July 31, 2007

A Multichannel Manifesto

Yesterday I asked you, the loyal reader, to share with the MineThatData community the leaders you believe are great multichannel marketers.

The response was underwhelming (i.e. no response), and underscores a challenge we're going to have to overcome over the next five years.

Are there any leaders who can put together all aspects of multichannel marketing, and speak to this craft in a credible way that drives increased customer satisfaction, sales, and profitability?

I'm aware of a business that has a "multichannel manifesto", a multi-page statement that tells all employees key facts about how customers behave in a multichannel world. I've paraphrased, revamped and added to the statement. The statement is outlined below. Could/should your organization produce a version of a "multichannel manifesto"? What would you add to this manifesto?


"At Acme, we leverage multichannel marketing to improve the shopping experience of our customers, and to improve the long-term profitability of our brand.

We don't necessarily believe that multichannel customers behave differently than other customers. We can simply measure more aspects of the multichannel customer relationship, and desire to use the information to grow long-term sales and profits.

Here is what we know about multichannel customer behavior.

First, the role of the catalog has changed. It is no longer the primary driver of sales at Acme. Still, we believe catalog plays a critical role in 'creating demand'. We know we have to dazzle the customer in the first twenty pages of the catalog, or the customer loses interest and purchases less merchandise from us. We know we have to mail a customer a catalog every three weeks. Mail less often, we lose demand. Mail more often, we cannibalize sales and become less profitable.

Customers take eight weeks to respond to a catalog over the telephone. Customers take four weeks to respond to a catalog over the internet. Customers take ten days to respond to a catalog in our stores.

Our catalog customers are suburban and rural, and have different needs than online or retail customers. Therefore, we are willing to merchandise catalogs in a way that maximize sales among the target audience. We are willing to create a 'look and feel' that is appropriate for our catalog target. We are willing to feature different merchandise in catalogs than online or in stores, because we've learned that when we advertise the best product in any one channel, we cause customers to purchase non-featured merchandise in other channels.

We are fully aware that our catalog and online channels are profitable when there is a steady flow of new customers into these channels. While loyalty efforts are considered important, the best route to long-term growth in our catalog and online channels is to constantly add new customers in a cost-effective manner. We know that new catalog and new online customers eventually become good retail customers, and calibrate our marketing activities around this central truth.

Our online channel is most representative of our overall brand. We know that for every dollar driven to the telephone channel by catalog mailings, we drive $0.40 to our online channel. We no longer obsess with conversion rates and abandoned shopping carts, because we've learned that our customers use the website as a research tool to facilitate purchases in any channel. We know that it takes four visits to the website before a customer will purchase merchandise online for the first time. Our best customers visit our website six times before placing an order. And when that order occurs, twenty percent occur over the telephone, fifty percent occur online, and thirty percent occur in stores. Traditional conversion rate and shopping cart metrics fail to measure the true relationship our customers have with our brand, but are appropriate for improving the effectiveness of the online channel.

We realize that our customers have relationships with other brands. We know this because sixty-five percent of all search-driven purchases occur among customers who last purchased within the past twelve months. Online marketing plays a key strategic role in our organization. Without portal advertising, affiliate marketing and paid/natural search, we are convinced we would give up market share to our competitors.

We know that online marketing strategies are different than traditional marketing strategies. Our online customers are highly responsive to discounts, promotions and incentives, based on the testing we've executed. We are willing to offer specific online incentives that benefit the customer, and further the long-term profitability of our brand.

Online customers are frequently suburban customers.

Nearly half of our active customer base subscribe to our weekly e-mail marketing campaigns. We know that if we assign customers to any one of four different creative presentations / merchandise offers, based on prior purchase history and stated customer preferences, we improve e-mail campaign performance by fifteen percent.

The average e-mail campaign has a life of forty-eight hours. E-mail campaigns delivered early in the week benefit our online channel. E-mail campaigns delivered late in the week benefit our retail channel. For every dollar driven online by an e-mail marketing campaign, we drive sixty-five cents of net sales into our stores.

We've learned that our retail customers are often different than our catalog/online customers. While nearly half of our catalog/online customers will purchase in a store, only fourteen percent of our store customers will purchase via catalog or in our online channel.

Our retail channel significantly benefits from catalog/e-mail/online marketing activities. As a result, we encourage retail purchases via our direct marketing activities, knowing customers are driven into stores. We've learned that retail customers are largely suburban or urban residents. This somewhat limits the effectiveness of catalog advertising, which is most effective to a rural audience.

Our retail customers are significantly more loyal than our catalog/online customers are. As a result, our loyalty efforts are largely directed at our best retail customers.

We realize that all of our marketing activities 'work together'. One out of every four online purchases were placed by a customer who received at least one catalog in past month, at least one e-mail in the past month, and arrived at our site via paid search in the past month.

Given these facts, we are taking steps to integrate our customer service, inventory and merchandising systems across the enterprise. That being said, we realize we must continue to educate all employees as to how multichannel and single channel customers behave, so that we can maximize customer satisfaction, sales and profit across all channels.

3 comments:

  1. Wow! That is amazing. Do you think many companies even have these numbers let alone the thoughts around them? Forrester gave retailers an F for multichannel measurement competency. These guys should get an A it seems. I would say A+ if the manifesto spoke more about creating programs that make it easier for customers to do their multichannel thing, print wish list, or buy online pick up in store type stuff. What do you think? Thanks for sharing

    Akin

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  2. P.S.: Ah, saw your comment on Forrester/Circuit City's path. Interesting. Can one conclude though that the profitability difficulties are related to the multichannel strategy?

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  3. Very few companies have their thoughts documented in this something this clear.

    Most companies don't have the metrics to create the document.

    Most companies do have the business intuition to write something like this --- they do know that this is how the world works, they just haven't taken the time to document it. And when you document it, suddenly, things seem clear.

    I do not conclude that Circuit City's problems are related to their multichannel strategy.

    I believe that the multichannel strategy that pundits try to get all of us to execute do not necessarily translate to sales or profit. They sound good ... yet companies who execute them fail.

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