Omnichannel – Music to Your Ears?

Consumers made their transition to omnichannel some time ago, and slowly retailers are following suit.  Retailers see the benefits of taking a channel-agnostic approach to give a complete customer experience from marketing to browsing and buying, but getting to that utopia can seem like trying to turn an oil tanker.

How do you get your organization, processes, systems and channels working together as a single harmonious orchestra, rather than a cacophony of instruments playing to their own tunes?  More importantly, how do you get there without risking a drop in customer experience, brand value or revenues?

Let’s start by making sure that we understand that multichannel and omnichannel are not the same thing. Of the two, multichannel was the first stage of customer interaction, with retailers offering different formats — first physical stores, then online and then social. These channels were not integrated, and customers could have different experiences in each. With omnichannel, the channels are integrated, so the retailer has a comprehensive understanding of who the shopper is and, as a result, can personalize the experience for them based on behaviors across the different channels.

Stepping Stones to Omnichannel

In order to be truly omnichannel, you need to understand each individual customer and the interactions they could be having across different channels simultaneously.  Achieving this requires you to go through several steps:

  1. The first step in the journey to a true omnichannel business starts with having a clear documented understanding of your brand, merchandising, and pricing strategies across all channels.
  2. Second, you must have the right organizational structure and incentives to support an omnichannel strategy.
  3. Third, you need the right kind of analytics to understand how customers behave across these channels at the individual customer level.
  4. And lastly, with setting up the right answers in steps 1-3, you can then personalize interactions, including across promotions, with less cannibalizing across channels, and secure more loyal trips from your target customers.

By knowing customer behaviors and desires, you can be proactive rather than reactive with communications and spend more efficiently to secure customer loyalty. Ultimately, the goal is to generate a cohesive branded experience across all channels where customers feel comfortable and see what they expect. This does not mean the experiences have to be identical, but it does mean that differences redirect customers to interact in the way that balances their preferences (and share of wallet) against the cost-to-serve across channels.

Obstacles to Omnichannel

There are operational, organizational and experiential issues to overcome to achieve a true omnichannel business.

In more traditional multichannel environments, the chief merchant officer controls the merchandising in the physical stores, while the CIO or “head of online” controls the offering in the online stores. They each have different agendas tied to different or misaligned incentive structures. This can cause the same retailer to cannibalize itself across channels, which inherently leads to less than optimal results for the customer.  If you follow the steps above, it will help to ensure your path to omnichannel will be as smooth as possible.

It’s important to keep in mind that online and in-store don’t have to have the same pricing on items. This can have a negative financial impact on the organization. It could be that just the key value items need to be the same, for example.

Another pitfall to avoid is trying to solve too much too quickly — compromising operationally or experientially in ways that can cause resistance and slow down the journey. It’s better to build out a roadmap and strive for quick wins first that can have a positive impact on the customer experience. Even a journey of a thousand miles begins with a step. It’s important to identify the right first step and goals for one, three, and five years down the journey, as this will set the tempo of your project and keep the team focused on the priorities.

Finally, not having the right data, structured in a coherent manner, may mean you do not ask the right questions or determine the right answers. Therefore, it’s imperative that you begin with the end in mind. For example, what are you planning to achieve through online sales (e.g., an extension of your current channel structure, a better way to reach your target customer base, or a way to improve the brand through merchandising across all the channels your customers interact through/in)?

Depending upon the intended goal, you should structure your data to answer questions that best resolve your business challenge. By creating better data structures – don’t wait for perfect — to answer the business problem, you can more quickly decipher the right solutions to address the next generation of your merchandising activities. This needs to be a seamless input to insight-driven action recommendations and workflow — otherwise the sheer volume of identified opportunities and faster, more dynamic pace of omnichannel will outstrip the capacity of the organization to take advantage of the opportunities.

The critical thing with omnichannel is to accept its inevitability if you are to survive.  From that point, plan for success and don’t let fear stop you moving forward, but don’t rush it either.  You’ve spent years building up your brand loyalty and reputation – it’s much easier lost than won.

 Brian Elliott is CEO of Periscope, a McKinsey Solution

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