The five steps to an omnichannel strategyby
If today’s customers are channel-agnostic connected consumers, then brands need to think like channel-agnostic connected consumers. This means dedicating serious time to establishing how the organisation presents itself as a seamless and consistent presence throughout the customer’s journey – with its actions defined by the customer’s ultimate goal, rather than being defined by the channel in which the current interaction is taking place.
“The customer journey usually consists of about 20-30 touchpoints with a brand before it gets to the point of purchasing. The future winners in retail will be the brands that can connect with the shopper on each touchpoint and provide a great experience,” says Uwe Hennig, CEO of Detego. “Omnichannel is not a trend that will disappear in a few months, it’s highly demanded by customers everywhere.”
But the journey to becoming an omnichannel organisation does not happen overnight. There are departmental siloes that need addressing. There are technical solutions that need consolidating. And there are cultural ideals that need embracing. And with that in mind, organisations need to have a robust strategy in place, comprising a clear roadmap of the journey ahead.
Despite the growing demand for omnichannel service from brands, however, this strategic approach is not something that is commonplace as of yet. A recent report by Retail Systems Research, for instance, found that while omnichannel retailing is a key concern for retail executives, 94% of e-retailers have yet to execute an omnichannel strategy.
“As customers are demanding a seamless experience across all brand channels, both on- and offline, businesses are struggling to move at the speed their consumers want and need,” notes Channie Mize, general manager for Retail at Periscope, a McKinsey Solution. “Organisations – more than ever before - need to recognise the importance of a robust omnichannel strategy in order to deliver the best customer service, choice and price, thereby increasing customer loyalty, which ultimately provides enhanced productivity and profitability to stay ahead of their competitors. A purely tactical approach may mean a retailer will miss out on the bigger opportunity with customer experience and managing that customer journey.”
The stakes don’t just involve the currency of customer experience, either. There are financial factors in play here. Mize gives the example of a bricks and mortar retailer that builds a website but doesn’t understand how its customers shop across channels, so it ends up promoting in one channel and cannibalising themselves in the other channel.
“A lot of retailers are offering an ‘endless aisle’ in the online channel but often they don’t know what they want for their assortment,” continues Mize. “The problem with that is that some of the items are not directly sourced, for example they may be drop shipped or have higher costs than own brand products – leading to declining margins.”
So with a strategy so obviously important, here is roadmap that organisations can use as a starting point to develop their own omnichannel strategy.
Understand your customers and their behavior
In order for organisations to evolve themselves beyond a product-centric approach, to a customer-centric approach, they must first swap their inside-out thinking for an outside-in view. The best starting point here is, surprise surprise, the customers themselves. That means speaking with customers, analysing their opinions and behaviours, and getting an insight into their objectives. You need to understand what channels they prefer for what scenarios, so that you can build up a picture of channel use amongst different consumer personas and profiles.
“Understanding customers - their behaviour, frustrations and needs - will allow you to identify what unique value you can bring to them,” explains Mark Walker, senior client director at dunnhumby. “The groundwork needed is a full and total immersion in their data, experiences and feedback to fully understand their needs. Once you are clear on this, a greater understanding of the strengths and weaknesses of each channel is vital. It is important to include all the routes you have to deliver value to customers, wither social media, sales teams or customer services – all have a role to play.”
Establish your objectives
Analysing the customer based and identifying their needs and habits enables organisations to then prioritise the right opportunities – to understand where value can be offered and what mix of channels is required to deliver it through. This then constitutes the main objectives that will form the backbone of the strategy and shape everything that follows. In particular, clear objectives will allow the strategy to be easily communicated, and progress monitored and measured by benchmarks and KPIs.
Objectives that are appropriate to omnichannel may include: creating consistent customer experiences from channel to channel in terms of branding and messaging; integrating physical, digital and mobile sales channels to support better buying experiences; creating seamless customer journeys by ensuring that there is continuity during cross-channel engagements (as opposed to the customer having to start the conversation afresh every time they move to a new channel).
Establish new processes to support your objectives
For organisations to meet their omnichannel objectives, they will need to adopt business processes that are customer-centric and cross-functional. This can require profound change, as most businesses are presently structured according to departmental hierarchies, working towards a set of goals that benefit their individual departments, rather than the business as a whole.
As Mize notes: “There are several operational, organisational and experiential issues to overcome to achieve a true omnichannel business. In more traditional multichannel environments, the chief merchant officer controls the merchandising in the physical stores, while the CIO or “head of online” controls the offering in the online stores. They each have different agendas tied to different or misaligned incentive structures. This can cause the same retailer to cannibalise itself across channels, which inherently leads to less than optimal results for the customer.”
The biggest challenge for retailers is the organisational change that needs to take place.
