Maximize Multichannel Relations

Marketers who want to service, expand and retain customer relationships are realizing that a multichannel marketing approach is critical. The reason is that marketers are dealing with more and more multichannel customers, and these customers are most likely to be the best customers.

This is particularly true if you are selling directly to customers who are generally better-educated and more affluent – the prototype for multichannel usage.

While each channel can warrant a separate discussion, the Internet illustrates how a multichannel approach can be used to build customer relationships. To do this, look at how the Internet works in combination with other channels.

It has become increasingly clear that the Internet is simply another communication and marketing channel rather than a separate business model. Originally viewed as a threat to traditional business, the dot-coms appeared to take an early advantage by offering customers immediacy and interactivity. However, it is now apparent that the businesses that derive their revenues from multiple channels have won not only the battles but also the war for consumers’ loyalty and expenditures.

Several challenges must be overcome in developing an effective multichannel strategy that includes the Internet. Two are particularly important: integrating channels to optimize channel performance and generate synergy; and allocating resources among the various channels.

The solution begins with a thorough understanding of customers’ needs and behaviors, coupled with an understanding of the strengths and weaknesses inherent in each channel.

Companies have gotten into trouble by running retail, catalog or Internet channels as separate businesses. Your strongest products generally will be best sellers regardless of the medium. If you routinely create special offers for one channel, you are likely to alienate customers who prefer to shop and do business in another channel.

One business that has developed an effective multichannel approach using the Internet is Insight Enterprises, a direct marketer of computer products based in Tempe, AZ. In a competitive, low-margin business, Insight has achieved consistent growth and earnings. It uses two main channels: the Internet and highly trained telesales representatives.

Unassisted Web sales are growing rapidly but account for less than 15 percent of total sales. The company estimates that 70 percent to 80 percent of customers visit the Web site before making a purchase. International Data Corp., Framingham, MA, reports that shipments at companies that use the Web to support telemarketing and customer service staff rose 27 percent last year, faster than that of other channel combinations.

Allocating resources across channels. Most businesses are still unable to track customer behavior across channels. This is clearly a disadvantage if a business plans a multichannel strategy. The goal is to capture and have access to customer spending data and purchasing patterns for each channel in a comparable format. This will allow accurate performance and cross-shopping analysis.

Most progressive multichannel businesses have been building their customer databases over time. This lets them focus on developing more business with and retaining existing customers rather than having to invest in the expensive process of attracting new ones. A problem many of these businesses still have, however, is that their legacy systems were not set up to handle Internet transactions. This makes analysis more difficult but not insurmountable.

Without a more sophisticated cross-channel tracking system, you will need to make allocation decisions by evaluating each channel as a separate entity. It also is important to understand that sales in existing channels generally decline when new channels are added.

This reduction is usually only a short-term effect. Keep a long-term perspective, as the synergy produced by using multiple channels in an integrated manner will create a whole that is larger than its individual parts.

You also need to take into account what each channel does best. If time frame is critical and you need to test a new product or promotional offer, for example, the Internet is ideal. Once you get a reading on the test, you can make the product or offer available in every channel.

When allocating Internet expenditures, many marketers overspend on interesting graphics, movement, content and chat features. If your primary objective is to promote sales or collect information via the Internet, spend additional money on improving site usability. It is almost guaranteed that this will improve sales.

Most customers prefer simpler, easier-to-use sites that allow them to compare products and provide feedback. Market research firm Information Resources Inc., Chicago, surveyed 7,900 shoppers and found that 74 percent of people will give feedback online, but only 38 percent of Web sites ask for it. Companies spend thousands of dollars on research to find out things they could have learned for free.

CRM in a multichannel environment. Not all customers have the same needs. Nor do they all want the same things from customer service. Though some may find what they require in frequently asked questions lists, others may need more personalized written responses; and still others may want to talk by phone with a customer service representative.

New customer relationship management software can assist multichannel marketers to service customers better. These applications have proved particularly valuable as a customer retention and upselling tool more so than as a device to acquire customers. The cost of such software has become more affordable but still may be out of reach for smaller businesses. To compete in a multichannel environment without such technology, you will need to emphasize training and information sharing to a much greater extent.

You should work toward these goals, if improving the return on your multichannel marketing investment and maximizing your customer relationships are priorities:

• Create a multichannel strategy that gives your customers the option of deciding how, when and where they want to shop.

• Cross-promote in all channels and cross-train employees and develop a “single face” approach with a consistent theme and message.

• Build a database to capture spending activity for each channel in a way that allows you to compare and measure shopping and browsing activity in each channel.

• Create a mix of human interaction and technology based on your existing business model.

• Develop an across-the-board profit and loss statement that allows a comparison of revenues and costs for each channel and reflects the total bottom line.

• Provide a fast and competitively priced order fulfillment service. Doing this poorly severely hurt the dot-com firms. It will not work if you respond quickly to customer service inquiries but cannot deliver goods quickly, at a reasonable cost, on a consistent basis.

• Study your customers’ behaviors and use your Web site as an opportunity to collect information about customers, their e-mail addresses and their product preferences. Once you have this information you can target the appropriate offer to the appropriate group, a marketer’s dream.

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