Digital Marketing Communication

(kode P051730015)

Pertemuan 6
Relationship marketing
using digital platforms

Dosen
H. Andri Budiwidodo, S.Si., M.I.Kom
 2001

WELCOME
 PERTEMUAN 6
Relationship marketing using digital platforms
1) The challenge of customer engagement
2) Customer lifecycle management

Sumber bacaan untuk STUDI MANDIRI:

Chaffey, Dave. Dan Fiona Ellis Chadwick. 2016.
Digital Marketing: Strategy, Implementation and
Practice 6th edition. Edinburgh United Kingdom:
Pearson Education Limited. HALAMAN 298-350.
Introduction
• Over the last three decades or more, relationship
marketing, direct marketing and database marketing have
combined to enable customer relationship management
(CRM) . In recent years, marketing automation technology
has been used to create rules that schedule more relevant
emails and personalised communications on company
websites. Marketing automation is the term currently used
to describe a closely related approach known as one-to-one
marketing . However, owing to the costs of managing
relationships on an individual level, many companies will
apply marketing automation to tailor communications and
offers to customer segments or groups, rather than
individuals.
• Customer relationship management (CRM). A marketing-
led approach to building and sustaining long-term business
with customers.
• Marketing automation. Enables businesses to automate
tasks in the marketing and sales process to make the
process to deliver more relevant communications typically
delivered as personalised emails and website messages.
• One-to-one marketing. A unique dialogue occurs between
a company and individual customers (or groups of
customers with similar needs).
 Introduction
Electronic customer relationship management (E-CRM) involves creating strategies and plans for how
digital technology and digital data can support CRM. Digital marketing activities that are within the
scope of E-CRM in this chapter include:
• Using the website and online social presences for
customer development from generating leads
through to conversion to an online or offline sale
using email and web-based content to encourage
purchase.
• Managing customer profile information and email
list quality (coverage of email addresses and
integration of customer profile information from
other databases to enable targeting).
• Managing customer contact options through
mobile, email and social networks to support up
sell and cross-sell.
• Data mining to improve targeting.
• Providing online personalisation or mass
customisation facilities to automatically
recommend the ‘next-best product’.
• Providing online customer service facilities (such as
frequently asked questions, callback and chat
support).
• Managing online service quality to ensure that first-
time buyers have a great customer experience that
encourages them to buy again.
• Managing the multichannel customer experience
as they use different media as part of the buying
process and customer lifecycle.
Electronic customer relationship management (E-
CRM). Using digital communications technologies to
maximise sales to existing customers and encourage
continued usage of online services through techniques
including database, personalised web messages,
customer services, email and social media marketing.
 From e-CRM to social CRM

