The term ‘omnichannel’ has been knocking around for some years now. Back in January 2013, MyCustomer predicted that it would become one of the most grating buzzwords of the year – and so it was.
But beneath all the hype and confusion lay a very serious proposition – that in an age when the number of customer channels had ballooned, and where the customer journeys increasingly finished on a different channel from which it started, brands needed to be able to stitch all interactions together to form a seamless experience.
“Many businesses offer multiple channels for their customers’ experience,” says Tara Sporrer, VP of marketing at Moxie. “These can take the form of a desktop website, a mobile site, and of course, a physical shop. Omnichannel is the idea that all of these different channels offer the same customer experience, ensuring that a customer can start a journey by researching a product or service from mobile, continue research in a shop or branch, and close the transaction via desktop online – all with minimum effort through seamless integration.”
Research demonstrates just how common the omnichannel approach to shopping has become. A study by MasterCard last year found that eight out of 10 consumers now use a computer, smartphone, tablet, or in-store technology while shopping.
Elsewhere, GI Insight’s report The Omnichannel Imperative shed further light on the unpredictable nature of customer journeys. In a study of 1,000 UK consumers, it found that 71% of customer journeys begin online and yet just 42% typically buy via the web, while 18% start with a visit to a shop but 31% end up purchasing in store. Meanwhile, 25% of respondents reported that they don’t have any ‘usual’ purchasing channel at all.
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Clearly, a growing proportion of today’s customers are happy channel-hopping among online and physical touchpoints, in a journey that could see them researching product reviews online, comparing features with friends on social networks, reserving a product through an app before picking it up in-store. But this presents a problem to many organisations, who haven’t necessarily been investing appropriately across the spread of available touchpoints.
“Many organisations have an unconscious bias whereby they assume that their digital-savvy customers (born digital/stay digital) are the most profitable, largely due to a lower cost to serve and a greater opportunity to woo them through personalised content and tailored services,” notes Rachel Barton, managing director for advanced customer strategy, at Accenture Strategy. “This belief has led them to over-invest in digital capabilities and channels so they can give customers (particularly millennials) more digital experiences that they supposedly crave. However, the assumption is not entirely accurate, and it could cost UK organisations £221 billion.”
Accenture Strategy’s latest Global Consumer Pulse Research suggests that channel-hopping ‘experimental’ customers are actually the most profitable customers over digital-savvy customers. And these profitable customers don’t want purely digital interactions, they want experiences that deliver the results they seek using unpredictable combinations of digital and traditional channels.
Barton continues: “This appetite for varied experiences is demonstrated by the fact that over half (51%) of UK consumers are comfortable crossing back and forth between multiple channels, even within a single interaction. Another 76% of consumers still prefer dealing with human beings over digital channels when getting advice or resolving customer services issues, underlining the importance of human interaction, even in the ‘digital age’.”
We are all omnichannel consumers
So who is the ‘omnichannel’ consumer at the heart of this trend?
“We are all omnichannel consumers,” says Kirk Dobie, commercial director at GI Insight. “More and more of us have the ability to use multiple channels at the speed of response we require. The majority of households have multiple devices, laptops, tablets, mobiles, landlines and many people have multiple email addresses to use and be contacted on (on average, eight).”
60% of shoppers would switch retailers if their delivery option wasn’t available.
Indeed, according to Kibo’s Digitally Demanding Consumer report, which surveyed more than 3,000 consumers across the United States and the United Kingdom, 95% prefer some form of omnichannel service when shopping. And the risk for those brands that aren’t prepared to go omnichannel, is that this trend is accompanied by a dramatic erosion of consumer loyalty.
Kibo’s study found that over half of consumers (60%) would purchase elsewhere if their preferred method of delivery wasn’t available, even from a retailer that they felt loyal to. Moreover, two-thirds say they are less likely to buy from retailers unable to confirm product availability online, while another third would leave retailers unable to offer click-and-collect.
“The fact that 60% of shoppers would switch retailers if their delivery option wasn’t available is testament to rising expectations,” warns John Pincott, European MD at Kibo. “In fact, a quarter of Brits not only prefer, but expect click-and-collect next day as standard.”
Given the value that omnichannel delivers to consumers, it is unsurprising that there is a growing demand for it – it not only provides new ways to shop with retailers, but also provides more information about products that may interest them and promises greater product availability.
