DIGITAL MARKETING AS DETERMINANT VARIABLE FOR IMPROVING THE BUSINESS PERFORMANCE

Abstract

This study analyzes the complex relationships between digital marketing, Customer Relationship Management (CRM), сompetitiveness, and business performance in the creative industry Small and Medium Enterprises (SMEs), focusing on craft-leading products in urban areas of East Java province. According to the sample size, the number of survey respondents was 172. There were 86 male entrepreneurs (50%) and 86 female entrepreneurs (50%). Primary data were collected by distributing the questionnaires according to the number of respondents to SME entrepreneurs who are managers or company owners with competence in the business field and more than five years of business experience. The analysis used Partial Least Squares Structural Equation Modeling (PLS-SEM). The results emphasize that digital marketing affects business performance through CRM by 0.126 with p-value of 0.006, and competitiveness by 0.260 with p-value of 0.000. It can be explained that digital media can identify, recruit, and turn potential customers into loyal customers. Higher demands from customers for online services are becoming increasingly crucial for digital marketing and business activities. The essence of the results of this study is that the more effective digital marketing is, the more influential the company’s CRM is to improve the company’s business performance, including profit growth, sales growth, and employment growth. The critical role of digital strategy, CRM, and competitiveness on business performance can overcome the challenges posed by the pandemic and drive success in creative industry SMEs of superior products in East Java, highlighted in this study.