The scope of Social CRM across business functions

Source: Altimeter (2010)
Social CRM. 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.
The challenge of customer engagement
• Forrester (2007) heralded customer engagement as
‘marketing’s new key metric’, given the rapidly
increasing online media fragmentation and the
challenges of keeping customers engaged with brands
given the proliferation of choice. Customer engagement
is sometimes used to refer to engaging customers on a
single touchpoint, such as whether someone dwells on
the site for a significant time or whether they convert to
sale or other outcome. Instead engagement really refers
to the long-term ability of a brand to gain a customer’s
attention on an ongoing basis whether the engagement
could occur on-site, in third-party social networks or in
email or traditional direct communications.
• Customer engagement. Repeated interactions that
strengthen the emotional, psychological or physical
investment a customer has in a brand.
• Media fragmentation. Describes a trend towards
increasing choice and consumption of a range of media
in terms of different channels such as web and mobile
and also within channels, for example more TV
channels, radio stations, magazines, more websites.
Media fragmentation implies increased difficulty in
reaching target audiences.
The challenge of customer engagement
• The commercial aim of engagement is to maximise
customer value through using customer interactions to
lead to more profitable relationships. Forrester (2007)
developed a framework to measure online engagement
through the customer lifecycle and also away from a
brand’s own site, such as on publisher sites or social
networks.
• According to Forrester, engagement has four parts which
can be measured both online and offline:
1) Involvement. Forrester says that online this includes website
visits, time spent, pages viewed.
2) Interaction. This is contributed comments to blogs,
quantity/frequency of written reviews, and online comments as
well as comments expressed in customer service. (We could add
the recency, frequency and category of product purchases, and
also ongoing engagement in email marketing programmes, as
discussed later in this chapter; all are important here.)
3) Intimacy. This is sentiment tracking on third-party sites including
blogs and reviews, as well as opinions expressed in customer
service calls.
4) Influence. This is advocacy indicated by measures such as
likelihood to recommend, brand affinity, content forwarded to
friends, etc
Benefits of using Using digital platforms for relationship marketing involves integrating the customer
database with websites and messaging to make the relationship targeted and
e-CRM to support personalised. Through doing this, marketing can be improved through:
• Targeting more cost-effectively . Traditional targeting, for direct mail for instance,
customer engagement is often based on mailing lists compiled according to criteria that mean that not
everyone contacted is in the target market.
• Mass customisation of the marketing messages (and possibly the product).
Technology makes it possible to send tailored emails at much lower cost than is
possible with direct mail and also to provide tailored web pages to smaller groups
of customers (microsegments).
• Increased depth and breadth of information and improve the nature of
relationship. Digital media enables more information to be supplied to customers
as required through content marketing.
• Deeper customer understanding and more relevant communications can be
delivered through a sense and respond approach.
• Lower cost. Contacting customers by email or through their viewing web pages
costs less than using physical mail, but, perhaps more importantly, information
needs to be sent only to those customers who have expressed a preference for it.
• Delivering loyalty programmes. Loyalty schemes are often used to encourage
customer extension and retention.
• Popular products are offered for a relatively low number of points to encourage
repeat purchases.
• Opportunities for gamification. Gamification involves applying game-based
thinking to a brand, business or organisation to engage and develop loyalty
Customer lifecycle management
• Customer lifecycle. The stages each customer
will pass through in a long-term relationship
through acquisition, retention and extension.
• There is a range of customer extension
techniques that are particularly important to
online retailers:
1) Re-sell. Selling similar products to existing customers –
particularly important in some B2B contexts as rebuys or
modified rebuys.
2) Cross-sell. Selling additional products which may be
closely related to the original purchase, but not
necessarily so.
3) Up-sell. A subset of cross-selling, but in this case selling
more expensive products.
4) Reactivation. Customers who have not purchased for
some time, or have lapsed, can be encouraged to
purchase again.
5) Referrals. Generating sales from recommendations from
existing customers – for example, member-get-member
deals.
The four classic marketing activities of
customer relationship management
Permission marketing
• Permission marketing. Customers agree (opt-in) to be involved
in an organisation’s marketing activities, usually as a result of
an incentive.
• Permission marketing is a significant concept that underpins
online CRM in management of the customer lifecycle.
‘Permission marketing’ is a term coined by Seth Godin (1999).
It is best characterised with just three (or four) words:
Permission marketing is … anticipated, relevant and personal
[and timely].
