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Customers Are Channel Neutral: The truth about multi-channel marketing

Originally written in 2003 as a prediction for what would come to be known as "Omni-Channel marketing."
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From 2003:

The term "multi-channel marketing" refers to the process of building a customer relationship across two or more marketing or sales channels.The channels are those that are interactive,such as face-to-face,telephone,email,Internet,or perhaps direct mail.These channels provide an organization the opportunity to develop and maintain the brand promise as the customer engages the organization at each point of contact.

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Customers Are Channel Neutral: The truth about multi-channel marketing

  1. 1. Customers are channel neutral: The truth about multi-channel marketing Solving your toughest marketing challenges. www.jacksongroup.com A Jackson Group White Paper David Harkins VP, Director of Strategic Services
  2. 2. Introduction The pervasiveness of telephones, email, and the Internet in the last few years have provided customers with multiple opportunities to interact with organizations – and they do so with ever-increasing frequency.The challenge for most organizations is to determine how to create meaningful interaction at each touch-point that adds value for both the customer and the company – while still maintaining the brand promise across all channels. Organizations have made significant investments in developing technology to engage and interact with the consumer for the purpose of providing improved choices in product selection and purchase on the front-end, yet similar investments have not been made to integrate the back-end fulfillment and transaction management technology. As a result, the typical organization has created multiple ways for the consumer to engage the company, only to disappoint the same consumer by the bottleneck of information created by the silo approach to managing each channel. This approach to engaging the consumer is driven primarily by a culture that values customer acquisition over customer retention as a means to meet revenue targets. In an era when almost every product and service offered could be called a “commodity,” organizations are finding that they’ve failed to understand how to build their brand and deepen customer value with consistent interactions and communications through multiple channels. The purpose of this paper is to highlight potential challenges to multi-channel customer interactions and identify high-level solutions to these challenges. Solving your toughest marketing challenges. www.jacksongroup.com 2
  3. 3. Multi-channel marketing defined The term “multi-channel marketing” refers to the process of building a customer relationship across two or more marketing or sales channels.The channels are those that are interactive, such as face-to-face, telephone, email, Internet, or perhaps direct mail.These channels provide an organization the opportunity to develop and maintain the brand promise as the customer engages the organization at each point of contact. At the core, multi-channel marketing is about building relationships. It is not about technology, but rather the consistency in fulfilling the customer’s expectations when engaging a specific organization. What we’re talking about is the message and the consistency of that message (or brand promise) across all channels.This approach can be actionable without significant investments in complex software or technology. Solving your toughest marketing challenges. www.jacksongroup.com 3
  4. 4. Why bother now? Technology has a way of opening new channels and opportunities that customers are quick to adopt. The speed of change is not going to slow, and customers are always looking for ways to simplify their lives. Consider this, until catalogs came along in the early 20th century, customer interactions were simple. Only one channel existed in which customers could buy products or services – the face-to-face channel through either a store or a door-to-door salesman. Catalogs created a new channel for merchandising, providing consumers and businesses alike the opportunity to purchase many items through the mail that could not be stocked in stores due to space constraints or practicality, or were too heavy for the salesman to carry to the door. Moreover, catalogs opened the marketplace to a great number of people who lived in areas not adequately served by the face-to-face channel. The telephone eventually became more commonplace, and many organizations set up inbound call operations to receive telephone orders in addition to written orders received in the mail. All was well, until the 1990s when many organizations began to see the Internet as the way to further expand their market area, reduce overhead, and potentially improve sales margins.While some have seen success, most notably those that use the Internet as their only channel, the vast majority of organizations have simply treated the Internet as another means of allowing the customer to buy something. The Internet changed customer expectations and behavior On the surface, adding the Internet as a purchasing channel looked like a great plan – “Let’s give the customer multiple ways to buy something from us.” This will help build sales volume by increasing the customer base – more customers, more revenue. At first, it worked well.Then reality set it. The Internet lowered barriers for competitive entry in some sectors and single-channel (Internet-only companies like Amazon.com) organizations sprang-up to give multi-channel firms a run for their money. These single-channel organizations eliminated the “middleman” and reduced the cost of the products offered. Such operations were capable of collecting and managing significant customer information in a manner that customers found valuable.With lower prices, better service, and ease of purchase and returns, customers became acutely aware of their value to a given business. Not only did they want the best price for the product, they began to expect improved customer service based on the information they themselves provided, as well as their transaction history with the organization. This became a problem for multi-channel organizations. Customers do business with you, not with a channel Organizations with multiple channels traditionally separated the information gathered through various channels. From insurance companies to retailers, many found that their channels had grown organically and their internal systems and processes were designed to support individual business units, not the needs and expectations of the customer.When customers began to demand that relevant personal information and interaction histories become accessible across all channels, most organizations weren’t in the position to deliver.They quickly explained away the complaints by saying “our systems don’t talk to each other” and that was the end of that. Solving your toughest marketing challenges. www.jacksongroup.com 4
