April 05, 2009

The Role Of Channels

In basketball, we all look to superstar players for inspiration. We enjoy watching the player that can record a "triple-double", ten or more points, ten or more rebounds, ten or more assists, in one game.

The "triple-double" is like "multiple channels".

Here's the thing. A superstar player has a hard time achieving a triple-double without serious help from his/her teammates. You cannot score more than ten points unless somebody passes you the ball. You cannot achieve ten assists unless your teammates can make shots.

In other words, each player has a role.

Now, allow me to ask you a question. Who, when you are meeting in your strategy sessions, assigns the role of each channel, so that all employees know what role each channel plays in your business?

Don't feel bad if you haven't identified who plays that role in a business. And don't expect that person to be the CMO, either. We haven't trained chief marketing officers to think strategically about the roles that channels play.

I will say that the most talented multichannel employees tend to intuitively know what role each channel plays. This could be just about any employee in your business, couldn't it?

On a piece of paper, write down the following channels, and the role each channel plays in contributing to the success of your business.
  • Catalog Marketing.
  • E-Mail Marketing.
  • Paid Search.
  • Natural Search.
  • Banner Ads.
  • Affiliate Marketing.
  • Shopping Comparison Sites.
  • Orders Via Your Call Center.
  • E-Commerce Orders.
  • Sales Force.
  • Live Chat.
  • Google.
  • Amazon.
  • Video Commerce.
  • Landing Pages.
  • Retail Stores.
  • Outlet Stores.
  • Outlet Tabs On Your E-Commerce Website.
  • Facebook.
  • MySpace.
  • Twitter.
  • Your Blog.
  • Radio.
  • Television.
  • Newspapers.
  • Auction Sites.
  • eBay.
  • Drive-Through.
  • ATM Machines.
  • Local Branches.
How did you do? Ask yourself the following questions, for each channel:
  • Does the channel scale? In other words, can it become one of the top two or three sales volume channels? If the answer is no, why do you participate in the channel?
  • Does the channel do a good job of acquiring new customers? If the answer is yes, do the customers have an acceptable long-term value? If the answer is no, what is your strategy to deal with low-LTV customers?
  • Does the channel aid in profitable customer retention? In other words, if you eliminated social media, would your annual retention rate change? If the answer is no, why are you participating in social media?
  • Does the channel aid in customer service? In other words, does the channel solve customer problems? If the answer is yes (i.e. call center), ask yourself why you pay those folks $11 / hour while you take home $175,000 a year while not speaking directly with your customers?
  • Does the channel feed other channels? If television advertising drives customers to your website, and your website drives customers to your stores, and customers generate profitable sales in your stores, then you established a successful micro-channel path. Hint --- the secret to successful multichannel marketing is to thoroughly understand and exploit profitable micro-channel paths. Quick ... name your five most profitable micro-channel combinations?
  • Does the channel generate profit? Having an unprofitable $3,000,000 store doesn't do your brand any favors.
  • Does your channel educate customers? Catalogs, websites, and e-mail are good at education. And education leads to demand generation. And demand generation is the secret to profitable success. Most of the Web 1.0 advertising channels are not capable of demand generation --- they focus on demand interception, an important but different role for those channels.
  • What is the exit strategy for each channel? In other words, what is the future of, say, e-mail marketing? What are the conditions under which you would decide to discontinue e-mail marketing?
  • What is your R&D strategy for emerging channels? It is one thing to be on Twitter, telling your customers that chinos are on sale for $29.99 and that your chief merchant ate a burrito for lunch. It is quite another thing to think strategically about how you will use the channel for research and development. How much time and money do you invest in an emerging channel, and when do you pull the plug?
  • Does the channel lend itself to in-house expertise or vendor-expertise? There are advantages to both, aren't there?
If a channel fails to deliver across most of the questions listed above, ask yourself why you participate in that channel? What would happen if you dropped that channel, and re-invested your money elsewhere?

Your homework assignment for April is this:
  • Assign one individual in your company the role of "Channel Advisor". This individual determines the role of each channel, and actively communicates the role each channel plays in the success of your business (using tools like Multichannel Forensics) to every employee in your company.