April 17, 2009

Channel Alignment

In a recent investor conference call, Talbots management spoke of "aligning their channels".

Channel alignment is one of the most challenging aspects of being a multichannel marketer in the year 2009.

In 2001, the concept was easy. The dot.com crowd had just flushed billions of dollars in the hope of monetizing eyeballs. Traditional direct marketers were looking to take control over marketing, doing so by astroturfing the concept of "multichannel", the concept that if we simply align all of our channels, customers will be satisfied. Research organizations surveyed customers, customers told the research organizations what they wanted to hear, brands purchased research organization reports and heard what they wanted to hear, and then pursued the "multichannel route" under the mantra that "Multichannel Customers are the Best Customers".

By and large, the multichannel playbook consisted of the following strategies.
  • Offer the same merchandise in every channel --- stores, online, catalogs.
  • Offer the same merchandise at the same price in every channel.
  • Offer promotions that can be redeemed across all channels.
  • Promote all products via all channels --- catalogs, e-mail, etc.
  • Make the website a resource for cross-channel research.
  • Match your online orders back to traditional marketing activities, to prove that traditional marketing activities were responsible for online orders.
All of this sounded good, in theory.

Eight years later, we're left with so few success stories. From time to time, we'll hear of a standalone marketing campaign that delivered a 2,493% increase in ROI. But we seldom hear of a brand that "connected the dots" and "reaped the benefits" that we were astroturfed into believing.

If you disagree, pick the brand that did this well, and outline in the comments section the financials that demonstrate that the multichannel industry script worked.

I recall my CEO at Eddie Bauer, the venerable Rick Fersch, asking me a unique question back in 1999. Our website skewed toward a male demographic, our catalog skewed toward a female demographic. He asked me "Why would we want to use a catalog to drive sales online if the catalog customer is female, and the online buyer is male?"

Of course, one might use the catalog to drive female shoppers online to buy womens merchandise, but that wasn't quite how our business worked back in 1999.

Instead, Mr. Fersch was asking a rational question --- "Should these channels be aligned?"

I dare you to find industry experts who publicly ask this question. But this question is fundamental to understanding marketing in 2009.

For instance, say your "traditional" marketing department dreams up a promotion --- 25% off of your order if you spend $200 or more.
  • Should this promotion appear in your catalog?
  • Should this promotion be offered in e-mail marketing?
  • Should this promotion be broadcast on Twitter?
  • Should this promotion be part of your search marketing strategy?
  • Should this promotion be part of a blogger outreach program?
  • Should this promotion be part of a direct mail campaign?
  • Should this promotion be offered on the e-commerce homepage?
  • Should this promotion be part of our radio, newspaper, and magazine ads?
Traditional multichannel marketing suggests the answer to all questions is YES!

Modern channel alignment suggests we might want to explore the audience that participates in each micro-channel. Each micro-channel attracts a different audience, with different demographics, psychographics, needs and expectations. Why not consider leveraging the strengths of each micro-channel?

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