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Multi-Channel Customer Management: Delighting Consumers, Driving Efficiency

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In today’s maturing consumer markets, emphasis is shifting from straightforward sales to a more holistic approach to customer life-cycle management, with a stronger emphasis on how sales are generated …

In today’s maturing consumer markets, emphasis is shifting from straightforward sales to a more holistic approach to customer life-cycle management, with a stronger emphasis on how sales are generated and service provided all along the customer journey. Effectively managing these different marketing, sales, and service channels poses a significant challenge. Companies need new strategies, structures, processes, and tools to deliver customer value across all channels. A multi-channel, integrative customer model that delivers customer value and significant return on investment (ROI) requires both a strong understanding of customer preferences and behaviors and a robust IT architecture that supports the overarching customer relationship management (CRM) strategy. Even those organizations that have embraced the need for sophisticated multi-channel orchestration often still fall short in their execution. This “Perspective” Viewpoint offers strategic guidelines in four areas to ensure success with multi-channel orchestration.

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  • 1. Perspective Dr. Michael Peterson Dr. Florian Gröne Dr. Karsten Kammer Julius KirschenederMulti-ChannelCustomer ManagementDelighting Consumers,Driving Efficiency
  • 2. Contact InformationBerlin London/Munich São PaoloDr. Florian Gröne Dr. Michael Peterson Ivan de SouzaPrincipal Partner Partner+49-30-88705-844 +44-20-7393-3310 +55-11-5501-6368florian.groene@booz.com michael.peterson@booz.com ivan.de.souza@booz.comDubai Munich SydneyKarim Sabbagh Dr. Karsten Kammer Vanessa WallacePartner Principal Partner+971-4-390-0260 +49-89-54525-558 +61-2-9321-1906karim.sabbagh@booz.com karsten.kammer@booz.com vanessa.wallace@booz.comFrankfurt Julius KirschenederOlaf Acker Senior AssociatePartner +49-89-54525-576+49-69-97167-453 julius.kirscheneder@booz.comolaf.acker@booz.com New YorkHong Kong Christopher VollmerDr. Edward C. Tse PartnerPartner +1-212-551-6794+852-3650-6100 christopher.vollmer@booz.comedward.tse@booz.comThis Perspective is one in a series of four articles written to accompany The Four-Pillars of Profit-Driven Marketing, a book byBooz & Company partners Leslie H. Moeller and Edward C. Landry. Booz & Company
  • 3. EXECUTIVE In today’s maturing consumer markets, emphasis is shifting from straightforward sales to a more holistic approach toSUMMARY customer life-cycle management, with a stronger emphasis on how sales are generated and service provided all along the customer journey. Effectively managing these different marketing, sales, and service channels poses a significant challenge. Companies need new strategies, structures, processes, and tools to deliver customer value across all channels. A multi-channel, integrative customer model that delivers customer value and significant return on investment (ROI) requires both a strong understanding of customer preferences and behaviors and a robust IT architecture that supports the overarching customer relationship management (CRM) strategy. Even those organizations that have embraced the need for sophisticated multi-channel orchestration often still fall short in their execution. We offer strategic guidelines in four the company or to find store locations areas to ensure success with multi- or telephone numbers. channel orchestration. First, mar- keting operations need to explicitly Third, companies need to build an define a channel strategy with respect IT foundation that underpins their to customer segmentation, the channel CRM strategy. This CRM IT archi- journey (how and where sales and tecture needs to enable the transfor- service are delivered), and targeted mation from vertical, single-channel incentives that reward multi-channel operations to true horizontal business sales and service support. processes that deliver cross-channel integration. Second, marketers need to optimize the online channel, which is fast Fourth, marketers can learn by exam- becoming the primary platform for ple. Companies across the consumer accessing product and service infor- products spectrum are experimenting mation, and completing an ever- with the multi-channel experience. growing number of transactions. It Marketers should broadly consider is also the entry hub to other touch best practices that they could adapt to points; customers go online to contact their own industry.Booz & Company 1