  5. 5. Why bother now? (cont’d) What most organizations failed to realize at the time (and many still don’t see today) is that the customer doesn’t see multiple channels – this is an organizational or “outward view of the customer.” Conversely, the customer sees only “one company” with which they do business – and they expect the same level of service and satisfaction regardless of the channel they may choose to use. Multi-channel interactions produce higher revenue The prevailing thinking behind this approach to marketing has been that consumers who use multiple channels are likely to be more loyal to a specific organization or brand. In fact, Shop.org, the industry association for retailers conducting business online, reported in its Multi-Channel Retail Report 2001 that customers who use multiple channels – store, catalogs and online – tend to spend more and be more loyal. Based on 48,000 interviews with shoppers in all channels, the survey found that the multi-channel customer spends an average of $600 more than single-channel customers. DoubleClick, a provider of online advertising tools, reported similar results in its 2002 Multi-channel Holiday Shopping Study.This study also identified that price is declining as an online sales driver, and that customers’ browsing and buying patterns are beginning to blur channel lines due to factors such as broader inventory, convenience of purchase (online), and the ability to try or touch a product (in-store). Essentially, customers will switch channels during the purchase decision process based on their specific needs, values, and expectations.Although for retail we’re talking about the purchase of a specific product, the underlying principal – customer interaction and purchases by channel are driven by needs, values, and expectations at a specific point in the purchase process – is true of non-retail industries as well. However, in these situations we’re more apt to be dealing with overall satisfaction of the delivery of service, or more precisely, service in support of customers’ needs, values, and expectations. Why it’s important to act now Simply put, failure to develop and implement a strategy for delivering consistency of message and action, regardless of channel, will cause the organization to become blinded by the brilliance of the next technological advancement. Remember the early 1990s when the Internet was going to solve all our customer problems? The “coolness factor” of the technology caused us to take our eye off the prize.We were so caught up in what we could do; we never stopped to find out how our customers really wanted to use the technology. It took a “technology bust” to set most organizations on the right path. Technology has a way of “wow-ing” and causing us to stray from our primary goal – meeting the customer’s needs and expectations. Developing a solid relationship-building strategy will help focus on that goal. Solving your toughest marketing challenges. www.jacksongroup.com 5
  6. 6. What customers want from your organization Depending upon a variety of factors, including time, place, need, and desire, customers will choose to interact with an organization in a different manner.While some may have a natural preference for one channel or another, the interaction method is largely chosen based on the circumstances of the moment. For example, to check a bank account balance away from the home or office we can typically check that balance using the telephone; yet if we are near a computer, we may choose first to access our accounts through the online banking system. Or, if we’re planning a trip in two months and want to use our frequent flyer miles, we may choose to redeem our miles through the airline’s website. On the other hand, if that same trip is scheduled within a week of the departure date, we may feel more confident if we talk to a customer service representative directly. As a customer, we see a company with which we do business, and not a channel by which we are managed.What a great experience it would be if we were individually recognized, regardless of the channel used, and were able to complete our transaction or interaction with the confidence that our needs and expectations would be met with the highest standards of personalized service that we may have come to expect from a specific organization. Unfortunately, this almost never happens.The lack of performance in a specific channel leads to frustration and anxiety for the customer. Customers have become so accustomed to the speed of the Internet and the general level of information accessible there, as well as the helpfulness and knowledge of the in-store staff that they often become annoyed at the lack of coordination between the channels.This is particularly true when a particular channel fails to meet the customer’s expectations or standards of service – regardless of whether these expectations are generally acceptable by the organization or the channel. Among the most prevalent customer expectations are: • Transparency in channel interaction • Historical knowledge of interactions and transactions at all points of contact • Ability to track and monitor current orders across multiple channels • Cross-channel knowledge of product or service availability • Consistency of service across multiple channels • Consistency of message across multiple channels Customers expect a high degree of integration between channels and are sorely disappointed when this integration is not present. Moreover, there is the general expectation that what works for one organization should, in theory, work for another organization.Those who have the highest degree of integration across channels are raising the bar for their competition. Above all, remember that lack of technology or data integration is not your customer’s problem. Solving your toughest marketing challenges. www.jacksongroup.com 6
