November 04, 2007

Mailbag: Multichannel Strategy

I am frequently asked to describe multichannel marketing strategies that "move the needle" --- in other words, I am asked to share ideas that dramatically increase sales (i.e. increase total sales by more than ten percent, on a consistent, sustained basis for at least one year).

Assuming your brand already has a credible e-mail marketing program, paid search program, portal advertising strategy, affiliate marketing program, and other online strategies, I'm not confident the concept of integrating marketing strategies across channels yields a measurable, sustained increase in sales.

Sure, it might be great for the customer to redeem offers in the channel of their choice.

Sure, Circuit City allows customers to buy online and pickup in stores (now, how much do you think this strategy boosted comp store sales?).

Sure, it might be great for the look and feel of catalogs, e-mail campaigns and websites to be integrated, or to have the same merchandise available across all channels.

Given those strategies, help me find one company that has implemented all/some/any of the multichannel strategies we're told we have to implement, and observed a consistent, sustained increase in sales of, say, ten percent, measured annually?

Seriously, use the comments section of this post to name the brand, the tactics they used, and the sustained increase in sales caused by the multichannel strategies we're told we have to employ.

2 comments:

  1. Interesting that you continiously question the claims of a integrated multichannel strategy. I've read about many examples of succesfull integrated multichannel efforts like REI:
    'One of the most celebrated aspects of REI’s multi-channel strategy is its in-store pick-up of online orders, a feature that accounts for about 30% of the retailer’s web sales. REI had $100 million in online sales last year.
    The store pick-up service provides online customers with a free ship-to-store option for items not available in their local REI store’s inventory, and this feature has driven up incremental store sales, Broughton said. “It’s had a huge impact on both direct and store sales,” she said, noting an average of close to $90 per order in incremental store sales'

    You can read the article here: http://www.internetretailer.com/dailyNews.asp?id=14169

    I do aknowledge that for most companies it is very hard to implement a multichannels strategy and that you have to analyse whether the costs of the implementation isn't higher than the results. But examples like REI do show us that you can make it work. Why is it that you stillfight the multichannel advocats instead of focussing how to make it work?

    ReplyDelete
  2. You just articulated the issues that cloud whether multichannel marketing truly increases sales, or not.

    Let's read your text.

    You mention that REI's buy online/pickup in store accounted for 30% of their online sales, and that they had $100 million in online sales last year.

    That sentence does not say that their strategy caused incremental website growth. It just states simple metrics. I could just as easily say "Customers with a last name ending in 'H' accounted for 30% of online sales, and REI had $100 million in online sales last year".

    Broghton says that the feature drove up incremental store sales, noting an average of close to $90 per order in incremental store sales.

    This, too, is funny-money. Before buy-online/pickup-in-store, customers researched items online, then went to the store and spent $90 in the store. There weren't any tracking mechanisms available to measure the behavior.

    Now, the measurement systems is in place to measure the phenomenon, so we "attribute" glowing sales reports to behavior that always existed, behavior we simply couldn't measure previously.

    If all of this worked, then REI would be publishing 20% and 30% annual, year-over-year net sales increases in retail stores.

    Notice they never publish facts like that. No company does.

    Now, honestly, I believe that multichannel marketing can have a positive impact. It has to have a positive impact.

    But sometime, step back and take a look at the folks who say these things, and the publications they represent.

    Internet Retailer has a responsiblity to publish this stuff, so that people get interested and buy their annual report of the top 500 sites.

    DMNews and Multichannel Merchants and E-Tail and Shop.org and National Retail Federation and countless others publish this stuff, so that they can generate ad revenue.

    When the day comes when somebody like Circuit City says "We had a 6% increase in comp store sales, with 3% coming organically, and 3% coming from our multichannel initiatives", then I'll know that multichannel marketing has arrived.

    Until then, multichannel marketing is all too often trade journals trumpeting ideas that cause vendors to pay for advertising space.

    And the general marketing public is drinking this stuff in, reciting it as if it were fact.

    As a footnote, Ms. Broughton left her job at REI to work at Shop.org, where she now promotes multichannel ideas. She turned down my speaker proposal for Multichannel Forensics, where I would talk about how channels fit together to increase sales.

    ReplyDelete

Note: Only a member of this blog may post a comment.

MRV (Merchandise Residual Value): A Jewelry Example

Yesterday I showed you how Home merchandise negatively impacted how the customer behaved in the future. Here's Jewelry for the same bran...