How Can Service Firms Incorporate Strategies to Improve Customer Engagement Using Online Media - Thesis Example

How can service firms incorporate strategies to improve engagement using online media? Table of Contents Literature Review 3 1. Introduction 3 1.2. Background of Service Firms 3 1.3. Marketing Strategies of Service Firms 4 1.4. Importance of Social Media Strategies in Service Firms 5 1.5. Customer Engagement Definition and Concept 6 1.6. Customer Engagement an Important Aspect of Business 8 1.7. Concept of Online Marketing (Social Media) 10 1.8. Impact of Online Marketing on Customer Engagement 11 1.9. Summary 13 Reference List 14 1. Literature Review 1.1. Introduction Social media strategies can be used as an influential instrument or platform by marketers to catch the attention of and communicate with consumers more efficiently and then develop a flourishing relationship strategy (Brodie, Hollebeek, Juric and Ilic, 2011). Consequently, it is not simply an instrument but also a considerable marketing strategy for service firms in competing environments. This section examines the literature of this thesis. The chapter starts with analyzing the definitions of the service firms and the marketing strategies incorporated by the service firms. More introductions regarding the types of marketing in service industries and the theory of social media influence brand image of business are involved (Bruhn, Schoenmueller and Schäfer, 2012). All those analyses and techniques assemble the approach outline of this dissertation. 1.2. Background of Service Firms Castronovo and Huang (2012), defined service industry to consist of companies, that chiefly earns revenue through offering intangible commodities and services. The researchers further explained that the service firms are engaged in retail, transport, distribution, food services and also some other service influenced business. As indicated by Chu and Kim (2011), service firms are involved in direct interaction with the customers for offering services. A study by Daniel (2014) on the marketing strategies in the service firms revealed that, service companies is likely to have the marketing strategies carried out in the marketing department. Francesca, Manuela and Gabriele (2012) revealed the attempts that can be made by the service firms to add value when providing services that exhibits increased complexity and intangibility in the view of several consumers. Kim and Ko (2012) studied that there are four distinct attributes of the services offered by the service firms namely, intangibility, heterogeneity and perishability that impact the perceptions of the consumers of quality service from the service organizations. The study also revealed that fierce competition in the recent era and escalating consumer desires have generated a climate where “quality” is considered to be the chief strategic variable for enhancing consumer satisfaction and consequently the profitability of the service providers. 1.3. Marketing Strategies of Service Firms According to Kuvykaite and Ligita (2010), strong marketing strategies are essential to the success of business of service firms. The researchers also revealed that service firms can experience challenges in incorporating marketing strategies as they generally do not offer physical products that can be confirmed by its customers. Malthouse, Haenlein, Skiera, Wege and Zhang (2013) indicated that the service firms as a result, rely on increased levels of professionalism and efficiency. A comprehensive marketing strategy can support the service providers to highlight capabilities and attract more consumers as well as increase consumer engagement. As revealed by Mangold and Faulds (2009) in their study, certain consumer engagement strategies that are implemented by several service firms over years are consumer recommendations, industry specialisation and expert networking opportunities. With the increasing global completion and increased influence of social media on the consumer engagement level, the social media strategies of the service firms’ have become the most effective consumer engagement and marketing strategies in the recent era. Martin and Ruth (2012) indicated that implementing strategies such as qualified sales leads can generally be initiated in the accessible consumer base. When a proficient service firm deals with their existing crop of contented consumers, its sales employees should stumble on, if those customers have company associates that would gain from their services. These referrals appear with an immediate connection to the outlook and eradicate a great deal of the concern often linked to making a cold call. Neti (2011) elaborated that consumer engagement strategies such as Professional networking opportunities provide service firms an added opportunity to execute their marketing strategies. Patrick and Karen (2011) through their study networking groups permit companies to carry out face-to-face interactions with prospective consumers and business leaders. Gatherings that merge industry with pleasure, such as principles, charitable functions and public events, provide sales staffers further chances to extend the remark about the business. They can also interact with significant associates in ways that leave individual impressions. As a lot of service firms opposing for a restricted number of prospective consumers, their relevant marketing and consumer engagement strategies should consist of methods on how to compete successfully from their rivals. As no firm can meet up every consumer each requirement, all company ought to decide which ability sets it possesses and stress on those proficiency. For instance, a law firm having expertise in bankruptcy law will strain its aptitude to customers looking for assistance in reorganizing their debts. Aside these, consumers engagement strategies of the service firms indicated that Social media has rapidly become one of the main efficient marketing tools for service firms. Websites such as Facebook, Twitter and Tumblr provide companies latest outlets to widen their messages to a global audience. Professional networking sites such as LinkedIn allow marketers and sales staff to connect with potential consumers’ dependent on work familiarity and industry position. 