Therefore, as part of their journey to becoming omnichannel, businesses need to explore how they can adopt more holistic business processes. Part of this means breaking down departmental siloes and transitioning towards a much ‘flatter’ structure, and uniting departments behind common company goals. But it can also mean winning the battle for hearts and minds through education and training, as well as potentially rolling out incentives, such as shared success programmes, to align staff behavior to support the omnichannel objectives.
“What is clear is that whilst there are technical challenges to delivering omnichannel experiences, the biggest challenge for retailers is the organisational change that needs to take place: the removal of organisational siloes, creation of new processes, and the forming teams that work across, rather than within channels,” says Mize. “These take careful planning and execution, but cannot be ignored, because without them any business is doomed to fail.”
But Raja Ray, director of solutions, at Verifone UK & Ireland, warns: “A truly comprehensive omnicommerce approach is broader than just payment acceptance and includes other critical functions such as logistics, marketing, inventory management and supplier management. Retailers need to look at their internal organisation and make sure a collaborative approach across departments is implemented. Gone are the days of having separate in-store and online teams.”
Walker adds: “I have seen a broad variety of approaches from clients to take advantage of these new and rapidly evolving opportunities. Team structures, in particular, vary considerably in comparison to the more mature set ups seen supporting traditional ‘bricks and mortar’ operations. So be reassured that there is no right answer here; it’s more about developing the right experience to fill the gaps of customer or channel knowledge.”
Dealing with data
Data plays a critical role in the omnichannel story. In order to be truly omnichannel, businesses need to deliver the right information or content to the customer, employee or touchpoint at the right time. Sometimes this might involve communications that are taking place across multiple channels in real-time. To ensure that this is a seamless process, it is necessary to create a master data set.
This means consolidating and standardising product data, for one example. It is not uncommon for customers to find that a business is offering a good at different prices on the web and in-store, something that can frustrate consumers. This is often because the retailer is using two different data sources to display pricing on the different touchpoints. To ensure consistency, businesses must derive the data from one master data set – a single source of truth.
When it comes to insight, I see a lot of gaps in customer plans.
But as well as convergence of product data, there also needs to be convergence of customer data too. Data received from customers must be effectively consolidated, as different departments have often collected different information about a single customer, resulting in multiple customer data sets. This means organisations need to put data from every customer, on every platform, in every store, into a single repository. This 360 degree view of customers allows the business to deliver more consistent and personalised communications, which in turn drives engagement and loyalty.
Mize explains: “Achieving an actionable omnichannel strategy requires going through several steps. The first step in the journey to a true omnichannel business starts with having a clear documented understanding of your brand, merchandising, and pricing strategies across all channels. Secondly, you must have the right organisational structure and incentives to support an omnichannel strategy. Thirdly, you need the right kind of analytics to understand how customers behave across these channels at the individual customer level. And lastly, with setting up the right answers in steps 1-3, you can then personalise interactions, including across promotions, with less cannibalising across channels, and secure more loyal trips from your target customers.”
Even after consolidation has taken place, however, there are still obstacles to overcome in order to ensure that omnichannel data is best used to identify customer preferences and act upon that information. Walker notes: “When it comes to insight, I see a lot of gaps in customer plans. A holistic and rounded customer view is hard to achieve if you don’t have the right data sources, experience to interpret this into insight, and a plan to move insight into action.”
More often than not, organisations will use a CRM system as the depository of customer data, acting as a system of record, but also offering analysis of the data sat within it, and providing insights to sales, marketing and customer service. The marketing team will typically use a unified marketing platform that is integrated with the CRM system to access this information, enabling them to view the likes of purchase patterns, ecommerce interactions and loyalty programme activity which in turn helps them to deliver more personalized and contextual communications.
Elsewhere, the service team will use the data from the CRM system to support their customer interactions utilising the customer history, but the CRM should also be integrated with the ERP system to enable the service team to better field customer queries regarding the likes of inventory and delivery. The proliferation of CRM systems integrating social media functionality has enabled service to be extended across social networks and aided cross-channel escalation.
While this roadmap only represents a starting point for organisations, this should provide a good idea of the task at hand – there are multiple tasks ahead, ranging from cultural to technical, and without a clear strategy, businesses can quickly fall foul of the complexities.
As Walker warns: “There is a real risk that businesses can be blinded by the excitement new or evolving channels can create, preventing the creation of a clear plan before action. Building a strategy, based upon customer needs, allows you to identify and prioritise the right opportunities, which value to offer and what mix of channels to deliver it through. This strategic plan needs to be communicated through agreed objectives, monitored and held to account by clear performance benchmarks and KPIs.
“A tactics or channel first approach will not allow you to place customers at the heart of your plans. Their needs are the opportunity you are there to meet. Without being clear on the objective, the tactical channel plan is not able to realise the opportunity, nor deliver value at its full potential – your efforts and focus will be wasted.”
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 20 years, including Internet Works, CXO magazine and Business Management. He joined MyCustomer in 2007.