• Godin (1999) noted that while research used to show we were
bombarded by 500 marketing messages a day, with the advent
of the web and digital TV this has now increased to over 3000 a
day! From the marketing organisation’s viewpoint, this leads to
a dilution in the effectiveness of the messages – how can the
communications of any one company stand out? Godin refers
to the traditional approach as interruption marketing.
• Interruption marketing. Marketing communications that
disrupt customers’ activities.
 A summary of an effective process of
permission-based online relationship
The stages are:
building
• Stage 1. Attract new and existing customers to
online presence. The online and offline
communications channels such as search, social
media marketing and direct mail, are used to drive
visitors to a website, Facebook or other form of
presence such as an app that enables opt-in.
• Stage 2a. Prompt and incentivise visitors to action.
Two key types of incentives to consider are: lead
generation offers and sales generation offers. On
Facebook, companies used gated pages where the
visitor must ‘Like’ the brand before they can gain
the incentive.
• Stage 2b: Capture customer information to maintain
relationship. Capturing profile information is
commonly achieved through an online form.
• Stage 3: Maintain dialogue using online
communication. To build the relationship between
company and customer there are many digital
methods of communication.
• Stage 4. Maintain dialogue using offline
communication. Direct mail or phone contact may
still be cost-effective forms of communication since
these can also be tailored and may have more ‘cut-
through’ compared to an email.
 Email marketing and social CRM communications strategy
• Principle 1 – Consider selective opt-in to
communications. In other words, offer choice in
communications preferences to the customer to
ensure more relevant communications. Four key
communications preferences options, selected
by tick box are: (1) Content – news, products,
offers, events; (2) Frequency – weekly, monthly,
quarterly, or alerts; (3) Channel – email, social
network, direct mail, phone or SMS; (4) Format –
text vs HTML.
• Principle 2 – Create a ‘common customer profile’.
A structured approach to customer data capture
is needed, otherwise some data will be missed –
as is the case with the utility company that
collected 80,000 email addresses, but forgot to
ask for the postcode for geo-targeting!
• Principle 3 – Offer a range of opt-in incentives.
Many websites now have ‘free–win–save’
incentives to encourage opt-in, but often it is one
incentive fits all visitors.
• Principle 4 – Don’t make opt-out too easy. Often
marketers make it too easy to unsubscribe.
Although offering some form of opt-out is now a
legal requirement in many countries due to
privacy laws, a single click to unsubscribe is
making it too easy.
• Principle 5 – Watch, don’t ask (or ‘Sense and
Respond’). The need to ask interruptive
questions can be reduced through the use of
monitoring clicks to better understand customer
needs and to trigger follow-up communications.
Some examples: (1) monitoring click-through to
different types of content or offer; (2) monitoring
the engagement of individual customers with
email communications; (3) follow-up reminder to
those who don’t open the email first time.
• Principle 6 – Create an outbound contact
strategy. Online permission marketers need a
plan for the number, frequency and type of
online and offline communications and offers.
Example welcome contact strategy
Personalisation and mass customisation
Options for mass customisation and
personalisation using the Internet
A way to manage personalisation and mass
customisation on a website is to tailor information
content email through a customer preferences
centre. ‘Personalisation’ and ‘mass customisation’
are terms that are often used interchangeably. In the
strict sense, personalisation refers to customisation
of information requested by a site customer at an
individual level. Mass customisation involves
providing tailored content to a group or individuals
with similar interests.
• Personalisation. Web-based personalisation
involves delivering customised content for the
individual, through web pages, email or push
technology.
• Mass customisation. The creation of tailored
marketing messages or products for individual
customers or groups of customers typically using
technology to retain the economies of scale and
the capacity of mass marketing or production.
• Customer preference centre. Profile page(s)
which enables customers to tailor the type and
frequency of communications they receive.
Using digital media to increase customer loyalty and value
• The ultimate commercial aim of relationship marketing
approaches such as e-CRM and social CRM is to increase
engagement with customers leading to increased customer
loyalty and so direct sales from these customers and
indirect sales through advocacy. Understanding the
different levers that contribute to increased engagement
and loyalty amongst different customer groups should be
the starting point in developing a customer retention and
growth strategy.
• Customer loyalty. The desire on the part of the customer
to continue to do business with a given supplier over time.
• Five activities to manage CRM: (1) Listening – developing
an analytics capability enabling you to monitor social
conversations; (2) Talking improving customer engagement
capabilities (in both social and other channels) that enable
you to respond to what you’ve heard.; (3) Energising –
harnessing the power of your ‘best’ customer to be active