1.4. Importance of Social Media Strategies in Service Firms Emergence of social media has resulted to a fundamental shift in the way of businesses of the service firms of every size engaged with their customers. Sashi (2012) indicated that rather than focussing on “touch points” at the time of marketing and sales process, the service companies are employing social technologies to generate meaningful extended term relationships that include frequent online communication more often through social media channels. The study of depicted that service firms that engages with their customers through social media possess more loyal consumers and the study suggested that the customers who are engaged with brands tend to spend 20% to 40% more on those brands. Service firms involve in expanding the perception of customer service as it is no longer an isolated segment of their business model, but part of customer engagement strategy. This is because of the reason that responsibilities which usually fall to the service marketing teams, now fall into area of consumer service (Daniel, 2014). Consumer engagement is no more as series of one-off experiences but is an ongoing dialogue. Service firms require being good listeners in this digital era and that requires new set of proficiency. Today, how a service firm engages with customers through online media channels impacts how consumers perceive their brands. A study of Sashi (2012) indicated that 70% of the Americans are influenced to spend an average of 13% and also are engaged with the service companies that provide excellent customer service and network with them often. This leads to generation of positive word-of-mouth among the online communities and this is bound to increase consumer engagement as the communities are influenced by each others opinions in social media. In the recent era, the bottom line of the service firms is driving their capability to successfully engage consumers (Daniel, 2014). For constructing loyal relationships that last long, it is essential that the service firms realise the basic principles of the fresh definition of consumer engagement and put them into act. 1.5. Customer Engagement Definition and Concept Consumer engagement is defined by Van Doorn, Lemon, Mittal, Nass (2010) as the engagement of the consumers with one or more organization or brand. The author states this as the relationship between a firm and consumers that indicates rational and emotional bond that the consumer develops towards the brand. Subsequently, engagement is argued by Verhoef, Reinartz and Krafft, (2010) to comprise feelings of confidence, satisfaction and passion in a brand. The idea for engagement can be both customer and business led and the means of engagement can be online or offline. Vivek, Beatty and Morgan (2012) define customer engagement as it is an extended-term practice that encourages consumer loyalty and promotion through word-of-mouth, through the critical objective of elevated level renovation. Principally, consumer engagement has five diverse stages on which customers can pass through as they relate to a single brand. This is referred as consumer engagement cycle as depicted in the figure below. Figure 1: Online consumer engagement cycle (Source: Smith, 2009) According to Weinberg and Pehlivan (2011), Online customer engagement is qualitatively dissimilar from offline engagement as the nature of the customer’s communications with a brand, business and other consumers hold opposing views on the internet. Wilson, Guinan, Parise and Weinberg (2011), indicated that social networks are places where community can interact and socialize that cannot be imitated by some offline interactive intermediary. Online consumer engagement strategies of service firms aim to encourage or influence consumer behavior, which is different from the offline one-way marketing communication. Even though, consumer support has for all the time been an objective for marketers, the growth of online consumer generated contentment that can take encouragement to an added level. Table 1: Topology of online consumer engagement level of Engagement Low Medium High Highest Type of user Adopter two-way Content designer Social Activity connect to groups Tag Bookmark Rate Vote State Favoritism generate content Upload content turn into fan generate fun community Networking (Source: Verhoef, Reinartz and Krafft, 2010) 1.6. Customer Engagement an Important Aspect of Business The study of Verhoef, Reinartz and Krafft (2010) indicated that in today’s increasingly dynamic and interactive business surroundings particularly, in service firms which involve face to face interactions of the company and the consumers in providing service. It is suggested by Verhoef, Reinartz and Krafft, (2010) that consumer engagement presents a strategic imperative for creating enhanced business performance that includes sales growth, increased competitive advantage and profitability. Study of Verhoef, Reinartz and