The Hub

Where we talk about ideas, events, cases & more
22 December 2014

Prepare yourself for an omni-channel world: what's it all about and how can you get there?

A current hot topic in retail markets is the difference between online and offline channels. Why are we talking about ‘the difference’? Because in most cases, online and offline are still considered to be  totally separate entities. Although consumers already think, handle and buy in an integrated way, retailers persist in approaching them in different ways with different messages. If a retailer’s online and offline channels are not aligned, they may as well be competing against each other.
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Let me share a personal experience that illustrates what I’m talking about: I received a generic promotion from a well-known perfume shop so I ordered a perfume set as well as some other products online with a 20% discount. However, when I received my order, I was disappointed to find that the perfume set wasn’t included, there was no note explaining why and I hadn’t received an email about it. I called customer services who told me that the perfume set I had chosen was no longer available online and that I would receive a refund for the amount paid. Customer services then mentioned that I could go to one of their physical stores to buy the perfume set if I so wished. I mentioned that I found it hard to understand this kind of ‘silo-channeling’ –my professional side had kicked in.The answer I received made things even worse: “I’m sorry I can’t help you, we are an independent helpdesk.” As a loyal customer, I duly went to the shop to buy the perfume set once more; this time at full price as the promotion was no longer valid. I again expressed my astonishment about silo-channeling to the lady in the store, who answered: “Yes, but online and offline are two totally separate things. It’s always better to visit the store to buy things.”

This anecdote not only demonstrates customer expectation for an integrated means of purchase, but also how a lack of channel integration can actually promote competition within a company. Unfortunately, we are too often confronted with this kind of silo-channeling. And it’s a shame that even leading retailers are still guilty of it. It’s time to act, but first they must understand where they are at the moment.

DIFFERENT KINDS OF CHANNELING

The word ’channeling’ suggests that companies’ touch points are intrinsically considered different. Within ‘channeling’, there are a number of steps you can take to become truly omni-channel.

Single-channeling (1 + 0 = 0) is out of the question today

Single-channeling means that consumers can only communicate with your company and buy products via one channel, e.g.in traditional brick-and-mortar stores.

As we are talking here about large retailers (not small, specialized SMEs), we can skip the question of whether or not a retailer should be represented offline as well as online and consider this a minimum. As an offline retailer, an online presence and being easy to find on the Internet is crucial. The online professionalism of big retailers obliges others to follow. The opposite can also be seen; top online players, such as Bol.com and Hello Bank, are starting to open pop-up stores to create an offline presence. Coolblue even found that clients close to one of their brick-and-mortar stores buy significantly more online, so they also set up more offline ‘service points’.

Multi-channeling (1 + 1 = 1) fosters competition within one company

If consumers can choose between different channels that operate side by side, independent from one another, this is multi-channeling. Each channel has its own logistics, customer service and even prices.

One of the reasons we still see multi-channeling is the ‘store-first’ mentality that still dominates most companies. Different prices and services are used across channels – mostly in favor of brick and mortar – and as such, silos are created. Think about extra shipping costs (free shipping could mean an extra sales opportunity of 10%, on average) or employees who are only evaluated on in-store successes, which inspires them to discourage other channels. What’s needed is a shared, integrated mindset within the company. Another reason is that 90% of all decisions are based on what’s possible within the organization.Again and again, we see companies simply building a website and e-shop without thinking about integrating existing offline channels. Even when communication is integrated, other elements remain separate,creating not just confusion on the consumer side, but also disappointment, as expectations are not being met. Rethinking the company’s structure is essential.

Cross-channeling (1 + 1 = 2); a good start is half the battle

When different channels operate in an integrated way centered on the consumer, it’s called cross-channeling. Consumers can start their order via one channel and finish it via another; they can buy products in an integrated way. Think about e-shops (e.g. Mango and Esprit) where you can buy products online and check offline stock at specific stores. As consumers are at the core with cross-channeling, it’s often based on defined consumer journeys and lifecycles.

In today’s market, consumers expect this as a minimum; cross-channeling is therefore key to killing offline vs. online competition. Cross-channeling is also the necessary intermediate step in your evolution toward a future-proof omni-channel strategy.

Omni-channeling (1 + 1 = 3) for the win

Omni-channeling goes further than cross-channeling. Focusing on the customer experience, channels are completely synchronized. At any moment, consumers can choose a channel and switch  to another according to their preference. Real-time availability of data on all channels is crucial; with one accurate and transparent logistics database accessible by all channels. The days of an out-of-stock email three days after an online purchase has been made will soon be over. The omni-channel organization also strives to be as contextually relevant as possible by taking into account time as well as a consumer’s location and preferences.

Today, consumers have less time, more expectations and more SoLoMo (social-local-mobile) confidence, so there can be little doubt that omni-channeling will soon be  reality. Still not sure?

I will tackle any doubts you may have in my next ‘point of view’ piece. In it, I will also explain our omni-channel FACTS approach that can help you determine the omni-channel challenges your company is facing. Read on…

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