Digital Marketing

Digitalization: the new relationship between consumers and businesses

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Written by Marine Lextrait

This topic about customer relationship management (CRM) in the era of digitalization is something that really passionates me. It is also because I now have more than one year of experience in a data marketing agency whose field of expertise is helping brands improve their CRM. The brands I work for are sometimes lost in the variety of new channels and innovative ways of communicating to their customers…

Digitalization has indeed defined new codes, and therefore customers have modified their behaviors. My personal experience is an illustration: it became a reflex to investigate on a brand thanks to customers’ reviews on websites and social media. According to a Nielsen Global Connected Commerce survey, 54% of people make online research to find product information in the beauty and self-care industry. This rate reaches 63% in the travel industry. This phenomenon is part of what we call the ROBO economy: Research Online Buy Offline. The Bazaarvoice infographics demonstrated that 56% of online shoppers read reviews before purchase, and it concerns 45% of the brick-and-mortar buyers.

Through this paper, I want to point out three aspects (among many) that demonstrate how digitalization impacts the relationship between consumers and businesses.

1) Combining physical and digital channels is the key to enhancing B2C relationship

Nowadays, brands and customers are facing two facts. On one hand, businesses have to deal with growing and complex databases because of the nature of the data collected. On the other hand, customers are overreached (overstimulated) and they ask for a more personalized and unique experience.

Those two facts can work together effectively because the whole retail experience is transforming. Both brick-and-mortar and online buyers use digital channels at least once in their shopping experience. The distinction between online and offline channels is not relevant anymore and consumers interact with brands through both of them. The omnichannel strategy is no longer an alternative for brands today but a necessity, in order to bring value to the shopping experience and win market shares.

This infographic from an analysis of Deloitte about the digital technology in the groceries industry demonstrates that grocery spendings increase by 19% when consumer use digital means. Moreover, integrating digital before or during the shopping experience leads to a 9% rise in conversion frequencies. There is no considerable increase noted for people who do not use digital technologies (compared to people who don’t).

One of the most relevant success stories of a brand taking advantage of the combination of online and offline strategies is Disney’s app case.

The interconnection between all the customer touchpoints gives them access to a user experience that never ends. Before the physical visit, users can already buy and scan tickets and Fastpasses, explore the map with distances between attractions and discover them through customized content. During their stay in the park, they can locate, among other places, attractions, restaurants, bathrooms and see the waiting time with an interactive and live map. Disney has successfully gathered all elements for an omnichannel experience.

Taking into account how digitalization can impact customer relationship through omnichannel strategies, we can ask ourselves to what extent the customer loyalty is affected.

2) Customer loyalty in a digital world

In a competitive business context, one of the many goals of a brand in terms of CRM is to strengthen customer loyalty. According to various studies, the digital era, up to now, has not proved significant positive impacts. The Accenture Strategy report “Global Customer Pulse Research” showed only 25% of consumers would recommend their providers to close relations and 65% decided not to remain a client of a company due to poor service. These figures illustrate the after-effect of omnichannel strategies. Digital enables brands to reach prospects and customers easily but the latter are overwhelmed with messages and promotions.

Why did many companies fail to win customers’ loyalty? A Capgemini Consulting report “Fixing the Cracks : Reinventing Loyalty Programs for the Digital Age”, 85% of millennial perceptions registered on social media towards customer loyalty programs are negative. The huge flow of communications makes customers feel like a number, not a person.

So how to increase customer loyalty? A Salesforce report among UK customers demonstrated that 58% switched companies because they had a better experience with a competitor. A brand does not have to offer either a product or a service anymore but has to take into account the holistic experience.

3) Digital and data collection: personalization at the core of experience

Consumers have become expert in the digital era. They understood the links between their digital interactions. They now realize that giving personal data to brands is valuable and consequently, their expectations have grown. The same report from Salesforce states 76% of UK consumers are liable to provide personal information as a compromise to receive customized product suggestions, this number rises to 88% regarding a customized discount. The global concern about how data is used is still very present but people are well aware of the unavoidable data they permanently create and provide.

Therefore, frustration grows up builds up when brands don’t reward customers with a unique and customized experience. That explains why customer loyalty is harder to obtain and to keep maintained. Nevertheless, the need for more customization through data remains a huge potential for business. The following charts prove the importance for consumers to have offers, service, ads, messages that correspond to them.

To widen the question on the personalization, an Accenture report, summed up in this video, introduces the notion of hyper-relevant customer experience, depending relying on customers’ trust and highly-personalized data. It would enable brands to communicate with their customers while it is the most relevant by understanding how they decide to make a purchase.

About the author

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Marine Lextrait