation: Individualising is using mass customisation and personalisation to define the company’s approach to each customer, offering a benefit to the customer based on the identification of customer needs. The effort expended on each customer should be consistent with the value of that customer to the organisation. 3. Interaction: Continued dialogue to understand both the customer’s needs and the customer’s strategic value. 4. Integration: Integration of the relationship and knowledge of the customer must extend throughout all parts of the company, harnessing data integrated from different systems. 5. Integrity: Since all relationships are built on trust, it is essential not to lose the trust of the customer. Efforts to learn from the customer should not be seen as intrusive, and privacy should be maintained. (See Chapter 3 for coverage of privacy issues related to e-CRM.) Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Permission marketing Permission marketing is about seeking the customer’s permission before engaging them in a relationship and providing something in exchange. Figure 6.8 gives a summary of a common, effective process for permission based online relationship building to support engagement through the different stages of the customer lifecycle. These stages are: Stage 1: Attract new and existing customers to online presence. Stage 2a: Prompt and incentivize visitors to action. Stage 2b: Capture customer information to maintain relationship. Stage 3: Maintain dialogue using online communication. Stage 4: Maintain dialogue using offline communication. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Permission marketing Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Figure 6.10 Matrix of customer touchpoints for collecting and updating email contact and other profile information To build the relationship between company and customer there are many digital methods of communication, shown in Figure 6.10. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Figure 6.11. Options for lifecycle email marketing messages for a retailer Source: Kath Pay, Holistic Email Marketing (2016) What is lifecycle marketing?, https://www.holisticemailmarketing.com/blog/what-is-lifecycle-marketing/ (accessed 30 July 2018). Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Personalisation and mass customisation - Increasingly, companies gather much personal data through the application of digital technology and then use it to develop personalised communication messages, with the aim of making the content appear more aligned to an individual’s interests. - To derive maximum benefits from the use of personal information, advertisers should consider giving individuals more control over how their information is used – for example, through tailoring content they receive via email through a customer preferences center. - Recommendations based on profile information, behaviour or predictive analytics are usually known as personalization or sometimes mass customisation. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Using digital media to increase customer loyalty and value. The ultimate commercial aim of relationship marketing approaches such as CRM is to increase engagement with customers, leading to increased customer loyalty and so directing sales from these customers and indirect sales through advocacy. Determining what customers value: Figure 6.13 shows how, when using digital media for online retention marketing, our ultimate goal on the right of the diagram is customer loyalty. The factors on the left help to deliver two main drivers of loyalty. First, emotional loyalty, where loyalty to a brand is demonstrated by favourable perceptions, opinions and recommendations, including social sharing. The second type of loyalty is behavioural loyalty, where loyalty relates to repeat sales, repeated site visits, social interactions and response to marketing campaigns. To achieve these repeat sales, companies work hard to deliver relevant marketing communications, either through email and social media communications, web-based personalisation or through traditional media. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Figure 6.13 Factors affecting customer satisfaction and loyalty Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  The relationship between satisfaction and loyalty. -Customer satisfaction refers to how happy a customer is about the quality of products and services. As a customer’s satisfaction with products and/or services increases, so should their behavioural and emotional loyalty, together with advocacy. -However, there may be customers with a high degree of satisfaction who don’t exhibit behavioural loyalty and, conversely, customers who are loyal according to their behaviour that may be at risk of defection since they are not satisfied. -It is important not only to measure satisfaction with online services, but loyalty also. In this way, we are able to identify customers at risk of defection who are likely to choose an alternative and those in the zone of indifference. This is an important category of customer who, although they may have a high degree of satisfaction, is not necessarily loyal. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Measuring the voice of the customer in digital media. -Online voice of customer (VoC) measures are useful for reviewing customer sentiment online. The satisfaction ratings we have reviewed are one example of VoC measures. -Another approach is intent-satisfaction surveys where the reasons for why a customer is visiting a site are compared against their success in completing tasks and their satisfaction ratings. This is a key technique for improving online customer journeys. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Differentiating customers by value and engagement. -Within the online customer base of an organisation, there will be customers who have different levels of activity or engagement with online services and purchasing. -A key part of CRM strategy is to define measures that indicate activity levels and then develop tactics to increase activity levels through more frequent use. -Objectives and corresponding tactics can be set for: Increasing the number of new users per month and annually. Increasing the percentage of active users. Decreasing the percentage of dormant users. Decreasing the percentage of inactive users. -The main retention metrics they mention that influence profitability are: 1- Repeat customer base. 2- Number of transaction per repeat customer. 