The customer is always right
In an increasingly competitive business environment, SME owners have to focus on customer retention if they want to see their businesses survive .
Once a small business owner lands customers it doesn’t mean they will keep them because they may want to concentrate on making new sales or pursuing bigger accounts. A loyal customer is not just one who keeps a business going, but is also the most effective marketing vehicle for an organisation, which is why it is crucial for a business to retain its most loyal brand advocates. This scenario is both a challenge and an opportunity for small- and medium-sized enterprises. They can grow and tap into their existing customer base and through it, build a new customer base, according to Ali Safri, Head of Presales at software solutions provider, Avanza Solutions.
Acquiring new businesses can be challenging for SMEs purely because of the amount of competition. According Growing sustainable SMEs in the MENA by advisory firm EMG, there are 1.9-2.3 million SMEs in the MENA region. They account for 20-40 per cent of private sector employment, with around 20-39 per cent of SMEs considered in need of a loan or an overdraft. This indicates the proportion of SMEs in the region that are undersupplied with financial products and services that are necessary for their sustained growth. Once an SME manages to gain a new client, it is crucial for them to retain that client in order to receive repeat business.
“We live in a competitive world where consumers have so many choices that retention is critical. The first step any SME owner should do to ensure customer loyalty is being built is to establish a line of communication to the customer. To do this, they need to acquire a valid contact email, number or even social media handle so a link to follow up is there. Building a customer database might seem easy as there are services offering to sell huge databases out there especially in this region but building a qualified customer database of advocates that have purchased your goods or services is critical,” said Aly Rahimtoola, Managing Director, Harmony Cosmetics, parent company of UAE-based beauty brand Herbal Essentials.
One advantage a smaller business has over a larger corporation is that the owner is able to be much more hands on when dealing with clients, which in turn can makes a customer’s experience more pleasant.
“Find a way to add true value to a customer’s life, then do it with excellence. Make their day-to-day operations simpler, easier, faster and less stressful. Enhance their lives consistently, listen to their feedback and deliver what you promise, when you promise it, and customer loyalty will naturally materialise as they choose your brand above others who may fall short on their promises,” said Mona Ataya, CEO of online retailer, Mumzworld. Being customer-centric is imperative for success, by putting customers at the heart of everything from the get-go and providing a positive customer experience before and after the sale in order to drive repeat business.
Part of what drives repeat business is maintaining effective communication with customers, which in today’s age of technology and social media is something an SME owner can leverage from the beginning stages of their business.
The key to effective communication with clients is to understand that consumers tend to use multiple points of contact with a business. They may, for instance, browse items in physical stores, then search online for the best price and purchase them that way. Or, they may initiate a chat, then transition to a screen-sharing session and maybe even two-way video. They will also likely escalate issues via multiple channels, and quickly. For instance, if they do not get an issue resolved via email or chat, they are highly likely to amplify this negative experience via social media, according to Shaheen Haque, Territory Manager at contact centre solutions provider Genesys.
“Businesses of all sizes must therefore focus on creating a consistent communications strategy across all channels and responding quickly. This requires customer engagement technology that supports omnichannel interactions. This not only enables a business to see the historical context of customer interactions across channels, but also enables them to report on these interactions in a holistic way so they can accurately measure service levels and adjust resources accordingly. With cross-channel visibility and appropriate resource allocation, businesses can react rapidly and effectively,” said Haque.
Taking omnichannel to the next level, businesses should also look for customer engagement technology that includes multimodal functionality. This gives businesses the ability to transition customers between channels within the same interaction.
Communication tends to be fine when things are going well, according to Mita Srinivasan, Director, Market Buzz, but when things go wrong or awry, communication can be a problem. “Not communicating a problem or flagging a potential problem is not an option. This leads to speculation and misunderstanding. Whatever the reason, it is in the interests of both parties to discuss and arrange a solution. Most people find it better to work together to find a solution and prefer to work with companies that are proactive in finding solutions and looking after their best interests. The business owner (or whoever they assign to do the client/project) should effectively be the face of the business and represent not just their own company but the customer’s best interests.”
Ataya added that a strong brand does not stop communicating with their client as soon as a transaction is finalised; it has an extensive customer service team ready to answer any questions or concerns, and an efficient process by which valid concerns can be reported, actioned and redressed in a timely and appropriate manner.
Retaining customer loyalty encompasses more than offering clear communication with clients and consumers, business owners have to consider their customer service as a whole. Providing quality service is one part, since it only takes one bad customer experience to destroy loyalty to a brand, according to Anastasiya Golovatenko, PR Director, JPd Agency. The other important consideration is offering a degree of flexibility when dealing with clients. “When you work with clients learn how to say yes rather than no. If you still not sure about such a strategy, the cost of new client acquisition is as much as five to 10 times higher than the expense of retaining a current one. Be transparent; a single lie discovered can create doubt in everything you've done or said.”
Employees and customers
It is also important for a business owner to ensure their employees also help foster brand loyalty. Employees that share the vision and philosophy of the business tend to be the best brand ambassadors for their companies. An employee that genuinely has the same passion and care for the business, that the founder has, will ensure that the customer has a superior customer experience so hiring and training employees that believe in the business is even more critical for a SME owner than a larger conglomerate, said Rahimtoola.
“Your employees are your greatest asset. Once they feel demotivated, clients will feel it too. Make sure that your team is your biggest investment–educate them, support them, motivate them and you’ll be surprised with the results achieved. A motivated team increases productivity, creates a positive environment, improves overall performance and help retain A-players. Happy employees mean happy clients,” added Golovatenko.