  • 4. Key Highlights THE NEW But in an era when customers are increasingly well-informed and• Multi-channel orchestration of customer processes delivers MULTI-CHANNEL communications savvy, this channel- a seamless experience across CUSTOMER by-channel approach is not enough: Today, businesses need a multi- all interaction points along the customer journey, adding value INTERACTION channel strategy that offers consumers and maximizing ROI by optimizing MODEL a seamless experience across all touch points, or they’ll miss an opportunity sales and service opportunities. for customer value generation. A• Building and applying in-depth recent survey found that in Germany customer understanding across alone, businesses wasted more than channels allows companies to €1 billion (US$1.5 billion) a year in match offers, messages, and unproductive marketing—often due to communication channels to Today’s marketing executives under- a narrow focus on single channels. customer preferences, and to stand the need to develop new align interaction costs with customer interaction strategies, When effectively executed, a multi- customer value. structures, processes, and tools—what channel approach will smooth the Booz & Company defines as the four relationship between customer and• To master multi-channel pillars of profit-driven marketing. company and give management the orchestration, companies need They are working hard to apply and capability to leverage all customer a defined channel strategy and a optimize these pillars within their touch points to boost revenues, robust IT architecture to support individual customer channels. reinforce customer satisfaction, and the overall customer relationship streamline sales and service costs. strategy and deliver customer value at each touch point.•The online channel is increasingly becoming the hub for a successful multi-channel marketing strategy. Businesses must reassess their current online strategy with this in mind. In Germany alone, businesses wasted more than €1 billion (US$1.5 billion) a year in unproductive marketing—often due to a narrow focus on single channels.2 Booz & Company
  • 5. FOLLOW Cross-channel customer management starts with better customer under- customers initially indicate interest, through the time they spend gatheringTHE BUYING standing. The more data points there information, to when they complete aJOURNEY are, the more opportunities marketing has to tailor a sales pitch and service transaction and seek post-sale support (see Exhibit 1). proposition to delight the customer. This means companies need to com- The process that leads to a purchase pile and maintain a comprehensive usually combines multiple channels. customer profile along the buying Customers should receive consistent journey, starting from the moment information and offers across allExhibit 1The Customer Buying Journey Compare/Select Compare/Select Locate Sellers Price Level Product Purchase Delivery Visit shops to Carry Purchase compare home and at shop Online select Techno- Online Home comparison/ Advanced shopping delivery selection Compare and Purchase Delivery at select online nearest shop online Compare Visit online shops Visit Visit shop for Purchase Carry Traditional shops to information at shop home compare Call customer Call for service informationSource: Booz & CompanyBooz & Company 3
  • 6. channels. In a true multi-channel about returning a product and then ments. Clearly, cost-per-contact variesenvironment, marketing departments drop off that product at the nearest across channels (see Exhibit 2).know customer preferences, interests, retail location with a store clerk whoand interaction history, whether cus- has full visibility into the history of Interconnected marketing, sales, andtomers are shopping in a store, calling that customer’s previous interactions. service touch points will invariablythe company, or visiting its website. produce positive customer experi- Developing multi-channel capa- ences; customers will feel valuedPost-sale service should similarly offer bilities also allows marketers to more and understood and will be moreseamless interactions via the custom- efficiently steer customer interaction likely to remain loyal and to responder’s preferred interaction platform. For costs—from acquisition to service to positively to cross-selling or up-sellingexample, a customer should be able to retention—based on the value to the approaches.speak with a call center representative company of different customer seg-Exhibit 2Cost and Value Creation Potential of Service Channels High Retail shops In-house call center Potential for Website Cross-/ Outsourced call center Up-Selling per Channel Offshore call center Interactive voice response Written Low 0 2 4 6 8 10 12 Cost per Service Channel (euros per contact)Source: Booz & Company4 Booz & Company
  • 7. BUILDING Marketers can follow a four-step process to successfully integrate and sales advice may warrant an extra outbound phone call or personalizedMULTI-CHANNEL orchestrate all customer channels. written invitation to a product launchCAPABILITY 1. Define the Multi-Channel Strategy at the nearest retail outlet. Staff at any touch point should have easy access to The first step to optimizing a multi- this knowledge about their customers, channel strategy is to explicitly define coupled with the tools necessary to three key components: delight individual customers with any communication. This knowledge • Customer segmentation should similarly be embedded in • The “channel journey” electronic platforms that serve • Multi-channel incentive programs customers, whether online, in stores, or via interactive voice response Marketers need to know their systems in call centers. customers, including their preferences and spend potential, in order to Second, companies need a detailed tailor a differentiated multi-channel understanding of the “channel experience for each customer journey” for each customer segment segment. A “digital native” teenager in order to identify what works most with a limited budget may be most effectively (for generating sales and efficiently served by an online-only, serving the customer) and efficiently no-touch channel, while a middle- (for controlling interaction costs). aged, old-school shopper with deeper Pinpointing the most appropriate pockets and a preference for personal channel for each segment helps reduce Companies need a detailed understanding of the “channel journey” for each customer segment in order to identify what works most effectively and efficiently.Booz & Company 5
