MSME organizations are competing to survive in the rapidly evolving market. The global economic downturn makes survival tougher for smaller and family-owned businesses. Though these businesses may have enjoyed years at the forefront of their industry, they often end up being bought out by larger competitors. The increasingly difficult conditions can be attributed to the absence of customer loyalty, as there is little opportunity for differentiation in terms of product quality and brand.
MSMEs usually have low shock absorption capacities. They prefer not to invest much in brand building and marketing activities. In the absence of strategic customer retention strategies, the MSME sector faces the following challenges in establishing customer loyalty.
1. Financial crunch - Most often MSME businesses operate on small margins. It is therefore difficult for them to spend on brand building. They also have a misconception that spending funds on branding and advertising are related to only large organizations.
2. Limited interest - Mid and small-sized businesses are set up by entrepreneurs, who prefer to see it grow at their preferred pace. They do not give priority to branding and marketing activities and rely on word-of-mouth and relationship building for acquiring customers. Some business owners even lack interest in the process, since brand building and customer retention strategies are generally long-term and do not produce immediate results.
3. Resource and time constraints- Brand building is an ongoing process and will take time before being effective. Most small business owners state that they don't have the patience and resources to invest in something that takes up so much time. Furthermore, decision-making teams often lack trained brand-building professionals. It makes the entire process resource-intensive and time-consuming.
4. Inconsistent company culture - In small-scale businesses, it is tough to establish consistent company culture as they are driven by the personality and values of an entrepreneur. All customer touchpoints and even those away should have a customer-centric approach. Engaging all employees with a brand that customers resonate with is tougher for small-scale businesses.
The challenges of building brand loyalty can be overcome by the MSME sector through strategic planning and adequate utilization of government schemes. Business owners must be educated about the importance of customer loyalty as a demand stimulant and having a competitive advantage. Highlighting the appropriateness of branding to build customer loyalty will encourage them to define customer retention strategies for their businesses as well.
Outlining a set of brand-building best practices for the MSMEs will help them establish their presence cost-effectively. Setting out guidelines will make it easier for managerial teams to develop integrative sales and marketing strategies with a customer-centric approach without spending on additional resources. The aim of the guidelines must be to convince business owners that creating brand value is no different from their overall business strategy.
MSME sector can also be directed towards the less expensive but more penetrative digital marketing strategies. Adoption of business-appropriate digital channels like social media and messenger-based sales, can help them connect with customers without spending much. It will help them network and build customer loyalty. Though the results may not be tangible early on, they will create a marked difference for the business over the years.