PAPER, BRICKS & CLICKS: 10 STEPS TO CHANNEL INTEGRATION

Mar 01, 2000 10:30 PM  By

The never-ending hype about e-commerce over the past few years has sent many catalogers and retailers speeding to produce flashy, attention-getting Websites. But the money that some have lavished on the newest ‘Net bells and whistles might have better been spent on an integrated marketing plan.

All too often, catalogers and retailers overestimate the complexity of Internet technology and hire “experts” to help them wade through the jargon. But these channel experts rarely understand the key drivers of e-commerce strategy: direct selling; customer acquisition, upgrade, and retention; and integrated selling. In actuality, the Internet is simply another marketing channel that can – and should – be leveraged as part of integrated customer marketing.

Since the Internet allows for direct and differentiated marketing to your customers, it clearly falls within the realm of customer relationship management (CRM). Therefore, the organizational structure most conducive to exploiting the Internet is one in which a CRM manager takes ownership of the entire customer relationship, with retail and catalog channel managers reporting in. The channel managers – those who oversee the Website, the stores, and the print catalog – should implement the CRM strategy created by the marketing experts and offer their expertise in execution and measurement through the channel.

In plain English, you want to lock in the customers you already “own” by offering them a new channel without taking away established shopping options – at the same time aggressively acquiring new customers who want the convenience of the Internet along with the merchandising and service expertise of an established cataloger or retailer.

How do you handle that feat? The following 10 tips will help you integrate the Web into a multichannel CRM strategy.

1) Keep a consistent brand strategy for targeted customer communications.

Most of the hip, edgy Internet advertising that worked in the past was effective for only a very narrow segment: the Internet buffs. It won’t work for your traditional customers. For them, the Internet is simply a convenience, and they feel safe going to your site primarily because they trust you. What’s more, your best acquisition prospects, regardless of the medium by which you try to reach them, look just like your existing customers. Don’t fail to meet expectations by forsaking your traditional branding for something younger, more energetic, and technology-based.

2) Keep a consistent CRM strategy, and use it to drive your online strategy.

Your CRM initiatives will fail if your one-on-one communications send out different signals. Without question, the key purpose of an e-commerce site, stores, and catalogs is to sell. Combine direct selling with CRM communications, and your customers will keep coming back. Therefore, all integrated customer activity determines how you should segment and communicate to your customers, and those methods must be consistently applied through each channel. If you send a customer special catalog editions claiming she is a top customer, and then fail to differentiate her on the Internet and in your stores, your relationship will suffer.

3) Develop an online strategy; don’t get lost in the bells and whistles.

Never have a company with Internet channel expertise as its core competency develop your Web strategy. You’ll end up with an evaluation of competitive sites and all the cool new technology the company is dying to apply.

Again, the Web is a subset of a CRM strategy. Your ‘Net strategy should begin with a comprehensive overview of all your marketing interactions with the customer, identifying how the Web can complement these interactions. For example, if you offer cooking tips in your catalog, you might want to offer on your site an archive of all the tips you’ve published or allow customers to add their own tips.

You may also need to apply direct selling expertise to repackage your product appropriately for the Internet channel. Rather than assume your product is a natural for e-commerce, evaluate the customer demographics of online shoppers vs. the demographics of your own customers, and compare the types of products and cost structures that have spelled Web success against your offerings.

4) Develop distinctive merchandising strategies for all channels.

Merchandise that works in a store window display may not work as well on your Web home page or on the cover of your print catalog. Store merchandisers, for instance, do not know how to merchandise online and in catalogs. You need a direct selling expert working in conjunction with catalog and Internet channel experts to merchandise these channels.

5) Develop distinctive direct selling strategies for all channels.

Your direct selling strategies should also differ between catalog and the Internet. Not only will folks who prefer each channel differ somewhat, but the majority of catalog selling is done via a call center, with a salesperson or an order-taker in the loop. As a result, the shopping-cart abandonment rate is much higher for online sales than the rate for incompleted catalog sales, because Web customers see all costs added up before they push the order button. With a catalog, most customers call before they have added up tax, shipping, and extras, and find it harder to abandon the order when a “live” person is part of the transaction. For the Web, you might want to consider altering your pricing strategies so that customers aren’t surprised by add-on costs.

6) Develop separate offers by channel.

Some marketers make the mistake of keeping the same merchandise offer – for example, $5 off any order – consistent throughout all channels. But this doesn’t respect the differing needs of customers in each channel. In truth, free shipping offers will often beat straight discounts in your catalog and on the Internet, while nothing beats straight discounts in a store.

7) Never create a preferred channel.

The best thing about the Internet is that it provides more options for the consumer to either receive or respond to information. Take great care, though, not to favor the Internet, with its lower distribution and response costs, over your other channels. At the launch of a Website, dramatic offers are fine; consumers understand the splash around a “grand opening.” But if you show ongoing preference to the Internet by distributing high-value offers good only for the Internet, your customers who favor another channel will feel cheated. And if customers feel forced to use the Internet, they may move to a competitor that leaves all the options open to them.

8) Provide cross-marketing support.

Cross-marketing is the key online advantage catalogers and brick-and-mortar retailers have over the virtual-only marketers – but few exploit it to the fullest. Below, a few quick examples to strengthen each channel:

- Print your Web address on your store shopping bags.

- Provide online access at your stores so that shoppers can locate items by category, price range, etc.

- Allow Internet and catalog merchandise to be returned to your stores.

- Offer catalogs or catalog sign-up lists in your stores.

- Print your Web address or the location of the closest store on the outside of your catalog.

9) Beware of third parties.

Right now, you own your customer. Never give that up. Do not be lured into third-party deals in which your customers can click a link on your site that will drive them to someone else’s site. If you cannot provide the comprehensive content that your customers are receiving from outside sites, consider developing your own third-party site with partners. For example, if you sell children’s products, sign up as a sponsor of parenting sites so that their customers can be driven to you. But don’t use your medium to drive your customers to a site in which you have no ownership.

10) Analyze the whole customer.

Many of your customers will shop all three channels, or they’ll use one as a distribution channel and another as the response channel (for example, leafing through a print catalog to select an item but then going online to make the actual purchase). Click-stream and screen-navigation analyses are one-dimensional and can be misleading, since the Internet is so often used simply as a response channel.

You should be able to port your Web data into your marketing database to conduct integrated channel analysis. This will help you see how each channel supports the other, what types of customers favor each, and migration patterns from one channel to another and back. Evaluate the potential to upgrade and retain by channel, along with the merchandise mix by channel, and the standard sales and margin to obtain a full view of the value each channel brings to you both in the short term and long term.