3- Revenue per transaction of repeat customer. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Figure 6.14 Activity segmentation of a site requiring registration Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Lifetime value modelling. Lifetime value is the total net benefit that a customer or group of customers will provide a company over their total relationship with that company. Lifetime value analysis enables marketers to: plan and measure investment in customer acquisition programmes. Identify and compare critical target segments. measure the effectiveness of alternative customer retention strategies. Establish the true value of a company’s customer base. Make decisions about products and offers. Make decisions about the value of introducing new e-CRM technologies. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Lifetime value modelling. Figure 6.16 gives an example of how LTV can be used to develop a CRM strategy for different customer groups. Four main types of customers are indicated by their current and future value as bronze, silver, gold and platinum. Distinct customer groupings (circles) are identified according to their current value (as indicated by current value) and future value (as indicated by lifetime value calculations). Some bronze customers, such as groups A and B, realistically do not have development potential and are typically unprofitable, so the aim is to reduce costs in communications and if they do not remain as customers this is acceptable. Some bronze customers, such as group C, may have potential for growth so for these the strategy is to extend their purchases. Silver customers are targeted with customer extension offers and gold customers are extended where possible, although they have relatively little growth potential. Platinum customers are the best customers, so it is important. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Figure 6.16 An example of an LTV segmentation plan Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Lifetime value modelling. RFM analysis is a technique that tends to be little known outside retail circles, but CRM gives great potential to apply it in a range of techniques since we can use it not only to analyse purchase history and targeting outbound communications, but also visit or log-in frequency to a site or online service and response rates to email communications. Recency This is the recency of customer action, e.g. purchase, site visit, account access, email response. Frequency: Frequency is the number of times an action is completed in a period of a customer action – e.g. purchase. Monetary value: The monetary value of purchase(s) can be measured in different ways – for example, average order value of £50, total annual purchase value of £5,000. Generally, customers with higher monetary values tend to have a higher loyalty and potential future value since they have purchased more items historically. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Lifetime value modelling. Latency is a powerful concept, closely related to frequency – it is the average time between customer events in the customer lifecycle. Hurdle rate. refers to the percentage of customers in a group (such as in a segment or on a list) who have completed an action. Grouping customers into different RFM categories: 1 Statistical RFM analysis. This involves placing an equal number of customers in each RFM category using quintiles of 20 per cent (10 deciles can also be used for larger databases), as shown in Figure 6.17. The figure also shows one application of RFM with a view to using communications channels more effectively. Lower-cost digital communications can be used to correspond with customers who use online services more frequently. More expensive offline communications can be used for customers who seem to prefer traditional channels. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Lifetime value modelling. 2 Arbitrary divisions of customer database. RFM analysis can be applied for targeting using email according to how a customer interacts with an e-commerce site. ( see examples in the book) Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Figure 6.17 RFM analysis Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Product recommendations and propensity modelling. Propensity modelling is one name given to the approach of evaluating customer characteristics and behaviour, in particular previous products or services purchased, and then making recommendations for the next suitable product. The following recommendations are based on those in van Duyne et al.(2003): Create automatic product relationships (next best product). Use familiar ‘trigger words’. Editorialise about related products. Sell related products during checkout. Allow quick purchase of related products. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Summary of elements of CRM strategy: Permission marketing Personalisation and mass customisation Using digital media to increase customer loyalty Determining what customers value The relationship between satisfaction and loyalty Measuring the voice of the digital customers Differentiating customers by value and engagement Lifetime value modelling Product recommendations and propensity modelling Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved Restricted - ‫مقيد‬  Case Study 6 Dell Gets closer to its Customers through its Social Media Strategy This case explores Dell’s business strategy and how it has positioned the brand through marketing communications especially online. The case applies the RACE framework and demonstrates how this relates to the design of online campaigns and promotional offers Source: Philip Sowels/Future Publishing/Shutterstock Copyright © 2019, 2016, 2012 Pearson Education, Inc. 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