Leveraging Digital Marketing Tools in Strengthening Customer Relationships in Micro Enterprises: Sri Lankan Analysis

Abstract

Background: Digitalization has transformed traditional marketing paradigms, making digital marketing tools essential for Sri Lankan micro-enterprises to build strong customer relationships, enhance engagement, and sustain business growth in an increasingly competitive environment. Aim: The current level of adopting and implementing digital marketing in Micro and Small Enterprises (MSEs) in Sri Lanka is steadily increasing, driven by the rapid development of digital technologies and the benefits they offer, such as increased market reach and customer engagement. Despite this growing adoption, MSEs still encounter several challenges in effectively implementing digital marketing strategies. This study aims to identify impact of digital marketing tools on customer engagement, retention, and overall business growth in Sri Lankan micro-enterprises. Design: Technology-Organization-Environment (TOE) framework used as a theoretical framework. The target population was micro enterprises operating in Sri Lanka, specifically those engaged in product or service-based operations. 400 micro enterprises which were randomly selected. Online survey method was employed to get data and structured questionnaire approach was used. Multiple regression analysis used to test the study's hypotheses. Findings: Of the 400 micro enterprises, 232 responded. Regression analysis result implies that 67% of variation in customer relationship development can be explained by social media, websites/blogs, display advertising and search engine optimization. Social media recorded the highest influencing factor. Implication: Results recommend that micro-enterprises owners increase their presence and activity on popular social media platforms such as Facebook, Instagram, TikTok and LinkedIn to fully exploit their marketing potential. The results suggest that well-implemented SEO strategies can help businesses access new markets, improve brand recognition, and increase market share while minimizing marketing costs. Micro-enterprises are encouraged to create user-friendly, visually appealing, and regularly updated websites that effectively showcase their offerings.