How to Develop a Winning Omnichannel Strategy
In business, one simple number can tell many stories. The latest U.S. Census Quarterly Retail E-Commerce Sales report (PDF) indicates that in Q1 2015, e-commerce sales rose to 7 percent of the percentage of total retail sales, continuing the steady upward climb of e-commerce from its inception in the late 1990s. But does this mean that on average, businesses actually received 7 percent of sales purely from the e-commerce channel? Not necessarily.
Here’s why. Customers today no longer distinguish between online channels and brick-and-mortar stores. Many of today’s purchases cross multiple channels, and the customer considers them all part of the same brand experience. So while the 7 percent figure represents a hard and fast number of e-commerce sales, it actually comprises more channels than just e-commerce. Most major retailers are no longer trying to solve for e-commerce; if they are, they are behind the times.
Today’s marketers need to address multiple channels, but rather than addressing these channels separately, smart marketers want to solve for them holistically in what’s become known as the omnichannel. The omnichannel is a multichannel view of sales that provides customers with a seamless shopping experience, whether by desktop, mobile device, brick-and-mortar store, or over the phone. Organizations are trying to solve for a wide variety of customer experiences through the omnichannel. Such experiences might include the following:
- A customer checks inventory by store on a company’s website, purchases the item later with a smartphone or tablet, and picks up the product at a chosen location.
- A customer “likes” a brand on social media, receives a coupon in email or through a mobile app, and redeems the coupon at any outlet — in-store, mobile app, or online.
- A customer enters a store and a customer service rep quickly accesses the customer’s purchasing history and preferences from all sales channels, providing acutely targeted customer service.
The concept of the omnichannel is exciting, but the reality is challenging. The marketing technology landscape has become bewilderingly complex and the omnichannel is only a piece of the puzzle. IBM, Adobe, SAP, and others sell holistic omnichannel platforms that attempt to address all aspects of the customer lifecycle. They track everything from offers made to a customer via email to clicks to the website to in-store purchases. These platforms often include support for infrastructure, analytics, inventory management, transaction, fulfillment, mobile and online stores, customer service, social media, alerts, and more.
However, most companies have large capital investments in a multitude of marketing solutions already, the abandonment of which would be chaotic and expensive. For example, they might have an analytics package for their e-commerce website, a separate digital marketing tool for email campaigns, a mobile app with its own analytics package, and so on. Between all these systems and tools they have the capability to track the success of their marketing campaigns; however, most companies have not integrated these toolsets as effectively as they would like to for a holistic look at the customer journey.
Marketers are under enormous pressure to align their technologies into a comprehensive solution that addresses all facets of the omnichannel. With so much to absorb, the challenge can seem insurmountable. As consultants, we see this situation often. Rather than starting with the technology, we think it makes more sense to start with really understanding the business problem you are trying to solve. In other words, don’t try to boil the ocean; most companies find success by identifying customer buying patterns they need to address and augmenting their tools for that specific use case.
When it comes to developing an omnichannel solution, the following best practices are a good place to start:
1. Define your customer’s journey: You should have some idea of how your customers are jumping between channels, even if it’s just an educated guess. Try to define and prioritize the key use cases your customers are utilizing. This should be done on a persona-by-persona basis and can be accomplished through interviews with customers, analytics data, and tribal knowledge. For example, is your typical customer’s biggest issue wanting to be able to pick up items in-store quickly? If so, then determine how to utilize your current inventory management system to give the customer a real-time view of what you have in stock across all the channels through which they might order an item. Solve for one use case at a time, maturing your solution with each step.
2. Conduct a technology gap analysis: Analyze the pieces in play. Most organizations already have a number of the puzzle pieces in place and working. After you know what you have to work with, identify the key missing pieces. Finally, understand where your platforms are in their lifecycle. If any are planned for obsolescence you can ensure that any new technology purchases integrate well together. Tackling priorities in this fashion eases the pain in building the end-state omnichannel customer experience.
3. Understand your current analytics state: To truly understand how customers are journeying between channels along the way to the purchase, you must have the ability to analyze their cross-channel journeys. By understanding the analytics currently being gathered and the possibilities with the tools at your disposal, you’ll identify the gaps in getting the data needed to meet your organization’s omnichannel experience goals. If your data is a mess, either because you are lacking data governance or the right people, processes, and tools, you will need to address that as well.
4. Eliminate Silos: Your customers are more likely to have a united experience if your internal teams are working on the same page. It’s critical to precisely determine how well your teams work together as well as any barriers that exist between departments at your organization. For example, is your email marketing team working in conjunction with your mobile app and website team? To do omnichannel well, you need leadership and communication across teams all working toward a common goal.
Note that this may also involve how your employees are incentivized when it comes to omnichannel experiences. For example, each brick-and-mortar store normally incentivizes employees to maximize revenue in that store. Quite often, a sales person will try to “steal” a sale from another channel, potentially endangering the sale overall. Companies ultimately will have to come up with ways to spread the sale across multiple channels. One way to do this is to measure the “nudges” (each of the touchpoints a customer has toward the end sale) and incentivize employees based on those nudges. Each customer’s touch point will carefully move her/him in the “buy” direction, but ultimately it won’t matter which channel seals the deal.
5. Utilize a holistic product development lifecycle process: With business and technology teams working as one, you can eliminate some of the organizational barriers. Product managers should be representatives for all of the various stakeholders on the business side and should be empowered to make decisions on behalf of those stakeholders. They should utilize analytics data and customer feedback from this process to feed back into the ideation process and prioritize accordingly. Wash, rinse, repeat!
The desired omnichannel end state is a completely frictionless experience for customers researching and purchasing products across all channels. However, the omnichannel is still in its infancy. Organizations will need to continue to make iterative improvements to the process based on prioritized needs. The journey never ends because newer technology, the addition of new channels, and evolving customer expectations will continuously push the omnichannel boundary outward. Nevertheless, customers will expect you to know them regardless of which channel they use to engage with you.
The key to optimizing your organization’s omnichannel strategy is designing a process that incorporates customer feedback as the glue that holds the pieces of your omnichannel puzzle together. Keeping in mind that you don’t have to scrap your investments in individual pieces, you can evolve your solution over time as you learn more and more about your customers’ expectations of your brand.