Master the Multichannel Tango

The blunt truth is that multichannel retailing is hard. Running a catalog business is a demanding mix of direct marketing skill and retailing savvy. Add in significant Web and store sales, and the complexity rises to a higher level.

Successful multichannel direct marketing is a three-step dance: serving customers across channels, tracking customers across those channels and marketing efficiently within them all. Following are some suggestions that can help.

Serving Customers

“Multichannel” is a retailer — not a customer — concept. Customers view your brand as a unified whole, regardless of where and how they deal with you. They expect a seamless flow of service and information from your contact center, Web site and stores. Multichannel excellence requires meeting that expectation. For example:
1. Do your contact center reps have access to your Web site?
2. Can they co-browse, or push pages to callers?
3. If a customer sends you an e-mail about a problem and follows up by phone, does the rep have access to the e-mail thread?
4. Can your customers use online offers in your stores?
5. Can they use catalog item numbers to quickly order online?
6. Can a customer return a product bought online to your stores?

Achieving consistency in brand, presentation, merchandise, marketing and offer across multiple channels is no small feat, and the merchants who achieve it are rewarded by the marketplace.

Circuit City provides a great example of channel integration. Every product page on circuitcity.com provides a field for a customer ZIP code. With the data, the site indicates which local Circuit City stores have that SKU in stock at that moment, and it offers maps and directions to those stores. Customers may buy the item online and have it shipped, or elect to buy it online and pick it up at the store. The Web site and stores share a real-time inventory system. If a customer has trouble with online ordering, he or she can make the same buy-now-pick-up-at-store purchase by phone.

Takeaway Tips:

Take a hard look at your company from your customer’s perspective, assuming all services and information are shared across channels. While you may not be able to achieve that tight integration today, move toward that goal in small steps.

Test serving a digitized clickable version of your print catalog online. Test live chat, dedicated kiosks or simpler Web terminals in your stores. Investigate integrating your call center with your e-mail contact center. While such technologies were cutting-edge two years ago, they’ve moved into the mainstream, and many vendors offer robust solutions at reasonable cost.

Track Customer Contacts

Where a customer is concerned with getting consistent service across channels, direct marketers also are concerned with recognizing customers across time and channel. Resolving a customer — i.e., matching an order or a customer back to an existing record in your database — is critical to knowing if your marketing efforts are working, determining profitability of your campaigns and understanding the mix between new and repeat business. While your operations team needs only a valid address and credit card to ship goods to a customer, your marketing folks need robust customer resolution.

Customer resolution typically occurs on three time scales: interactively in real time, in nightly batches and during infrequent merge/purge runs. In real time, your contact center team or your Web site always should ask unknown buyers, “Is this your first time ordering from us?” And if so, try to match them against the database. Real-time phone resolution is powerful and certain, because you can confirm the match with the customer. “Mr. Smith, our system seems to show your old address in Somerville. Can you confirm that previous street address? Thanks. I’ll update your address now.”

Real-time resolution online is more awkward and places hurdles in the ordering process. Requiring a login to order is effective, but impedes your customers’ shopping experiences. Resolving customers online without a user name and password login is challenging, and makes sense only in situations that demand utmost security. For example, to confidently resolve visitors, PayPal queries them about their monthly car payment amounts and the banks that hold their mortgages.

Each night, many catalogers run batch processes to match new orders back to existing customers in the database. The excellent ChannelView product from Abacus provides this functionality, matching back orders from Web, call centers and stores to customers and marketing campaigns.

Infrequently, the merge/purge process also provides customer resolution and matchback. However, you may run large merge/purges only quarterly, and these jobs may not include the entire housefile.

As you examine your customer-resolution processes, it helps to have a precise definition of what you consider a customer: a person, an address or a household? If a second person in a current buyer household orders from you, under what circumstances should you cut a new customer record, and when should you merge them?

You’ll have the best results resolving customers when they have an incentive to provide your systems with their correct customer numbers. The best incentive is better service through recognizing and remembering that customer.

Consider Amazon.com. The usefulness of its recommendation engine and comprehensive online order history is a powerful motivator to use the same login for every purchase. Be careful of marketing promotions or financial rewards tied to new-customer or previous-customer status. They can lead customers to split their accounts (where the customer uses a slightly different name or address so as to claim a new-customer discount multiple times). Or it could lead less-than-scrupulous call center reps to merge customer records (where, in order to close more sales, the rep offers all callers the “loyal returning customer” benefit by using the same “gold” buyer record for each call, repeatedly mangling the address.)

