Multichannel Integration: Three Tactics to Achieve Channel, Brand and Market Segment Profitability

As evidenced by recent surveys, including one in this issue’s By the Stats column, multichannel integration and customer acquisition across channels are both issues of increasing importance to catalogers, online merchants and brick-and-mortar retailers. Executives from several multichannel merchants gave their strategies for achieving success across multiple channels, brands and market segments in a panel session at last week’s eTail conference in Palm Desert, Calif.

1. On getting Internet marketing funds from reluctant executives: “One of the ways we raised awareness for e-marketing was to break out the sales that were attributed to Internet marketing on the formal P&L,” said Maureen Daney, vice president and general merchandising manager at multichannel, multi-branded apparel merchant Charming Shoppes. “We also break out those costs.” Contrasting the low cost, high return methods on paper often is enough to convince even the most stubborn CFO or CEO, she noted.

2. On allocating sales across brands and channels: “The most important thing is to operate within each individual brand,” said Jodi Watson, vice president of direct marketing services at housewares and home furnishings marketer Williams-Sonoma. “We try to see how customers migrate, not just across channels, but across brands as well.”

Watson’s customer spreadsheet separates each customer segment by communication strategy, whether it receives one or two catalogs per month, three or four e-mails per month, etc. She plays around with each communication strategy to determine the magic mix of marketing efforts to boost sales. “There’s a lot of testing to find out which combination works best,” she noted. Watson pointed out that she first starts with the catalog, measuring the lift it has on sales across the board. She follows that with a similar allocation process for e-mail campaigns.

Lastly, she said it’s important to recognize that the Internet marketing channel isn’t one channel, but several. “Of the people who responded through paid search, how many got a catalog in the last one, two or three weeks? How many got an e-mail or visited us through an affiliate site? And does it matter?” she asked. Each of these marketing methods needs to be weighed in the final examination of customer acquisition cost.

3. On increasing profitability: Sometimes increasing profitability isn’t just about increasing conversion rates. “Determine what your unprofitable segment is, then figure out if you can migrate that customer to a profitable segment,” said Steven Skinner, acting president at big-box hardware retailer Home Depot. “And if you can’t migrate them to a more profitable segment, figure out how to ‘fire’ those customers, because sometimes that’s necessary to increase profitability.”