mc3 and the leadership gap

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   The other metric that most retailers do not know is how much they save on an online order vs. a catalog/contact center order vs. a store order. And if you do not know that, then how do you know how much you can invest in transitioning a customer over to a lower-cost channel?

6. LACK OF CONTEXT AND BENCHMARKS

   I will scream the next time an established, brand-name multichannel merchant tells us how pleased it is with 15% growth in its Internet business, doubling its conversion rate to 2%, or finally having a shopping-cart abandonment rate of 55%. In a vacuum and compared with its store business, the growth rate looks phenomenal, and compared with its catalog prospecting statistics, the conversion rate is wonderful. But unfortunately those are not the correct benchmarks to track, nor are the abovementioned metrics anything to crow about.

   The online retail business in the U.S. grew 25%-30% last year, so you are probably losing category market share on the Internet if you did not grow at least that much or did not see growth equal to the growth in your category, which may be even faster. And in case you think you are too big to be growing at that pace, you might not be aware that Wal-Mart, Best Buy, QVC, and Williams-Sonoma grew their Internet businesses, all of which are in the $1 billion ballpark, much more than 30%. At established brand-name multichannel merchants, Internet operations with annual sales of no more than $100 million should be growing at triple-digit rates at the very least, and Web operations with sales of more than $100 million should be growing in double digits beyond the average growth rate for the sector, in order to be winning meaningful market share.

   For established brand-name merchants, Internet visitor-to-customer conversion rates should be 5% plus an adjustment upward or downward based on category, price points, and competition. For example, QVC is estimated to have a conversion rate of roughly 6%, L.L. Bean 8%, and Williams-Sonoma 10%.

   The average shopping-cart abandonment rate for retailers is about 43%. So there'd better be a very good explanation if your rate is higher than that. If you are an above-average retailer with customer-friendly messaging, flow, and navigation on your site, you should see cart abandonment rates in the teens and 20s.



7. INADEQUATE INFRASTRUCTURE

   Good news: The additional capital investment required to support a robust multichannel, customer-centric infrastructure is probably less than the cost of opening a couple of stores or launching a couple of catalog titles — and the ROI is much higher, and the payback much faster, occuring in months and not years.

It is important, though, to understand the strategic objective of this mc³ infrastructure: to create a seamless platform to acquire, sell to, and service your customers regardless of channel. That means having a common customer view across channels — using a common customer profile to entice buyers to come back and make another purchase; to personalize a relevant offer whether it is at the store point of sale, the catalog contact center, or the Website; and to provide cross-channel customer service regarding everything from returns to questions about how to clean the product. It also means having a common view of your inventory and its real-time availability across channels so that customers can buy what they want, wherever they want, whenever they want with a clear expectation of when they will receive the item. In the short run, having a cross-channel view of customer data and company inventory will pay off by boosting customer satisfaction and loyalty. In the long run, it will create a barrier to entry for your competition because you have conditioned the customer to believe that you are the first place to shop within your category.

Most multichannel merchants are making progress. But the progress is neither fast enough nor good enough. Leadership, or the lack thereof, is the primary reason for this lackluster progress. Changing or bolstering leadership is a first and necessary step to becoming a world-class mc³ merchant.