September 08, 2008

Multichannel Customer Evolution

Reading the marketing literature, we learn all about how we have to be "multichannel". We need to be all things to all customers.

We don't read much about how customers behave as the migrate through the multichannel maze.

Across a veritable plethora of Multichannel Forensics projects, we get a good view into the evolution of customer behavior. Let's review different stages that frequently repeat themselves.


Stage 1 = Online Shopping Via Direct Marketing. This is the classic stage that the marketing folks talk about all the time. In this stage, the customer that was always responsive to direct marketing becomes responsive to direct marketing via the online channel. Here are six customers, before this transition, then following the transition.

Before Transition
Customer 1 = Telephone Shopper
Customer 2 = Telephone Shopper
Customer 3 = Telephone Shopper
Customer 4 = Telephone Shopper
Customer 5 = Telephone Shopper
Customer 6 = Telephone Shopper

After Transition
Customer 1 = Telephone Shopper
Customer 2 = Telephone Shopper
Customer 3 = Telephone Shopper
Customer 4 = Online Shopper Via Direct Marketing
Customer 5 = Online Shopper Via Direct Marketing
Customer 6 = Online Shopper Via Direct Marketing


Stage 2 = Paid Search, Social Media, And Branded Visitation: This is a transition that direct marketers born prior to e-commerce are struggling with. In this stage, traditional customers evolve to online shopping, while online customers begin to not use traditional direct marketing (catalogs, e-mail).

Before Transition
Customer 1 = Telephone Shopper
Customer 2 = Telephone Shopper
Customer 3 = Telephone Shopper
Customer 4 = Online Shopper Via Direct Marketing
Customer 5 = Online Shopper Via Direct Marketing
Customer 6 = Online Shopper Via Direct Marketing

After Transition
Customer 1 = Telephone Shopper
Customer 2 = Telephone Shopper
Customer 3 = Online Shopper Via Direct Marketing
Customer 4 = Online Shopper Via Direct Marketing
Customer 5 = Online Social Shopper
Customer 6 = Online Social Shopper


This is the transition we are going through right now. This transition is a tough one for traditional direct marketers, because the tools and techniques we always used now only work among 2/3 of the audience. Couple that with an economic downturn, and there's trouble brewing.

The real challenge comes in when adding retail to the equation. When a brand adds retail stores, all bets are off. Some customers migrate to retail, some customers migrate to retail while using the online channel for research purposes. Other customers are true multichannel customers, using all channels.

Stage 3 = Addition Of Retail Stores. Let's see what this looks like.

Before Transition
Customer 1 = Telephone Shopper
Customer 2 = Telephone Shopper
Customer 3 = Online Shopper Via Direct Marketing
Customer 4 = Online Shopper Via Direct Marketing
Customer 5 = Online Social Shopper
Customer 6 = Online Social Shopper


After Transition
Customer 1 = Telephone Shopper
Customer 2 = Retail Shopper Via Direct Marketing
Customer 3 = Retail Shopper Who Buys Online (True Multichannel Buyer)
Customer 4 = Retail Shopper Only, Not Responsive To Direct Marketing
Customer 5 = Online Social Shopper
Customer 6 = Retail Shopper Who Uses Online Micro-Channels For Research Purposes


Look at the six customers at the end of this transitional period. Six homogeneous customers become six independent customers, all exhibiting different behavior. This is the mystery of customer behavior that we're not quite comfortable with. We want to lump all six of these customers into the multichannel bucket, then execute old-school marketing and new techniques. This can anger a customer who doesn't want to hear via e-mail, blogs, catalogs, postcards, and search that you have a sale where the customer can save up to twenty percent. We'll stop marketing the same programs to all customers at some point --- we don't necessarily have the tools to do so today.

In reality, these are not multichannel customers. The customer is in a stage of transition --- the customer migrates through channels, instead of belonging to all channels. Our worldview will change in the next few years.