Multi-Channel Integration: Convenience Leads to Loyalty

Many retailers traditionally treat sales channels as separate entities with separate inventory, order, and customer service processes. If they understood the dollar implications of these age-old habits, they might consider changing their ways. Studies have shown that customers who shop multiple channels (web, catalog, and stores) spend on average four times more than single-channel shoppers. Therefore a retailer who can increase the number of multi-channel shoppers by even a small percentage will add significant revenues to the top line.

Customers may become loyal shoppers when retailers make it convenient for them to shop across different channels and when retailers have an intimate understanding of their multi-channel spending habits and can deliver the right promotional and merchandise offers.

Convenient, Multi-Channel Service

Ohio-based market research outfit Retail Forward recently audited the 16 largest multi-channel retailers (ranked by U.S. revenues, June 2004), using a checklist of multi-channel customer service features including in-store pick-up of on-line orders; pre-order of new product releases; in-store kiosk orders; Web shopping lists for in-store buying; etc. The conclusion was that while these retailers claim to be focused on providing a multi-channel shopping experience for their customers not many actually do.

Yet why shouldn’t customers expect these cross-channel services? After almost 10 years of experience with e-commerce (which has topped catalogs as the second highest source of retail revenue), customers are used to the convenience of online shopping and expect that same convenience from their physical stores. They don’t care that the retailer treats its store, catalog, and e-commerce as separate business units. They want to shop and receive services through the most convenient channel whether they happen to be on the phone, in a shopping mall, or surfing the Internet.

If a customer purchases bed linens online they want to have the option of picking them up at the store, or if the shoes ordered online don’t fit, the customer may want to exchange them for a new pair at the store.

All transactions should be available through all channels, yet very few retailers have the systems in place to do so. Some store clerks will even confide in customers that their capabilities are limited and the store can’t handle “the cross-channel thing,” they will send them to a better-equipped competitor. In contrast, the competitor will allow the customer to order a special item online, where it is processed hassle-free and later arrives with a store discount coupon, prompting the customer to return to the physical store for additional purchases!

If a retailer’s multi-channel business processes are not seamless or integrated, they are leaving money for their competitors to earn instead.

Loyalty Programs, Integrated Customer Analytics

In addition to making transactions and customer service processes seamless and simple, a good multi-channel strategy requires analyzing cross-channel shopping patterns and creating targeted merchandise and promotional offers that continue to reinforce customer loyalty and repeat sales. For example:

Retailers such as The Gap have sent award coupons when a customer’s combined offline and online purchases exceed a certain amount; superstores such as Costco email discount offers for special items to preferred in-store customers.

Michael Ker was CEO of Escalate, Inc.