Krafft (2010), revealed that several service firms invest heavily in the relationship marketing to increase consumer engagement. Academic literature focuses on the significance of resembling the concept of customer engagement as an essential aspect of service firms business. The model below describes the relevance of consumer engagement in business. Figure 2: Model of Consumer Behaviour (Source: Verhoef, Reinartz and Krafft, 2010) Doorn, Lemon, Mittal, Nass (2010) suggested that a consumer willing to spend physical, cognitive and expressive effort into an online platform, will have a superior tendency to increase word-of-mouth communication concerning it. A consumer evaluation structure introduced by Doorn, Lemon, Mittal, Nass (2010), suggests that the significance of customer engagement includes four magnitudes: consumer purchasing activities, consumer recommendation behavior, consumer influencer actions through consumers influence on new, existing or possible consumers and lastly, consumer awareness behavior using feedback given to the service firm. Consequently, both customer loyalty and word-of-mouth have recognized foundation as prospective engagement consequences in the literature. The perspective of online social media has turn out to be of huge interest to marketing practitioners as the latest social media podium rapidly appeared as precious tools, fundamental to their attempt of consumer engagement. Regardless of the enormous recognition of the notion amongst businesses, the drive of engagement still misses the spot and is unsuccessful to elucidate what it eventually implies to the service firm (Doorn, Lemon, Mittal, Nass, 2010). The behavioral actions of engagement existing on online social media stages such as number of fans, repetitive visits or communications with the brand website, present slight information about the profits to be projected. As a result, consumer engagement concepts are of great importance to be considered by the service firms. 1.7. Concept of Online Marketing (Social Media) Social media have transformed from the way people stay in touch, interact, share and eventually accomplish their relations with relations, associates, co-workers, politicians, the media, celebrities and businesses similar (Doorn, Lemon, Mittal, Nass, 2010). Social media, which can be illustrated as mutual environments centered on the exchange of substance, provide people with distinctive platform not only to obtain substance alike traditional medium outlets but also to enthusiastically take part in the formation, expansion and broadcasting of content. Doorn, Lemon, Mittal, Nass (2010) stated that social media marketing is a wide term that many service firms are willing to utilize to enhance the image of their company .It is difficult to truly describe, but the researchers definition indicates that it is a scientifically utilization of marketing with various technological concepts and tools to attain defined objectives of the service firm. More specifically, social media marketing means developing a business through various media such as blogs and videos as they provide company exposure. Figure 3: Social media marketing goals (Source: Castronovo and Huang, 2012) Viral advertising has become a process in which the service firms are marketing and providing more information on their brands or services. The viral initiative to online advertising has a foremost benefit, since; communication is further targeted to a brand’s future consumer. This can be recognized to the reality that viral communication gives the marketer a better level of innovative authorization through a communication delivery medium that is further close and modified (Castronovo and Huang, 2012). In recent technology obsessed world, social networking sites have turned into a technique where service firms can expand their marketing campaigns to a wide array of customers. The techniques and approaches for interacting with consumers have transformed significantly with the appearance of social media; consequently, businesses ought to study how to employ social media in an approach that is reliable with their business and this is particularly true for service companies determined to increase a competitive advantage. 1.8. Impact of Online Marketing on Customer Engagement Francesca, Manuela and Gabriele (2012) stated, over the years, marketers thought that they efficiently handled the market analysis part and reached the heights of customer segmentation understanding. However, the emergence of social media brought with it crucial changes over markets that led to change in traditional marketing. Social media provided fresh opportunities in matters of customers understanding and transformed the way customer engagement were done. Improvement of customers understanding- Customers understanding is a large part of increasing consumer engagement, it is the foremost step brands have to surpass for building relationship strategy. Based on a report of Francesca, Manuela and Gabriele (2012), that asked several service companies to choose their priorities for upcoming years, companies’ priority for the phase 2014-2016 was to “Understand Customers and the Customer Experience”. Next priority was developing marketing analytics for elevating consumer record. Overall, on the 11 priorities chosen for 2014-2016, 6 of them intended to recognize consumers better and to please them by using all techniques, particularly digital ones. This report depicted that knowing the consumer was the huge priority in brands’ plans particularly with the emergence of social media. Those innovations shaped latest ways to identify customers