Omnichannel - a Channel Strategy with Long-Term Benefits

Omnichannel, the integrative interaction of channels presented to customers, is once again at the top of the agenda. This will come as no surprise; eighty-seven percent of customers want to continue and even increase their online shopping despite the re-opening of the stores.[1] At the same time, however, many consumers want personal support at a physical location, especially for products and business transactions that require more detailed consultation. This translates into a valuable differentiating feature for providers who can offer customers both types of service in comparison with their online-only competitors. However, this advantage can be exploited to the full solely if movement among the various channels is desired by customers and functions seamlessly. Ultimately, solely a consistent, smoothly functioning omnichannel customer experience leads to sustainable customer loyalty, rising repurchase rates, and increased revenues. And there is obviously still room for improvement here! According to one survey, 60 percent of consumers still feel like they are talking to different business units instead of one company.[2]

One reason for this is that the successful transformation to an omnichannel provider takes time. As a rule, companies generally need plenty of stamina, but this can pay off in the long term if five success factors of omnichannel integration are systematically considered and addressed.

The goal of an omnichannel strategy is the close linking of all marketing, sales, and service channels to create a comprehensive customer experience. This strategy for differentiation from the competition demands successful channel integration that begins at the level of the corporate strategy — in other words, the commitment of top management and uncompromising anchoring in the company’s mission and vision. Along with the development of a strategic vision, such determination involves organizational and cultural adjustments, including the sensitization of employees and the introduction of teams and roles comprising various positions to ensure cross-departmental thinking and action. Ultimately, all relevant company processes must be viewed from the customers’ point of view and revised as determined to be necessary.

An omnichannel project should always begin from the customer perspective. Customers are generally hugely heterogeneous in terms of their use behavior: while some prefer to obtain quick solutions to their issues by placing a call to a hotline, others deliberately incorporate multiple channels, both online and offline, into the purchase decision process. Every channel addresses a specific target group that is dependent on the industry and the product. One effective means of grasping customer preferences is to create personas; developing profiles of fictitious, representative users renders a company’s target groups and their behavior patterns more tangible, and the channel mix can be optimized in terms of target group, content, and priority.

Once channel preferences and requirements of the particular target groups have been determined — whether with the help of personas or through classic market segmentation (e.g., based on psychographic or sociodemographic demarcation criteria) — the channels should be matched to the target group segments and optimized. A close examination of all aspects along the customer journey is an advisable approach here. Which channels does the customer use for information, advice, purchase, and aftersales service? Where are the handover points of essential importance (moments that matter), and where are they less desirable? Depending on the business case, a single or multi-channel realization might be the right approach to take. When customers have problems with the use of a product or service, they usually want to find solutions immediately on their preferred input channel. An overwhelming number of channels or a forced channel change at the wrong point can lead to increased complexity and “information overload” for customers, ultimately prompting them to discontinue the customer journey. Understanding critical moments helps companies to focus their omnichannel actions. Qualitative findings from a customer journey mapping should always be confirmed by quantitative data from customer surveys or operational data.

One major challenge, especially for companies that use digital and analog sales channels in equal measure, is an overarching incentive system encompassing all channels. A kind of “silo thinking” has developed in the minds of many employees, especially in the B2C sector, over the course of time and has become established at the point of sale (POS). Surrendering a lead or customer to another channel has been unthinkable until now because the conclusion of a transaction was rewarded solely in the final channel. The key to breaking down these silos is an incentive system that rewards a referral to other channels in measurable form. In addition, employees should be involved in cross-channel projects for the analysis of pain points and the generation of measures at an early stage. This involvement makes the success of omnichannel tangible and promotes cultural change.

Moreover, silos hindering the free interchange of customer and product data must also be torn down. A company should maintain a central data pool that is constantly fed with data about customers, product, and availability from all channels and that every channel can access. According to an EHI survey, this integration of central data management is precisely the factor that 75 percent of the companies surveyed regard as the greatest challenge for the further development of omnichannel services. If a request must be described repeatedly every time there is a change of channels or if a product that has been reserved online is suddenly no longer available in the store, any hope of a positive customer experience is lost. This central availability opens up a great opportunity in data-supported marketing as well for targeting customers individually and according to defined contexts across all channels. The challenge here — in addition to the creation of the technical infrastructure — is usually data collection still being handled manually in the stationary channels. This often represents substantial additional effort for POS employees that is not rewarded.

Where do transitions not function optimally from the customer’s point of view? What use cases are accepted by customers? Are the goals that have been set being achieved? Multi-channel providers generally still begin the design of systems for measuring success in terms of specific touchpoints or channels. Such an approach does not reveal the whole truth about omnichannel journeys, however. A better recommendation for determining customers’ satisfaction or their recommendations to others is the journey-based survey. Many typical omnichannel use cases such as reservations and pickups, on the other hand, require new metrics; a dropout rate that reveals how many reserved products were not picked up is only one example.

Evidently, many customers view the targeted integration of multiple sales channels into the information and purchasing process to be a growing enhancement of value — if done seamlessly. Omnichannel as a strategy for customer loyalty and differentiation from competitors is gaining in relevance and can pay off in the long term. For many companies, however, the inevitable changes in processes, organizations, and technologies can be realized only in the longer term. Omnichannel is a strategic change process that requires stamina on the part of both management and employees. The measures and the structured approach described above provide a starting point for this process and help to secure strong customer relationships and higher revenues in the long term.

[1] Bitkom Research: E-Commerce Trends 2021

[2] State of the Connected Customer, Salesforce 2020

[3] EHI: Connected Retail 2020