But the benefits of omnichannel aren’t one-sided. While it may appear that customers have companies over a barrel, blackmailing them to go omnichannel or lose their custom, brands can also reap rewards. The 2015 Global Omnichannel Retail Index, by PricewaterhouseCoopers, notes that businesses can “gain a comprehensive picture of individual customers and their preferences by merging data and insights obtained through consumer activities across channels” enabling better targeting of sales and marketing content, which in turn generates significant gains in conversion rates and purchases.
The report highlights how sports clothing firm Peak Performance has reported a notable increase in online conversion rates since it launched an omnichannel strategy in 2010, while driving shipping costs down by 14% and average shipping times down by two days.
Omnichannel opens a whole new level of doing business.
Elsewhere, British retail John Lewis has found that shoppers who take advantage of its full omnichannel network spend on average three times as much as people who are still using single channels for purchases, reportedly because the improved convenience encourages them to purchase more. And US retailer Macy’s has been so convinced by the response to its omnichannel efforts that it has now appointed a dedicated chief omnichannel officer.
Szymon Chodkowski, director of digital practice at PwC, notes: “Omnichannel opens a whole new level of doing business - by putting the consumer and technology in the centre of their strategy, brands are able to collect the data, learn to understand their consumers better, deliver more relevant content and measure an increase in ROI, across all channels.”
So how well are organisations responding to the growing demand for omnichannel shopping and service?
“The digital world has seen all retailers pressured to deliver across many channels allowing their shoppers to get any product, on any platform, at any time, and delivered in a variety of ways,” says Matt Hopkins, retail industry director at Blue Yonder. “Many retailers now claim to offer personalised assortments and multichannel fulfilment options such as click and collect and same day delivery. The reality is somewhat different and retailers have underestimated, or had a short-term view, on how to deliver the ultimate customer experience across all these platforms.
“By promising the customer shopping on their terms, retailers have found themselves struggling to keep up with the speed of operations and decisions needed to deliver on their brand promise. There is a clear speed deficit between customer expectations and retail decision-making.”
There is a clear speed deficit between customer expectations and retail decision-making.
PricewaterhouseCoopers concludes that globally the majority of retailers have not fully embraced omnichannel delivery so far, although this is in part due to the considerable complications involved with omnichannel. These obstacles include the significant investment in front-end and back-end systems, the restructuring of operational process that are necessary, and often most prohibitive of all, the elimination of the departmental and technical silos that represent a significant barrier to a channel-agnostic model.
Nonetheless, there is some progress being made, in particular in the US, the UK and Australia, where there is high mobile penetration, the consumers have particularly embraced omnichannel shopping and where retailers have made investments to develop the advanced capabilities needed to support omnichannel. But even then, in PwC's Global Omnichannel Retail Index, the US is still only ranked 50 on a scale of 100 in terms of its omnichannel maturity, with the UK ranked 49 and Australia 48.
“It varies from industry to industry, but the fact of the matter is that the ones that have a digital first mindset, have already reached a stage, where they either are in the process of, or already have implemented the relevant strategy and technical solutions,” suggests Chodkowski. “With the rising amount of channels and touchpoints, it's difficult to keep up in a hype-neutral way, so companies focus on keeping a balance between innovation and proven ways of doing business.”
It is also clear that as immature as it is, omnichannel shopping is still considerably further down the road than omnichannel service. In retail, a variety of different shopping models have emerged that blend the digital and offline world, from click and collect to check and reserve; but providing true omnichannel customer service, whereby any support issue can be seamlessly triaged from channel to channel, still appears quite elusive.
Nevertheless, the business case for omnichannel is such that organisations the world over will increasingly be exploring how they can better serve the omnichannel customer in the coming years.
“Omnichannel is becoming very important to brands as it is now the consumer’s choice as to how they engage with brands rather than the other way around,” explains Dobie. “There are more channels, the increasing numbers of people influenced by traditional and relatively new channels such as social media continue to drive the number of people using multiple channels. Not to forget, the shopping experience has changed, showrooming is more commonplace together with the ability to select where products are delivered and services consumed.”
In order to remain competitive, businesses must respond to the demands of the customer.
Hopkins adds: “The business case is simple. In order to remain competitive, businesses must respond to the demands of the customer. Shoppers now expect to have the same level of service when they purchase an item in store as when they make a purchase online. Convenience is now a major factor when it comes to customer loyalty and retailers must meet this or risk failure.”
With this in mind, over the coming weeks, MyCustomer will be exploring omnichannel and providing advice on how to overcome the obstacles and transition to an omnichannel model.
About Neil Davey
Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 15 years, including Internet Works, CXO magazine and Business Management. He joined Sift Media in 2007.