Tuesday 12 February 2008

The Consultancy take on Multichannel Retailing

After reading the article on the BT Global Services report, the subject of my last post, I decided to take a quick look at what the other consultancies were saying (or have said) about multichannel retailing.

Wipro http://www.wipro.com/ai/images/downloads/wp/IntegratedMulti_Channel_Retailing.pdf
Whilst I've worked with Wipro in the past and on both occasions came away slightly disillusioned, I have to say that this whitepaper is excellent. Though that's not just because their introduction has an almost identical definition for Multichannel Retailing as I used in my first blog post, but because they clearly define the benefits and challenges to implementing a multichannel operation. They highlight the added complexities of legacy systems in an established retailer, the governance issues in ensuring consistency across channels, the need for organisational alignment and the difficulties of getting store staff onboard with promoting cross channel shoppers. Of course the paper finishes by promoting the Wipro appraoch, but still a good high-level paper.


Javelin
Unfortunately, Javelin Group don't have a great deal to say about Multichannel out on the web apart from their brochureware. That's a shame, as I've worked with these guys and seen them influence and advise on both purely eCommerce strategy and cross channel.


Charteris
Back in late 2006 Charteris, a UK based IT consultancy, commissioned Martec to review the current state of multichannel retail in the UK. In early 2007 I was lucky enough to attend their breakfast briefing on the subject in which several well known UK retailers discussed the challenges of multi-channel retail. The report produced by Martec highlighted a couple of areas to me, the main being the lack of decent CRM processes across channels, followed by KPIs used to measure channel effectiveness. My view on the first point is that many retailers have yet to understand the wealth of customer data that is available to them from their web channel and therefore the need for an effective CRM platform to capitalise upon it. Not only that, but how they can merge that data with their other channels and external sources. The second point always amazes me, whilst many businesses produce business cases to justify a particular project, it very rarely contains any clear success criteria on which to base KPIs, e.g. level of customer retention/acquisition. Typically it's only ever about the first 5 year projections on the incremental revenues. 9 times out of ten, these KPIs are picked up in the reporting requirements that also seem to be the last thing the project team think about. Of course, Retailers aren't the only culprits here.


Conchango
Rizwan from Conchango, a business consultancy and systems integrator, has an excellent couple of blog postings. I think he sums up Multichannel and its challenges in his posting 'What is Multi-Channel?'. Working for one of those older traditional retailers, I totally agree with his observation regarding greater gains, but higher barrier to entry due to technology and organisational obstacles. In an organisation that has grown it's business units organically and traditionally autonomously with IT aligned to business unit, there are silos of organisation and technology which first need bridging and then replacing with joint technology and process - thankfully it's something that's been started here. Rizwan also mentions Service Orientation and this is something I want to go in to more detail about in a later posting. Service Orientation is a key concept to enable multichannel retailing, allowing individual services to be called upon from multiple channels to provide that single, consistent customer experience.

All in all, the consultancies appear to concur with the definition and points I raised in my first posting. In fact, many of them use a similar definition or at least some of the same terms!

The importance of getting it right

Just spotted this posting on TheRetailBulletin - "Multichannel Strategy Drives Customers Away".

It describes a recent survey conducted by BT Global Services and highlights the fact that if you get it wrong and the customer experience isn't consistent across channels then your missing out on sales. Almost all repondent (97%) expect the interactions to be consistent across channels.

If you get it right there's the likelihood that those using 2 or more channels will spend 114% more than those only using a single channel!

An interesting final statement, “The difficulty with multichannel strategies is often a chicken and egg one. Organisations will only invest significantly in a new channel when they can prove its worth. They should remember, however, that customers will only use a new channel if it offers them a truly effective experience.” - surely this is actually a result of the barrier to adopting a new channel being too high. So, what are these barriers? It's probably a fair split between lack of IT agility and resistance to organisational change or new process adoption.

I've a few thoughts on the IT agility one that I think the NRF/ARTS are starting to address and I'll elaborate more as my blog continues.

Friday 8 February 2008

What is Multichannel Retailing?

In the first of what I hope to be many blog posts I'm going to attempt to create a succinct definition of what is multichannel retailing.

A quick Google for the term 'multi channel retail definition' didn't really come up with much.

In my view Multichannel Retailing can be summed up with the following phrase; "Multichannel Retailing provides a consistent customer experience regardless of the channel that a customer wishes to use to interact with the organisation"

There are a few key sub-phrases in that sentence I wish to highlight. Let's take them in reverse order...

Interact
I could have easily used the word 'shop' in place of this, but I didn't. The reason is that in this day and age the customer relationship with a retail organisation should be more than simply a shopping experience. With the advent of the Web (forums, customer reviews, etc), IVR and other channel technologies there is no reason why the relationship between customer and retailer should not be more interactive.

Channel
What exactly is a 'Channel'? What makes a retailer 'Multichannel'? Nowadays we can shop with our favourite brands in a multitude of ways; the bricks & mortar shop, web, phone, catalogue/mail order, mobile phone, in-store kiosk, IDTV. Each and every one a different 'channel'. The majority of retailers have at least 2 of these channels operating. So, surely aren't all these 2+ channel retailers classed as 'Multichannel'. One might argue, 'Yes' as they're operating in multiple channels, but how many of them meet the definition I've made above? That bring me on nicely to my final point...

Consistent Customer Experience
The most important of all. I love the phrase 'Customer is King'. If that's the case, why do so many retailers fail to understand that to succeed they must provide customer-centric services. Whichever channel I interact on must know who I am, what I've bought and what my previous interactions have been. Not only will this impress the customer (or spook the more wary), but it will also provide extensive and valuable marketing intelligence and the opportunity to target customer segments and personalise the customer experience.

Not only that, but as the Banking & Finance industry all too well know, the future share value of an organisation will be proportional to the quality of customer data it maintains. (I know somebody else said that, but not sure who - anybody?)