  7. 7. Why most organizations can’t deliver on their promise to their customers While we’ve explored the broader reasons of organizational failure in value delivery across multiple channels, let’s look at the key factors that are preventing organizational success: 1. Focus on using specific channels to reduce costs, rather than improve customer satisfaction. Many organizations try to force customers to the lowest cost channel to reduce operational expenses without regard to the customer’s needs.What works for one product or service may not work for another. Consider the banks that are strongly encouraging customers to use ATMs and adding additional fees for teller-related services; or the travel industry and many retail organizations that offer Internet-only pricing. In the case of the travel industry, this often benefits the customer with lower pricing; in the banking industry personal interaction with a teller is highly valued by many customers and such policies work against the bank’s ability to achieve a higher level of customer satisfaction. 2. Failure to examine interactions from the customer’s viewpoint. Organizations do not always see the value in understanding the needs, values, and expectations of their customers and the reasons behind their buying behavior. While organizations are beginning to look at past behavior as a predictor for future interactions, they are still not looking at the underlying motivations or circumstances behind the behavior. For example, the reason we may use the telephone rather than use the Internet to check a bank balance will be dependent on our immediate circumstances, yet many banks (and other organizations) will look at this and say that customers have no channel preference. In reality, they do, but the preference is dictated by circumstances. 3. Inability to integrate information. Most organizations that have grown organically and incrementally with regard to multiple channels have a silo approach to customer interaction capabilities.The silos do not interact due to a variety of reasons from organizational structures to inadequate systems or technology, and typically aren’t structured to deliver value to the customer across the organization. You need look no further than your telephone provider to see examples of this at work. With few exceptions, the telephone customer sales and service operations don’t have a clue as to what’s happening with marketing promotions. Of course, the online offers and customer service capability are rarely tied to an individual account; yet, when the services are linked, we can only view our service or pay our bill.We’re still forced to the telephone channel to make changes to our service. Unfortunately, there are no quick fixes to solve these critical challenges. Over time, we have learned that customers do make purchase decisions based on price. However, the ability of an organization to better understand its customers and demonstrate this understanding across multiple channels in a consistent manner will significantly differentiate itself from competitors. Solving your toughest marketing challenges. www.jacksongroup.com 7
  8. 8. How you can improve your multi-channel interaction capabilities Depending upon the organization, the specifics for improving multi-channel interactions will undoubtedly differ. However, a specific framework should be considered when approaching multi-channel interaction initiatives: 1. Understand the customer’s needs, values, and expectations (NVEs). We’re not talking just about customer transactions.These are important inputs and we don’t want to discount the value of this data for marketing purposes. However, we strongly believe that a thorough evaluation of an organization from the customer’s perspective is the place to start for the best understanding of how to develop successful multi-channel interaction programs. Specifically, examine how customers interact with your organization within each channel and across channels.What are their NVEs at each point of interaction? How well are you delivering – from the customer’s viewpoint? 2. Develop a business and marketing strategy that is “channel neutral” from a customer’s perspective. Remember that customers don’t do business with channels; they buy products and services from companies.With this in mind, develop and deploy a strategy that focuses on delivering the promise of your corporate brand in an integrated manner.Then, develop continuity programs to deliver that promise across all channels in a consistent manner. 3. Define and deploy operational infrastructure to support “channel neutral” delivery of products and services to your customers. Integration of data and technology, and back-end logistics and operations are important to creating transparent multi-channel interactions for customers.The last thing your customer wants to hear is that your “systems don’t talk to each other.” Make sure that you can knowledgeably engage your customer at all touch-points, providing relevant information about services needed or desired, order tracking, delivery, and more. If your organization doesn’t have the internal infrastructure to support this type of effort, consider outsourcing these critical customer care operations as so many other companies are doing today. Channel marketing is often looked at from the inside out. It’s easy to be caught up in what can be done or should be done in each channel to meet the specific business needs of a functional or operational area, or to reduce channel conflicts.This invariably leads to a silo approach of multi-channel efforts that makes corporate channel leaders happy, but makes the organization look ineffective in its ability to deliver for customers. Ultimately, success will depend upon the organization’s ability to go beyond marketing using multiple channels to a channel-neutral approach that meets – and exceeds – the needs, values, and expectations of the customer. Solving your toughest marketing challenges. www.jacksongroup.com 8
  9. 9. About Dave Harkins Dave Harkins,VP of Strategic Services for The Jackson Group, is widely accepted as an expert in multi-channel customer interaction management, database marketing, and customer relationship management (CRM). He is a frequent speaker at industry and trade conferences on the topics of customer service, database marketing, and CRM, and has authored and published numerous articles on these and other subjects. He can be reached at: 1-888-JACKSON x 3374 or dharkins@jacksongroup.com. About The Jackson Group The Jackson Group is a provider of integrated customer management solutions, including marketing services, customer service operations, and fulfillment.We offer a suite of solutions including advertising and creative, lead generation and acquisition, database development and design,multi-channel customer support, eCommerce services, printing and mailing, warehousing, and fulfillment. For more information on The Jackson Group, visit our website at: www.jacksongroup.com or call us at 1-888-JACKSON. Solving your toughest marketing challenges. www.jacksongroup.com Copyright 2003,The Jackson Group. All Rights Reserved. Reproduction prohibited without expressed written permission. Contact Brigitte Torzsa at 1-888-JACKSON x3081 for reproduction information. 9

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