Are you multichannel? Even if you have only one brick-and-mortar location, you probably have a simple Website and communicate with some customers via e-mail. That makes you multichannel.
Absurdly simple, yes, but the implications are vast — not just for the way you do business, but in the way you organize yourself to do business. Many retailers have yet to rethink their organizational structures to realize maximum growth. Consider a few of these questions:
- What should your org chart now look like?
- What role should the head of marketing play now?
- How does all of this affect the retail org chart?
Added to the new world of multichannel marketing are four grudgingly acknowledged realities that further complicate a retail restructuring:
- The customer is now in charge.
- Silo-management no longer works.
- The role of the vice president or head of marketing has become outdated or confused, and
- In many organizations, customer information remains decentralized.
Customer information, in fact, holds the key to integrating all of these issues, and it’s critical to multichannel growth. But how is that information managed? How is it gathered and made accessible to all stakeholders? And what structural impact does placing information in a central role have on an organization?
These questions remain vague. But multichannel retailers can respond to the new challenges by creating the role of chief customer officer.
The historic role of marketingin bricks, clicks and calls
In the in-store channel, it is still a challenge for many companies to identify and measure the customer. At most store retailing companies, vice presidents of marketing have historically focused on advertising and sales promotion, although some newer executives have brought some type of CRM expertise with them to this role.
The responsibilities of these folks are often more tactical than strategic. They may report to the CEO, but often sit a seat away from the “C” table.
Although these executives may manage budgets of millions of dollars, they seldom, if ever, have P&L responsibility — even though they plan and execute programs that support the chief executive’s key initiatives. They are charged with building topline sales, but seldom have any direct impact on the bottom line other than controlling costs.
As a result, the brick-and-mortar marketing heads have focused their efforts more on art than on science. With still just 50% to 75% of the store retailers using CRM or customer data in any serious fashion, the science part of retail marketing for the bricks group of marketers remains sadly undeveloped.
In the world of “calls” or of multichannel sellers that grew out of the mail order business, customer measurement is the primary key to success. In this environment, it has been much easier to identify and measure the customer.
Here the heads of marketing often carry vice president, senior vice president or even executive vice president titles. Their responsibilities include advertising and promotion, but also they are mandated to direct the metrics critical to monitoring and ensuring success in the calls channel.
This entails managing and evaluating the customer database, segmentation and measurement, page cost, square-inch analysis, cost/sales per book, lifetime value of a customer, list rental income, and so forth.
These marketing heads usually have P&L responsibility, which is also factored into their compensation. They understand the balance between the art and science of marketing, and they recruit and manage top-level staffs who execute both.
Long before today’s technology and measurement tools existed, the heads of catalog marketing may have initiated, developed and perfected these customer metrics to create successful mail order businesses.
Marketers in the world of clicks have had the ability to measure and track almost every customer interaction. While the Internet channel is still evolving for many multichannel retailers, most companies have masterfully blended the look of all channels to reflect the brands that may have started in bricks or calls.
Applying a truly multichannel approach to customers’ interactions with the company — in which the channel remains neutral in terms of merchandising, service and promotion — remains a challenge for most.
In some multichannel environments, Internet marketing became a stepchild to the marketing department or was spun off as a mini silo of its own. It often functioned with little coordinated input, except for graphic execution, from the predominant channel — be it bricks or calls.
Because of the intensive tracking and measurement devices typical of Internet marketing, its role is often highly analytical. Its input into other channels was often overlooked, as was the need to serve the customer in some type of coordinated manner.
The head-of-marketing role may still reflects the past retail roots of the company, or it’s evolving into some kind of hybrid position. In other companies, an operating-silo mentality has splintered marketing into customer information, store, catalog/Web or Web-only silos. This hampers efforts to develop a 360-degree view of the customer and respond to her needs and channel preferences.
Operating silos that supported single-channel retailing made sense when the retailer had only a store or a catalog or even a Website. Today’s customer thinks of the retail brand, not the channel she’s purchasing through.
There may be efficiencies in keeping operations separate, but customer information must be centrally located. And marketers need to be able to move horizontally from one channel to the other and back again.
As the charts above illustrate, customer information needs to draw from such nonmarketing channels as operations, IT and merchandising. This means that marketing now needs a cross-silo or cross-department approach.
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The new chief customer officer
For marketing to function fully in its new role that blends science with art, retail executive level management needs basically to think across all channels, too. The “C” level (chief executive, chiefs of finance, operating, and merchandising) now needs to include the new role of the chief customer officer — an executive who has experience beyond advertising and sales promotion.
Although advertising/sales promotion remains important, that expertise is now combined with database marketing, customer analytics, primary and secondary market research, and proprietary credit card marketing, to name a few of the skills critical for this new role.
Today’s chief customer officer needs to be fluent in many marketing languages: mass media (radio, TV, newspapers, GRPs); direct marketing (marketing databases, control groups, testing, ROI, CPM, NCOA, modeling, etc.); Internet and e-commerce (SEO, PPC, navigation, e-mail, opt in/opt out, privacy, spam, Google).
And today’s chief customer officer must function as a tactical facilitator, drawing information and skills from C-level counterparts, to build bridges across silos and place the customer and customer information in the center of the enterprise.
In a CCO-led multichannel world, all channels are on parity, with the customer in the driver’s seat. Although chief customer officers respect traditional retail operating silos, they know how to partner with them in building and maintaining the database.
The new chief customer officers recognize the need to educate the other C-level areas on the new value of cross-channel customer information. They remain in charge of the traditional four Ps — product, price, promotion and placement — but customer information has now acquired a dominant position.
Chief customer officers work to develop programs that impact the company’s bottom line, which is now supported by customer-specific information. In today’s multichannel retail world, the C-level suite recognizes the CCO as the expert on all customers, regardless of channel.
Customer info is king
In this new organizational structure, most of the channel-specific position titles remain under marketing, but all look at customer data and behavior first, and then adapt creative, messaging, policies, media, analytics, etc., to accommodate each channel with the company brand remaining paramount.
The results collected are monitored via specific channel, but are also shared and interpreted across channel into a multidimensional view of the customer. This information is eventually rolled up to provide additional strategic tools to the “C” suite.
The new realities of retailing present many challenges. The retail industry is moving away from presenting what the retailer says the customer should buy and where she wants to shop to hearing what the customer wants and responding to those needs.
Top management may have been slow to recognize the new role of marketing, especially since retail has been hard hit by other challenges in recent years. But with customers now assuming more control in the retailing equation, you need to create an organization that addresses decision-making from a customer perspective.
Francey Smith (email@example.com) is president of retail marketing consultancy Francey Smith & Associates.