  • 8. costs, speed up the sales cycle, 2. Optimize Online that starts as an in-store promotion—and promote retention. Recent The online channel has matured collecting a coupon for an onlineBooz & Company research shows into much more than simply the competition—becomes a multi-that when customers are offered e-commerce website. A company’s channel experience when customersproduct and service options they want online presence is not just another register online, and it affordsvia the channel they prefer, they are stand-alone channel or brand booster marketing departments a valuablemore likely to be repeat buyers and platform: It is the linchpin of any opportunity to capture and use keyless likely to perceive the interaction multi-channel operation. The online customer data.as intrusive. channel is the sales and service hub, the tool that collects and disseminates 3. Build an IT FoundationThird, senior management needs the information that enables and For most companies, building ato define a clear incentive program facilitates the customer experience highly automated, high-performancewith targets and rewards that reflect across all other channels. It acts as CRM IT architecture that integratesand support the company’s channel an umbrella that connects retail, all customer touch points will beorchestration objectives. Only then e-commerce, search engine marketing, an evolutionary process, given thewill staff deliver customer value using and search engine optimization. presence of already functioning single-an optimized channel mix, while It funnels customers from social channel operations that typicallymanagement will have a lever to steer networking sites to sales and service consist of inflexible, historicallythe customer’s journey. touch points on and off the Web. grown, more or less hardwired vertical silos.Clearly, there are trade-offs. A multi- Online channel capabilities can closechannel solution will involve conflicts gaps in the customer experience and The remedy lies not in adding yetand channel cannibalization. Some facilitate sophisticated customer another channel tool but in developingbusiness areas will lose out; the key is segmentation based on clickstream an open and flexible IT backbone thatidentifying the channels with the best transparency and rich Web analytics. facilitates information flow acrossROI to ensure a positive net effect. For instance, a marketing strategy channels. Investment in business Online channel capabilities can close gaps in the customer experience and facilitate sophisticated customer segmentation. 6 Booz & Company
  • 9. process management and integration can learn much from looking at of new opportunities to cross-sell andtechnology may be painful in the strategies being employed in industries up-sell to those customers.short term and yield few visible “same beyond their own. From banking andyear” benefits. But if multi-channel insurance to telecommunications, Much can be learned from thecapability is the goal, such a backbone travel, and automotive, companies are nimblest airlines as well. Some haveis key to ensuring that the business exploring the opportunities that come mastered cross-channel integrationrules that govern customer- and from creating a cutting-edge, cross- to the point where a call center agentsegment-specific channel experiences channel customer experience. can retrieve and complete a bookingcan be applied and extended that a customer started online butseamlessly across an ever-growing Successful retailers are leveraging abandoned (for whatever reason) andrange of customer touch points. Only multiple touch points simultaneously then called for personalized supportthen can marketing, sales, and service to offer customers more choices along to finish.organizations use predictive models the buying journey. For example, oneor “next best activity” engines, which mobile operator installed interactive These and other best practices canprovide sales and service agents with terminals in its retail outlets so that be found in many retail industries,analytically grounded suggestions of customers can preorder products and from banking, insurance, and travel,what will meet individual consumer services. In this scenario, in-store to fashion, furniture, and interiorneeds, to most effectively tailor offers personnel help build online customer design. Identifying and applying themand messages. profiles. Over time, shifting customers can help businesses avoid unnecessary to online channels may cannibalize duplication of efforts. Business4. Learn by Example in-store sales, but it will help reduce ambitions should not be held back byWhen it comes to making the most of overall customer interaction costs a not-invented-here bias.multichannel integration, companies (since online interactions are lessneed not reinvent the wheel and expensive) while providing a wealthSuccessful retailers are leveragingmultiple touch points simultaneouslyto offer customers more choices alongthe buying journey.Booz & Company 7