advocates for your brand; (4) Support – using social
Factors affecting customer satisfaction and loyalty channels to help customers help themselves and others via
collaborative and cooperative behaviours across social
media; (5) Embrace – involve customers in the
development and tailoring of your products.
Categorising customers according to value
1) Most-valuable customers (MVCs). These
are the customers who contribute the most
profit and are typically a small proportion
of the total customer base as suggested by
their position in the pyramid.
2) Most-growable customers (MGCs). These
are customers who show potential to
become more valuable customers. They are
profitable when assessed in terms of
lifetime value, but the number of product
holdings or lifetime value is relatively low
compared with the MVCs.
3) Below-zero customers (BZCs). BZCs are
simply unprofitable customers. The strategy
for these customers may vary – they can be
encouraged to develop towards MGCs, but
more typically expenditure will be
minimised if it is felt that it will be difficult
to change their loyalty behaviour or the
source of their being unprofitable
 Lifetime value modelling
• Lifetime value (LTV). Lifetime value is the total net benefit
that a customer or group of customers will provide a
company over their total relationship with a company.
• Lifetime value analysis enables marketers to:
1) plan and measure investment in customer acquisition programmes;
2) identify and compare critical target segments;
3) measure the effectiveness of alternative customer retention
strategies;
4) establish the true value of a company’s customer base;
5) make decisions about products and offers;
6) make decisions about the value of introducing new e-CRM
technologies.
• 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
An example of an LTV-based segmentation plan indicated by lifetime value calculations). Each of these groups
will have a customer profile signature based on their
demographics, so this can be used for customer selection.
Different strategies are developed for different customer
groups within the four main value groupings
 The ‘Big Data’ concept
• ‘Big Data’ applications in marketing ‘Big Data’ refers
• The opportunity and challenge of Big Data for
A summary of the three main dimensions of Big Data
Source: Soubra (2012)
to applications to gain value from the increasing
Volume, Velocity and Variety of data integrated
from different sources. These enhance insight to
deliver more relevant communications through
techniques such as marketing automation and social
CRM.
marketing is often described using the three
dimensions or vectors:
1) Data Volume refers to the increase in data which is now
available for online interactions with websites and social
media.
2) Data Velocity shows how marketers now have access to
real-time data, such as real-time analytics of interactions on
web and mobile sites and also social media interactions.
3) Data Variety shows how new types of unstructured data,
including, again, social media interactions, offer potential
too. This also suggests the potential of integrating different
sources of data to gain more customer insight.
Applying virtual communities and social networks for CRM
• Virtual community. An Internet-based forum for special-interest
groups to communicate.
• Virtual communities are the emerging construct of the traditional
social marketplaces where groups of people who share common
interests and needs come together online. Most are drawn
together by the opportunity to share a sense of community with
likeminded individuals, regardless of where they live.
• Virtual communities also provide opportunities for some
companies to develop relationships with their customers.
• The power of the virtual communities, according to Hagel (1997),
is that they exhibit a number of positive feedback loops (or
‘virtuous circles’). Focussed content attracts new members, who
in turn contribute to the quantity and quality of the community’s
pooled knowledge.
• How to provide virtual communities:
1) Creating community through social networks. The main social media
platforms which can offer a presence for companies are Facebook,
Twitter, LinkedIn, Instagram and YouTube (Facebook company page,
Twitter page, LinkedIn Company pages and groups, Instagram).
2) Creating your own presence. If a company sets up a community facility
on its own site or sets up a separately branded community like the
American Express Open Forum (www.openforum.com), which is
Nike Run Club App. Nike AU targeted towards small and medium-sized businesses, it is more closely
aligned to the goals and brand values of the website.
 End of slides

2011
H. Andri Budiwidodo, S.Si., M.I.Kom
Terima kasih
 FORUM & QUIZ
https://www.youtube.com/watch?v=JqYk535eZ6U
Konser Map of The Soul ON:E BTS Ditonton 114 Juta ARMY

Beberapa waktu lalu BTS sebenarnya berencana akan menggelar konser online dan offline pada bulan Oktober ini.

Akan tetapi, karena masih belum ada pelonggaran aturan terkait pandemi Covid-19 dari pemerintah Korea Selatan,
maka BTS terpaksa hanya bisa menggelar konser secara virtual saja.

FORUM:
Apakah ARMY bisa digolongkan sebagai virtual community seperti yang disampaikan pada slide 21 “Applying virtual
communities and social networks for CRM”? Berikan alasan/penjelasan berdasarkan konsep virtual community,
kemudian dari penjelasan itu, apakah ARMY termasuk atau boleh disebut sebagai virtual community?

QUIZ:
Perhatikan materi menyangkut “Using digital media to increase customer loyalty and value”. Sebutkan dan jelaskan 5
(lima) aktivitas untuk mengelola CRM.