Companies Have to Connect with Customers Digitally to Succeed

Businesses live or die today based on how they adapt to digital media.

[source: Mitchell York, Entrepreneurs] As an entrepreneur growing a business, how do you establish and implement an effective digital strategy? In the new book The Network Is Your Customer: Five Strategies to Thrive in a Digital Age, Columbia Business School’s David Rogers offers step-by-step guidance for businesses on how to prosper in the digital age.

Why are digital media so important to entrepreneurs today? Does every business need a digital strategy?

From smartphones to social networks, today’s digital tools are helping your customers connect, create, and interact with each other on a global scale. This is changing your customers’ relationships with each other, and with every business, no matter the size or industry. In the past, businesses relied on a broadcast model to influence customers with mass marketing, projected out one-way, to as many consumers as possible. To succeed today, businesses need a network model, one that takes advantage of customers’ ability to engage, interact, and even collaborate with your organization and each other.

For many entrepreneurs, the choices of digital media are daunting. How do you decide where to start?

Small businesses should not try to do it all. There are so many choices of digital tools today: Facebook, Twitter, YouTube, blogging, wikis, foursquare, Ning, and more. With the right strategy, these digital tools can help you save time and money, and increase the reach of your marketing. But just launching a blog or Facebook page without knowing why is a poor use of your resources. You need to start with understanding your own customers, then identifying your business goals, and choosing an appropriate strategy to fit them.

You identify five strategies to thrive in the digital age. What are they, and what makes them effective?

These are five strategies that came out of my research into hundreds of case studies of businesses of all kinds, trying to understand what makes a successful digital strategy:

  • The Access strategy: Be faster, be easier, be everywhere, be always on
  • The Engage strategy: Become a source of valued content
  • The Customize strategy: Make your offering adaptable to your customers’ needs
  • The Connect strategy: Become a part of your customers’ conversations
  • The Collaborate strategy: Invite your customers to help build your enterprise

I identified these five strategies by examining the core behaviors of customers in their networked lives. While technology keeps shifting every day, the underlying behaviors that drive customers in the online world remain constant. So, they present a huge opportunity for businesses to innovate, and to retain and win new customers.

What’s an example of an entrepreneur or new business successfully implementing these kinds of customer network strategies?

I’ll give you a few examples:

  • ZipCar: founder Robin Chase re-invented the car rental experience by linking vehicles to the Internet, and giving customers the tools to find, rent, and return vehicles through their phones and PCs at any time.
  • Stephenie Myers: when she reached out to her early fans online in their own fan sites, they helped build her Twilight books into a cult hit.
  • CD Baby: musician Derek Sivers built a $30 million company by creating an online business model that allows independent musicians to build their own digital storefront and sell music to consumers
  • Kiva: the charity has given a half-million donors the power to choose what projects and what families they want to sponsor, using the Web to access a network of micro-entrepreneurs around the world.
  • Wine Library: Gary Vaynerchuk built a huge online following with his daily Web videos of wine tastings, reaching thousands of new fans and growing the wine retailer’s business ten-fold in three years.

What’s the biggest mistake you see entrepreneurs making, in terms of digital strategy?

A lot of businesses get caught up in focusing on the technology. Every week, there’s buzz in the news about the latest social media tool, the newest customer craze, or how many friends a brand has just added on Facebook. Rather than focusing on your customers and what motivates their behavior online, it’s easy to imagine that by jumping on the latest technology, you will somehow grow your business. In fact, many of these tactical approaches to technology are often a waste of time.

What’s the first step that a business should take to establish an effective digital strategy?

The first step is to set your objectives. Are you trying to reach new customers, drive sales to current customers, reduce your operating costs, gain customer insights, or introduce a breakthrough product or service offering? Once you know your objectives, you can figure out the right digital strategy to fit. It’s important to benchmark successful cases as well, often from outside your industry, to get a lot of your best ideas. That’s why I include over 100 case studies in my book. Setting business objectives at the start will ensure the time you spend on digital media is delivering real value to your business.

What’s the most important lesson for entrepreneurs in a world of digital media?

A digital strategy is no longer a nice-to-have. It’s a must-have. Every business today is shifting from a world of mass markets and mass production, to a world of customer networks that are interconnected, dynamic, and powerful. Whether you are running a pizza chain, a political campaign, or a personal finance service, you need to understand your customer network’s behavior, and you need to come up with new ways to add value for them in your products, services, and marketing. Rather than marketing by yell and sell to anyone who’ll listen, you need to help your customers become your biggest champions, and the biggest drivers of your business. Their voice is louder now than ever.