March 27, 2007

Credit For Channel Growth

You worked your tail off to acquire a customer via catalog advertising, in the telephone channel, back in 2002.

Today, your job as it existed back in 2002 no longer exists. You do the work of two or three catalog folks from 2002. Your former catalog positions are now leadership-level positions in the online marketing department.

Remember the customer you acquired, via catalog, in 2002? This customer now purchases merchandise exclusively via the online channel. She may or may not purchase online because of the catalogs she receives. But she certainly clicks on paid search via Google.

Last week, an individual told me "I deserve credit for acquiring this customer. The website folks get all the credit for customers I worked so hard to acquire."

One of the challenges of multichannel marketing involves rewarding individuals for exemplary performance.

If there's one thing I observed last week, in speaking with folks, it is that employees really want to do what is right for the customer. If the customer wants to purchase merchandise via any channel, at any time, and have merchandise/pricing transparency in any channel, employees want to provide this for the customer.

And yet, within companies, there is tension. Finance folks want to see sales reporting based on the channel that records the sale. As long as this happens, employees that work in growing channels will be rewarded. Conversely, employees that work in shrinking channels are not as likely to be rewarded.

It will be really interesting to see what happens when the online channel stops growing at twenty-five percent per year. When this channel grows at five percent a year, and Google fails to drive significant increases, a generation of online marketers raised in an era of constant growth will be challenged like never before, will feel pressure like never before. Many of these folks will have never experienced a true, non-bubble-based downturn. What will they fall back on for experience, when the sales increases stop happening?

Multichannel CEOs and CMOs: This is a very good time to start thinking about how you would dramatically grow the online channel, if asked to. Online executives benefited from the transfer of catalog and retail customers to the online channel. Here's a great drill --- run a simulation. Have your folks tell you what it would take to grow online sales by an additional twenty-five percent TOMORROW. How much would you have to spend? How profitable would it be? Could you do it via online marketing, or would you need paper/catalogs to help you? And if you needed paper/catalogs, who would you give credit for the online sales to?

Profit per New Customer

It's common for folks to measure cost per new customer. Total Marketing Cost = $10,000. Total New Customers = 130. Cost per New C...