A survey by ADP Research Institute conducted in the MENA region looked at how engaged employees are an asset to their organisation, and showed that happy and engaged employees are not only 57 per cent more effective; they’re also 87 per cent less likely to leave their employers.
“There is a vast range of quality products on the market today, so more often than not it is the employees which differentiate a company from its competitor. From the boss, right down to the delivery man, employees are at the heart of any business and have the ability to make or break a company. How a customer is treated, the information they are offered and how a situation is handled is often as important as a product itself,” said Ataya.
Regardless of how good a product or service is, customers will not know to approach the business if they do not know about it. Ataya said that product awareness is key, which comes back to the notion of making life easier for customers. From the perspective of Mumzworld, mothers are busy, and if they know they can source something from the website, they are more likely to return instead of wasting time trying to shop around on other websites. The company constantly updates its offerings and adding new collections to the website to help mums identify what they need as fast as possible, making the customer shopping experience more streamlined.
“Awareness is the starting point in the journey that the SME will take the consumer on that will involve purchasing, ultimately ending up with a loyal retained customer who, in time, will become an advocate for the brand. The best way to build a business is to develop consumer advocates who love what you provide. They will tell their friends and this ‘word of mouth’ strategy, which might seem outdated, is still as valid and important today as it was decades ago but it all starts with product awareness,” said Rahimtoola.
While word of mouth allows a company to generate awareness organically, promoting products via marketing necessary for any size business because it allows a company to establish the brand’s reputation quickly and allows the business to attract new clients.
“Today an increasingly large majority of the buying population–the millennials–do not want to be generically marketed to. They want personalised offers tailored to their needs. They also want self-service options, and they want organisations to communicate with them using the channel of their choice,” said Haque.
He added that using cloud solutions, SMEs can now offer this sort of sophisticated service previously only affordable for large companies. Making use of technologies such as advanced analytics, artificial intelligence and the internet of things (IoT), the cloud offers SMEs ways to anticipate what types of products customers want, as well as when and how they want to be marketed to.
While the prevalence of customer loyalty programmes was the lowest globally, in the MENA region at 42 per cent, 87 per cent of respondents were strongly in favour of these programmes, according to the Nielsen Global Survey of Loyal Sentiment, which polled more than 29,000 respondents. This suggests that there is scope for more customer loyalty programmes across the MENA region, something SMEs could leverage. According to research by ICLP, that surveyed 600 consumers in the UAE and Saudi Arabia, loyalty programmes were found to be a powerful way to improve a business; 63 per cent and 61 per cent of respondents in the UAE and Saudi Arabia respectively preferred to buy from brands that offered customer loyalty programmes.
Considering SMEs’ limited cash flow, they do not necessarily have to offer financial incentives. SMEs can take advantage of digital marketing by encouraging interaction on social media accounts, such as offering customers an opportunity to win products through an online contest. Using relevant analytics tools allows a business owner to see their customers’ buying behaviour in detail, and enables them to customise their offers accordingly.
Although social media was perceived to be highly important in customer engagement in the ICLP survey, 20 per cent of respondents said they engage with brands they are loyal to on social media, which suggests that tailored incentives is one of the most effective ways to increase customer loyalty in the Middle East.
Engaging and keeping customer aware about brands using social media and non-invasive tools like proximity beacons, efficiently coupled with cognitive CRMs, provide a metric and measurement of loyalty and are the new ingredients for success, said Safri. “Technology can now enable SMEs to compete with much larger players who can undercut on the price but cannot provide the similar user experience and thus provide an edge for keeping the customer loyal, engaged, and satisfied and a likely ambassador of the brand furthering its reach.”
In most cases, the unique selling point for SMEs against a corporate giant is their ability to provide a level of personalised service that their larger, less flexible competitors are unable to match. Between technological advances, new channels for engagement, and the general economic conditions that have prevailed in the Middle East for over a year, delivering service that can attract and retain today’s millennial customer is now more important than ever.
“In fact, according to Marketing Management Primer for 2016 by research firm, Gartner, 89 per cent of marketers compete primarily on the basis of customer experience–discrete moments that, together, strengthen or weaken a customer's preference, loyalty and advocacy for a brand. By investing in customer service rather than competing on price alone, SMEs can protect their margins while remaining competitive,” said Haque.
Another advantage SMEs have that makes them more competitive than their larger counterparts is flexibility–when time equals money by responding quickly, a smaller business can actually help their client solve their problems, as well as save money. “A smaller business with fewer layers is better-geared to respond quickly to challenges and to jump on to new opportunities when they arise,” said Golovatenko.
Being undercut, particularly in today’s challenging climate, is a real threat for many SMEs, but they can use these differences to their advantage. They should focus on competing by creating value, said Ataya. She added that smaller copycats who imitate strategies and price cut impact the ecosystem as they drive higher prices of marketing and confuse consumers with unrealistic pricing. These are typically short lived as they do not have a sustainable model that adds true consumer value.
Customer behaviour in Saudi Arabia and UAE:
63% from the UAE buy from brands that offered customer loyalty programmes.
61% from Saudi Arabia buy from brands that offered customer loyalty programmes.
55% from the UAE purchased more from brands that they are loyal to.
60% from Saudi Arabia purchased more from brands that they are loyal to.
74% from the UAE value instant rewards, but felt 54 per cent of brands delivered.
72% from Saudi Arabia value instant rewards, but felt 57 per cent brands were able to deliver.
Source: Research by ICLP that surveyed 600 consumers in the UAE and Saudi Arabia