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Cutting costs with the multichannel customer experience

6th Mar 2009
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As organisations look to cut costs in these precarious economic times, one source of waste can often go overlooked - the waste generated by poor customer experiences. So how can an emphasis on multichannel capabilities solve this problem and provide a rapid payback? Rod Street explains.

By Rod Street, IBM Global Business Services

The focus on waste that inevitably consumes organisations as they strive to survive in these recessionary conditions too often concentrates only on the obvious pools of cost – inventory, headcount, premises or communications. However, businesses need also to consider the often hidden waste generated by poor customer experiences.

This waste loses incremental sales, deters repeat purchases or weakens the sense of emotional loyalty, while simultaneously adding extra operational costs. Addressing this for the 60% of customers who now now check online ratings, blogs and feedback before buying in-store, and move seamlessly from one channel to another in their interaction with organisations, demands that key multichannel capabilities are prioritised in the drive for improvement.

In prioritising your energies I suggest three areas of focus.

1. Fulfil the basics effectively

The priority requirements are generally not difficult to grasp from a customer viewpoint – although technically they may present challenges! They are the essential basics that meet customers' needs, such as 'can I order on the web and pick up in store?'

"The heart of multichannel is about reaping the inventory rewards that can come from a renewed end-to-end look at how best to commit and fulfil customers' orders."
Rod Street


In a retailing context, this makes capabilities such as the 'click and collect' service - that companies like John Lewis and Comet offer - powerful examples of good customer experience generated by multichannel capabilities. This is a rapidly developing area being pushed by consumer demand and unlocked by a mix of process change, enterprise integration and data technologies that are empowering ever more sophisticated and smart interactions.

For example, place an order through Argos that cannot be fulfilled (perhaps because the stock level is wrong or the manufacturer cannot supply) and the consumer will not be left to find out all by themselves. A proactive call or text from the call centre will advise of the problem and seek a suitable remedy - a great way of building consumer commitment and making sure that multichannel really helps these basics of customer experience.

The heart of multichannel is about reaping the inventory rewards that can come from a renewed end-to-end look at how best to commit and fulfil customers' orders. Flexible supply, lower stock holding, wider ranges and an ability to reserve stocks in transit provide great cost savings and a good customer experience.

In most markets there are key needs that customers have around their purchases:

- They get what they want.
- They receive it in full. 
- It arrives when it is promised.
- They are forewarned about any problems.
- They have their complaints handled effectively.

These key service attributes need to be delivered cross-channel and should be at the heart of your goals for enhancing multichannel capabilities. The rapid growth that internet kiosks in retail stores that have been so successful in Mothercare or REI, for example, will be driven by the benefits they unlock on the first two of these needs.

2. Fix the broken 'moments of truth'

Multichannel investments and initiatives need focus. A great way to do this is to build a good picture of the journeys that customers travel along your channel chains, all around the customer lifecycle, and identify where these break down and undermine your customer experience.

These broken links need to be seen as the customer looks at them – across channel by journey, e.g. your IVR layers and tele-agent linkage, your web and contact centre prices, offers, inventory and approach, or your direct business and face-to-face sales operations.

Again, once identified and prioritised, they can contribute to a significant cost saving and improvement in customer experience. For example, one beverage company saw the biggest ever jump in their customer metrics when core parts of the service cycle were addressed. The renewed fashion for lean six sigma (a method which measures customer satisfaction within an oragnisation) is testimony to the beneficial financial impacts of this in the service environment.

3. Double-check your metrics

Another great way of enhancing customer experience is to make sure that your vision, metrics and channel activity are firmly customer-centred, focusing on the greatest needs that customers actually have.

The future customer is already shaping and mixing their channel expectations. For instance, those service providers that see their stores as simply sales outlets and measure them as such will not succeed. So much of their role - as firms such as Apple have realised - is as a showcase for all channels, targeting experience and expertise to enhance the brand and drive an sales.

"The future customer is already shaping and mixing their channel expectations."

Similarly, in many B2B situations the ability to dramatically improve reach and cost to serve by using channel combinations to sell and support customers can only be achieved when the metrics and vision reflects the reality of customers wanting to conduct different journeys through different channel combinations.

Tip of the iceberg

We are only at the start of organisations using their multichannel capabilities to enhance the customer experience. At the moment most businesses need to focus on the foundations. But the landscape is changing rapidly.

Only five years ago Facebook started operations and we heard the first noises of Web 2.0. Now it is having an enormous impact. And the rapid growth in social media and the value that consumers put on social connections will not remain on the web.

As such, we can fully expect that the next five years will drive further enhancements in customer experience through the exploitation of social web experiences in the mobile, retail and kiosk channels.

Rod Street is partner at IBM Global Business Services. In over 20 years of consulting he has worked with the likes of Unilever, Nestle, Samsung, Philips and Glaxosmithkline, and is the author of the recently published book on customer experience across channels - The Multichannel Challenge.

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