Customers and orders for which you can’t match back to marketing campaigns or to your housefile typically get allocated back, often proportionately, to the tracked orders. Assess how sensitive your marketing decisions are to your allocation rule. If the fraction of “no code” or “untracked” orders is small, the allocation scheme matters little. If, on the other hand, the fraction is large, your choice of allocation method may be the primary factor in channel profitability.

Compute the profitability of both your catalog- and your Web-marketing efforts, first giving all the untracked revenue to the catalog, then again giving none of the untracked revenue to the catalog. If the two scenarios produce different results, use surveys and research to determine reasonable allocations.

Takeaway Tips:

Determine the relative damage from false-positive matchbacks (incorrectly merging two distinct customers) vs. false-negative matchbacks (incorrectly splitting a single customer across multiple records). Draw a flowchart of all the processes and business logic used in your contact centers, Web site, stores and merge/purge to match buyers back to records on your housefile. Ensure these efforts are internally consistent with your company’s privacy policy and the costs of false positives and negatives.

Add an, “Is this your first order from us?” checkbox to your online checkout process, providing an important clue to your matchback processes downstream.

Assign a dedicated 800 number to your Web site, so you can distinguish Web calls from catalog calls.

Run your entire housefile, including prospects and ancients, through a full merge annually to clean out older dupes.

Test more comprehensive data-scrubbing programs.

Determine the sensitivity of your channel profit-and-loss statements to your untracked allocation rule.

Market Efficiently

Determining the best way to allocate your marketing budget across channels is a daunting task. You want to know which message motivated a customer to order, so you can send more relevant messages. However, customers move across your channels and interact with your brand in complicated ways. A customer may research a purchase on your Web site, then buy from your store. She may buy through a link in your e-mail newsletter, but only because she got your print catalog earlier that week.

When a customer has been touched by multiple marketing efforts before ordering, you need to assign that order to a specific campaign. There are different ad-hoc rules for this assignment. Give the order to: 1) the last campaign that touched the customer, 2) the first campaign or 3) the campaign tied to the order’s key code. Some catalogers say, “When in doubt, always credit the catalog,” while others always credit the Web site.

Each of these rules has limitations. For example, consider a cataloger who mails a large paper catalog twice yearly and sends e-mail campaigns bi-weekly. Due to the relative frequency, the “last-touched” rule may give too much credit to the e-mail effort, incorrectly minimizing the importance of the large catalog.

Or consider an order taken on a Web site of a national store retailer following a click on a paid-search link. The “order key code” rule would assign that order to the search marketing campaign, incorrectly minimizing the importance of the retailer’s national TV and print campaign, which drove the customer to the search engine.

Historical data can offer clues as to which marketing efforts drove which orders, but retrospective analysis can’t distinguish correlation from causation.

The gold standard for making smart multichannel marketing choices is a test. Start with a distinct marketing hypothesis. For instance: “For customers who first found our company online, and have made only online transactions since, we can mail them only twice a year, losing a small amount of revenue but saving a great deal of catalog expense, thus increasing the profitability of this cohort.”

Takeaway Tips:

Because such tests can be complex and expensive, don’t test small factors. Focus your efforts on bold hypotheses that have the potential for significant revenue or cost improvement. Such tests are complex because you must tag customers for special treatment and track during a longer time period, such as a season or a quarter, rather than a single mailing.

Ensure the people responsible for marketing to your various channels communicate regularly. Document and review your rules for assigning orders to campaigns. Determine what fraction of your orders, if any, are being double-counted by your reporting systems across channels. Review the duration of online cookies placed by you and your marketing partners which tie orders back to affiliate, e-mail and search efforts.

Agree on a bold multichannel marketing hypothesis with the potential to change your revenues or costs significantly, and launch a multichannel contact strategy test to determine if that hypothesis is correct.

Conclusion

The multichannel tango isn’t easy, but it’s exciting. Start with small steps to improve your services, tracking and marketing across channels. And realize ongoing change and testing is the new norm. Online consumer behavior is evolving rapidly. What you learn this year may not hold true in the next.

Alan Rimm-Kaufman, Ph.D., is president of the Rimm-Kaufman Group LLC, a catalog consultancy.