and brought innovative perspectives in accordance to consumer databases creation (Francesca, Manuela and Gabriele, 2012). The rises of communities and word-of-mouth on social media- The emergence of social media transformed the customers’ decision-making practice by advancing the powerful channels. Certainly, online communities assemble internet users about identical interests or values that connect people simultaneously There are two diverse members, loyal consumers of a brand that immediately obtain promotional mails and other people claiming their engagement to a group of people and promoting the brand they support (Francesca, Manuela and Gabriele, 2012).. Figure 4: The Network Coproduction Model (Source: Francesca, Manuela and Gabriele, 2012) In contrast, Kim and Ko (2012) revealed that Opinion leaders have well-built status and are convincing; recommendations coming from each of them will have a large authority on the random customer’s decision-making practice. Nevertheless, with the emergence of social media, discussion between users increased and so marketers also desire to target each customer. Appreciation to a conversation strategy, they attempt to manipulate consumers’ behavior by staying near to them (Kim and Ko, 2012). 1.9. Summary The literature review section evaluated various literatures on the social media strategies impact on increasing customer engagement level in the service firms. The literature reviewed that social media is increasingly emerging as the next big frontier for customer engagement and interactions. Several customer interactions are taking place each day on the social media websites such as Facebook, Twitter, You Tube and many more. This trend is expected to grow exponentially over few years as the application and number of active users of social media sites is continuously increasing. This trend also indicates a gradual shift from predominantly serve form and customer interactions that impacts on the company-customer relationship as well as increases customer engagement level. It consequently becomes imperative for the service firms to have a strong social media consumer engagement strategy. This section will help the researcher to gain an understanding of the relevant concepts that will assist in conducting the research work. Reference List Brodie, R. J., Hollebeek, L. D., Juric, B. and Ilic, A., 2011. Customer engagement: conceptual domain, fundamental propositions, and implications for research. Journal of Service Research, 1(9), pp. 4670-5114. Bruhn, M., Schoenmueller, V. and Schäfer, D. B., 2012. Are Social Media replacing traditional media in terms of brand equity creation?. Management Research Review, 35(9), pp. 770-790. Castronovo, C. and Huang, L., 2012. Social media in an alternative marketing communication model. Journal of Marketing Development and Competitiveness, 6(1), pp. 117-134. Chu, S. C. and Kim, Y., 2011. Determinants of consumer engagement in electronic word-of-mouth (eWOM) in social networking sites. International journal of Advertising, 30(1), pp. 47-75. Daniel, A. A., 2014. Service operations strategy, flexibility and performance in engineering consulting firms. Ramereo Publishing, 12(5), pp. 96-105. Francesca, C., Manuela, D. C. and Gabriele, P., 2012. Social media affordances: Enabling customer engagement. Marketing through Social Media Publishing, 18(11), pp. 212-369. Kim, A. J. and Ko, E., 2012. Do social media marketing activities enhance customer equity? An empirical study of luxury fashion brand. Journal of Business Research, 65(10), pp. 1480-1486. Kuvykaite, S. and Ligita, Z. J., 2010. Consumer Engagement in Social Media by Building the Brand Rita. Social Media Publishing, 6(1), pp. 96-98. Malthouse, E. C., Haenlein, M., Skiera, B., Wege, E. and Zhang, M., 2013. Managing customer relationships in the social media era: introducing the social CRM house. Journal of Interactive Marketing, 27(4), pp. 270-280. Mangold, W. G. and Faulds, D. J., 2009. Social media: The new hybrid element of the promotion mix. Business horizons, 52(4), pp. 357-365. Martin, M. and Ruth N. B., 2012. Why Attachment Security Matters: How Customers Attachment Styles Influence Their Relationships With Service Firms and Service Employees. Journal of customer behaviour, 5(2), p. 63. Neti, S., 2011. Social media and its role in marketing. International Journal of Enterprise Computing and Business Systems, 1(2), pp. 1-15. Patrick, S. and Karen, F., 2011. To Keep Your Customers, Keep It Simple. Journal of Marketing Management, 16(9), pp. 78-96. Sashi, C. M., 2012. Customer engagement, buyer-seller relationships, and social media. Management decision, 50(2), pp. 253-272. Smith, T., 2009. The social media revolution. International journal of market research, 51(4), pp. 559-561. Van Doorn, J., Lemon, K. N., Mittal, V., Nass, S., Pick, D., Pirner, P. and Verhoef, P. C., 2010. Customer engagement behavior: Theoretical foundations and research directions. Journal of Service Research, 13(3), pp. 253-266. Verhoef, P. C., Reinartz, W. J. and Krafft, M., 2010. Customer engagement as a new perspective in customer management. Journal of Service Research, 13(3), pp. 247-252. Vivek, S. D., Beatty, S. E. and Morgan, R. M., 2012. Customer engagement: Exploring customer relationships beyond purchase. Journal of Marketing Theory and Practice, 20(2), pp. 122-146. Weinberg, B. D. and Pehlivan, E., 2011. Social spending: Managing the social media mix. Business Horizons, 54(3), pp. 275-282. Wilson, H. J., Guinan, P. J., Parise, S. and Weinberg, B. D., 2011. What’s your social media strategy. Harvard Business Review, 89(8), pp. 23-25. Read More