Much is publicized – and advertised – about the manifold promises of digitalization. As with other innovations over the course of the past decades, nothing less than a revolution of business opportunities and processes are being announced.
On the other side, looms an almost insurmountable number of different digital approaches, tools, organisational structures and processes. A concentration of solutions, such as in the ERP and CRM area, has not yet taken place.
For these reasons, going digital may appear to many SMEs as too difficult, time-consuming and possibly – still – untimely. Particularly in times of full order books, such as in the craft trades or in mechanical and plant engineering, but also in times of full capacity utilization in the hotel and catering industry, and constantly rising retail sales, SMEs in particular are asking themselves, whether digital transformation is not more of a financial risk than a possibility for improving operational performance.
However, digital change does not only originate – if it does at all – from the companies that see it as a new opportunity at an early stage, but especially from users, customers, consumers – partly motivated, partly driven by the technical possibilities that the large Internet providers – such as Apple, Google, Amazon, Alibaba and Tencent – are already fully providing:
- Pinpoint accurate search functions that allow to search for specific products and services (not suppliers!),
- wide availability of alternative product variants, services in various forms, which increases customer expectations by a large degree
- overwhelming information possibilities, including function descriptions, user reviews and tips, which make customers today quasi-experts in their field,
- trial subscriptions, even for products of greater value, such as in the automotive segment, which allow customers and consumers to try out products and services before they buy them.
Coupled with the prospect that even a phase of full order books may be over in the near future, there is a certain need for companies of all types and sizes to face up to digital change.
In order to be able to cope with the current high complexity of the digital offer in the market, companies of any size should approach the topic calmly and planned. The essential initial questions are no different from a regular strategy analysis:
- Where does the company stand at the moment, in comparison to set goals and the competition?
- How have customer needs changed and how does the competition deal with this?
- How has the procurement of information and the selection and purchasing behaviour of customers changed?
- What other industry trends can be identified?
In addition, ongoing digital change and strong willingness to invest has shown an increased risk that new competition will emerge from completely different segments, or that companies from a great distance – from other countries and other regions of the world – will provide a “local” offering that in the past was near exclusively reserved for genuinely local companies.
To answer the question, where and how digital transformation should ideally be started, the above strategic consideration should preceed and be followed. Nonetheless, digital customer acquisition can be considered a priority option in any case – because sales is certainly essential for all companies at all times and in all economic situations. Furthermore, this approach directly addresses where, as described above, customer and consumer behavior is changing most strongly in almost all industries.
In the case of SMEs in particular, a widening gap is becoming increasingly apparent between some companies that still operate in a traditional “we have always done it this way” manner and companies that are pro-actively facing up to digital change, particularly in terms of customer acquisition.
Do a self-experiment: Do you know a long-established, renowned gastronomy business in your immediate vicinity? Check whether it is represented in the internet and then contact it, e.g. by email or with the various messenger services. Do you not receive an answer? If not, then this company may be losing potential customers at this very moment and especially even more so in the future – namely those customers, who no longer choose the name of the restaurant, but who are looking for a specific – in this case, for example, culinary or ambient experience.
It is therefore apparent that the first step towards digital customer acquisition is initially a passive one: increasing the visibility of one’s own offer.
In doing so, many companies make a significant beginner’s mistake: they increase the visibility of the company or product name instead of their offer. Customers and consumers are increasingly – as already mentioned above – looking for products and services that meet their assumed needs, and less and less often for concrete product or company names.
The second step is active digital customer acquisition. Once again, the catering and apparel retail sectors are characterized by very different approaches, which in turn respond to a changing customer and consumer behavior – or not. In the course of a stark increase in the range of different products and services offered in a wide variety of forms, it has also become difficult for customers and consumers to make the right choices for themselves. Therefore, more and more providers meet their customers by actively addressing them on most or all social media and internet platforms with a high degree of variation and regular news feeds. If companies always stay present with new – relevant – content and interesting offers, they have the chance to constantly generate new customers – and increasingly also – to retain existing customers.
Both steps, passive increase of the visibility of one’s offer, and active digital customer acquisition require a dedicated approach.
It has long been shown that the approach of a casual presence in the internet and on social media networks can be more harmful than useful if this presence is not properly thought through and not regularly maintained. It bears the following risks:
- The digital presence is not in line with the needs and purchasing behaviour of the desired clientele,
- the digital appearance suggests an offer that may not actually be supported by the company (see above, example of a restaurant business with digital contact possibility, but which is not answered by the company).
In order to choose the right approach for both steps, a company must consciously and – with an emphasis on operational sustainability – strategically set the steps up, plan them, and firmly anchor them in its organization and process flows:
Step 1 – Increase the visibility of the offer
- Which products, which services can and should be advertised digitally?
- What is the real need of the customer? Is the customer looking for a specific product (name), or a functionality, or an experience that a particular product or service can fulfill?
- How can products and services be described and advertised digitally so that they can be easily found by searching customers without knowing the concrete product and company names?
- Are product and service descriptions consistent and coherent across all platforms (internet, social media networks, etc.)?
- Is the company in a position to respond to the needs generated by the presence on websites and social media networks within a short time – e.g. within 24 hours?
Step 2 – Digital Sales
- How do potential customers inform themselves about products and services that meet their needs or their demand for specific experiences?
- In which digital networks are the company’s customers currently active?
- How can the company repeatedly communicate with interesting contributions and activities targeting existing and new customers without being seen as overly intrusive?
- Can product and service descriptions be published in such a way that they effectively address potential customers according to their selection and purchasing behavior?
- Is the company able to maintain regular and interesting customer information on websites and in social media networks?
The success of digital customer acquisition depends on how well the company can present its own products and services online and, in particular, whether the company is able to manage the product and service advertising published online on a regular basis. Beware: Online advertising that has been placed without follow-up and with sporadic or outdated information is to be considered as highly counterproductive.
This means that digital customer acquisition is primarily less a technological issue than an organizational and process-related one.
Staff must be provisioned in a manner that it can make digital customer acquisition at least partly one of their main tasks. Alternatively, a company can also hire appropriate agencies to take over their digital customer acquisition up to the point of initiating business for the company. The increased sales success is thus naturally paid for with agency fees and a part of the generated added value is given away. On the other hand, especially for SMEs, the question arises, whether an external marketing agency can truly and authentically reflect the culture and philosophy of the company – with limited resources – in their on-behalf digital customer acquisition.
For many SMEs there is a need for digital customer acquisition as a first step towards digitalisation.
Either the information, selection and purchasing behaviour of customers has already moved significantly in this direction, so that a company must follow, if it wants to continue to reach these customers effectively. Or competitors in the same or completely different industries already use the online world as an essential medium for addressing customers and are already increasingly taking market share from the company by storm. Both scenarios generate an acute need for action.
However, by experience, the first steps are easy to take as soon as a clear decision has been made and employees and a manageable budget have been made available for the digitalization of the customer acquisition process. The will alone, good planning, emphasis on sustainable business operations and a small budget are enough to win the outstanding opportunities of digital customer acquisition – the realistic increase in sales success of up to 30%.