  • 10. MAXIMIZING Customers today have more buying and service channel choices than ever choice and better service. Businesses reduce the cost of sales by accurate,ROI before. Linking and leveraging these targeted marketing that has greater customer touch points not only makes up- and cross-selling potential, and sense but is fast becoming a strategic they can streamline cost-to-serve by necessity. This requires a coordinated better mapping different channels to effort among marketing, sales, service, customer segments. and IT executives, first to define who the customers are, second to collect With the results feeding directly to the information about them across bottom line, the question should be all channels, and third to perform how quickly a company can roll out the analytics to match relevant multi-channel customer management, products and services to customers’ not whether it is necessary. needs. The customer benefits from8 Booz & Company
  • 11. Resources“The E-Commerce Imperative for Traditional Retailers: Letting Go “Performance-Based Advertising Models: Extending the Principlesof Old Conventions,” by Harald Dutzler, Coen de Vuijst, Robbert of Profit-Driven Marketing,” by Michael Peterson, Florian Gröne,Huisman, and Michal Bohanes (Booz & Company, 2011). www. Karsten Kammer, and Julius Kirscheneder (Booz & Company,booz.com/media/uploads/BoozCo-E-Commerce-Imperative- 2010). www.booz.com/media/uploads/Performance_Based_Traditional-Retailers.pdf Advertising_Models.pdfThe Four Pillars of Profit-Driven Marketing: How to Maximize “Shoppers on the Go: Winning Strategies in Mobile Commerce,”Creativity, Profitability, and ROI, by Leslie H. Moeller and by Matt Anderson, Stefan Eikelmann, Fabian Seelbach, andEdward C. Landry, with Theodore Kinni (McGraw-Hill, 2009). Nick Buckner (Booz & Company, 2010). www.booz.com/media/ uploads/BoozCo-Shopper-Strategies-Mobile-Commerce.pdf“Online Customers, Digital Marketing: The CMO–CIOConnection,” by Michael Peterson, Volkmar Koch, Florian Gröne, “Social CRM: How Companies Can Link into the Social Web ofand Kiet Vo (Booz & Company, 2009). www.booz.com/media/ Consumers,” by Olaf Acker, Florian Gröne, Rami Yazbek, anduploads/Online_Customer_Digital_Marketing.pdf Fares Akkad (Booz & Company, 2010). www.booz.com/media/ uploads/BoozCo-Social-CRM.pdfAbout the AuthorsDr. Michael Peterson is a Dr. Karsten Kammer is apartner with Booz & Company principal with Booz & Companyin London and Munich and a in Munich. He primarily worksmember of the communications, with telecommunications andmedia, and technology practice. high-tech clients. His focus areasHe focuses on mobile markets include sales effectiveness,and convergence services growth, and innovation, as wellacross Europe. His areas of as organizational design.expertise include strategydevelopment, specifically related Julius Kirscheneder is ato marketing, customer service, senior associate withand sales, with a focus on online Booz & Company in Munichand new Internet business and a member of themodels. communications, media, and technology practice. HeDr. Florian Gröne is a principal supports mobile and Internet-with Booz & Company in Berlin. related service providers in theirHe supports telecommunications strategic road map and focusescompanies and information on customer-centric functionsand communications from product innovation to salestechnology (ICT) service and service.providers in developing theirmarket positioning strategiesand improving IT operationsefficiency. He also works onCRM strategy and architectureacross industries.Booz & Company 9
  • 12. The most recent Worldwide Officeslist of our officesand affiliates, with Asia Middle Eastaddresses and Beijing Brisbane Helsinki Abu Dhabi Detroittelephone numbers, Delhi Canberra Istanbul Beirut Florham Parkcan be found on Hong Kong Jakarta London Cairo Houstonour website, Mumbai Kuala Lumpur Madrid Doha Los Angelesbooz.com. Seoul Melbourne Milan Dubai Mexico City Shanghai Sydney Moscow Riyadh New York City Taipei Munich Parsippany Tokyo Europe Paris North America San Francisco Amsterdam Rome Atlanta Australia, Berlin Stockholm Boston South America New Zealand & Copenhagen Stuttgart Chicago Buenos Aires Southeast Asia Dublin Vienna Cleveland Rio de Janeiro Auckland Düsseldorf Warsaw Dallas Santiago Bangkok Frankfurt Zurich DC São PauloBooz & Company is a leading global managementconsulting firm, helping the world’s top businesses,governments, and organizations. Our founder,Edwin Booz, defined the profession when he estab-lished the first management consulting firm in 1914.Today, with more than 3,300 people in 60 officesaround the world, we bring foresight and knowledge,deep functional expertise, and a practical approachto building capabilities and delivering real impact.We work closely with our clients to create and deliveressential advantage. The independent White Spacereport ranked Booz & Company #1 among consultingfirms for “the best thought leadership” in 2010.For our management magazine strategy+business, visitstrategy-business.com.Visit booz.com to learn more aboutBooz & Company.Printed in Germany©2009 Booz & Company Inc.