21 Feb Challenges and Opportunities of the Rapidly Changing Digital Market Place
Using Advanced Analytics for Retaining and Fostering Customer Loyalty
Author : Pavan Pulavarty
The rapidly changing digital environment is redefining the market place giving rise to unique challenges and opportunities for enterprises in retaining and enhancing customer loyalty. The digital marketplace, with its online, social and mobile channel interactions has created an ecosystem that is creating its own customer loyalty; this has led to an explosion of analytics based solutions to foster customer loyalty. Investing in digital channels and connectivity is no longer just an option – it is a prerequisite to stay in the market and retain market share; those who have not done so risk ”significant losses in customer loyalty” according to IBM’s Institute of Business Value (IBV) based research.
Impact on Digital Media Extends Beyond Online Sales and e-Commerce Transactions
According to a study by Deloitte (‘The new digital divide’), even the more savvy organizations and retailers often misjudge the sphere of influence of the digital media in this market. This influence extends well beyond the online transactions and sales . The digital channels comprising of laptops, tablets, and smart phones heavily influence how the physical in-store sales are done, in addition to the online sales. To be successful in this market, an enterprise should not define its digital strategy narrowly covering online sales and ecommerce transactions. It should be defined as covering the entire shopping experience, and how the entire organization and the entire industry is viewed by its customers. The experience of a customer starts well before the customer enters a bricks-and-mortar retail store and ends well after the customer leaves that store. The interactions with the social media, the online and mobile websites all impact a customer’s in-store experience. Those who do not create an integrated and cohesive platform that allows customers access across multiple devices anytime, anywhere will be left out of the digital revolution, ending up on the wrong side of the ‘digital divide.’
Need for Building Positive Customer Digital Experience
Having a digital strategy that spans multiple channels involves more than throwing open a website, a mobile channel and establishing FB and Twitter accounts. It involves seamlessly integrating all these leading to a customer-centric and customer focused information system. Each of these channels should supplement and complement each other and capitalize on the unique advantages that each channel offers. Needless to say, this requires an in-depth understanding of customer requirements, digital usage patterns, behaviors, likes and dislikes. An omni-channel, comprehensive digital effort would then pave way to gaining and retaining sustained customer loyalty. It is important to remember however, that the true driver of customer loyalty are not any of the tools used, but the resulting customer digital experience – how customers perceive the value proposition of a company, its products and services through the use of the various digital and social media. A report by Forrester on Banking and Retailing industry has shown, for example, that a good customer experience is sometimes more important to the customer than such other features including pricing. Customers are willing to pay higher for positive customer experience. But the converse is not necessarily true; a business cannot always get around poor customer satisfaction by price discounts and other offerings.
Capitalizing On the Opportunities of the ‘Switching’ Economy
Another significant feature of the evolving digital market, based on a study by Accenture (‘Customer 20-20: Are You Future-Ready or Reliving the Past’), is the steady erosion of the traditional customer loyalty across markets. There are several factors leading to this disruption – particularly a result of how customers are accessing, processing and using the information across the digital media. Here are some of the study’s findings –
- Customers are now making much more informed decisions about products and services and are performing ‘due diligence’ before making purchases.
- They are judging the value propositions of products and services based on the opinions and ratings of others’ in the market as communicated via the social media. This makes it imperative that businesses closely monitor and actively manage social media.
- The digital enablement of customers has given rise to the ‘nonstop customer’ – the customers want quality information to be available continuously – all the time and across multiple channels. With this they are able to constantly reevaluate different providers’ products and services.
- The digital revolution has led to a ‘switching’ economy. With more information on products and services across digital and social media, customers now have more options and flexibility to switch providers. 6 out of 10 customers said in the study that they are more likely to switch from one provider to another. The volume of this ‘switching’ economy as revealed by the study is staggering – it accounts to over $6 trillion across various countries/markets.
It’s not hard to reach the conclusion from the above that the ‘switching’ economy presents great opportunities to those leveraging right strategies and tools for maximizing customer experience. Those capitalizing on these trends will risk losing customer loyalty.
The Solution: Advanced Analytics Models
Given this complex, challenging and rapidly changing digital environment, how do companies foster positive digital customer experience and consequently, customer loyalty?
The key, according to a Gartner’s study on Predictive Analytics, is to understand what customers will want, before they themselves know what they want. This can be accomplished by skillful use of analytics.
However, not all analytics tools are made equal. Companies have to research and make intelligent choices based on the comparative strengths and weaknesses of each of these tools. They would also need to take into account the unique advantages and features of these tools before they deploy and successfully enhance customer digital experience and loyalty.
Here are some of the considerations for selecting and deploying the advanced predictive analytics tools –
Continuous monitoring of customer behavior across digital and social media channels
Gone are the days when in-store surveys were used to gain insights into the customer behavior. Even the online surveys cannot be effective in continuously monitoring the dynamic digital customer behavior and experience. Several newer tools in the market enable ‘plugins’ that collect customer interactions 24X7 and help companies check the pulse of the nonstop customers. This is however, only the first step in building positive customer experience.
Measuring and Quantifying Customer Digital Experience
A lot of current day analytics generate voluminous metrics about the customers’ use of digital assets but fail to quantify and summarize the customer experience in a meaningful way. They also fail to provide deeper insights into the hidden patterns of digital customer behavior. Unraveling these hidden patterns requires tools using more than just statistics techniques – it requires use of sophisticated machine learning (ML) algorithms.
To make inroads into customer loyalty and make big gains in customer experience, companies must focus on the individual customer behavior as opposed to focus on the aggregate behavior. The focus should be on the experience of individual customers across all the digital channels, covering all areas of interaction including transactional, visual, informational and other categories. Personalized attention is a prerequisite to deploying more sophisticated technologies that detect the ‘intent’ of the customers and recommend decisions to correct deficiencies and enhance customer experience.
Predictive Modeling and Use of Decision Matrices
As mentioned earlier, too many tools focus on generating voluminous statistical data on digital customer behavior without drawing any conclusions or making any predictions about the overall and individual customer experience levels. Fewer still recommend decision criteria to increase customer experience and tie them to current and forecast customer experience levels. There are select solutions that offer ML based decision criteria with relative probabilities of success. They help identify courses of actions to attain targeted levels of customer experience and loyalty.
Addressing the challenges posed by the ever evolving Digital Market Place requires use of sophisticated predictive tools. However, not all tools have the capabilities that the present day digital market place requires. Finding and effectively deploying tools with the advanced capabilities discussed above, plus taking appropriate corrective actions will likely result in enhanced customer experience and lead to sustained customer loyalty.