Build the Right Company Culture

Editor’s Note: This is the second of a three-part series on becoming more adept and adapting to the multichannel world. Part one appeared in our February issue, and part three will appear in our September issue.

The world of direct marketing is changing quickly. Whole new analytical tools, benchmarks and ratios have become commonplace in measuring success. You must think cross-channel if you’re to be customer-centered. And above all else, if you’re a stand-alone cataloger or retail store operator, the corporate atmosphere is forcing you to rethink your internal culture.

The opposite of a multichannel approach is a channel-centric one, where one channel dominates the others. For companies in which a single channel dominates, the company is typically more important than the customer in that everything revolves around company sales and profits.

Retailers have historically thought solely about their stores; other channels are an afterthought. Pure-play catalog or Internet companies concentrate only on those two selling methods. Neither is a winning recipe in today’s market.

The Right Attributes
Winning multichannel companies are customer-centric. From the customers’ perspective, this means:
1. Customers have significant control over their relationship with the company.
2. The customer relationship is seamless through all channels. You capture transaction history and record it in the database from each channel — catalog, Web or store. That database then drives all communications with customers.
3. Customers see a single face, identity and voice. Because of the database, each channel can speak to customers with the knowledge of what has transpired in every other selling channel.
4. Customers feel the company cares about them and will work for their loyalty.
5. All or most merchandise is available through every selling channel.
6. Customers demand more customer service.

What Multichannel Customers Want
In a recent study, Modalis Research Technologies pointed out two significant things about multichannel customers:

• 90 percent of customers said they don’t want to be asked the same questions from different channels. They want company reps, such as telemarketers and store salespeople to know everything about their past transactions with the company.

• 72 percent of those surveyed indicated they’d stop doing business with companies that have poor customer service.

What Multichannel Companies Want
From a customer-centric company’s perspective, your company should:

• Grow at a rate greater than industry standards through retail, catalog and the Internet — the combination of channels is stronger than any single or dual channel.

• Get improved value from your advertising dollars. Since all three channels can be referenced in promotions, the ratio of advertising to sales can be much lower than traditional catalog-, Internet- or store-only companies.

• Improve fulfillment and customer service, thereby enhancing customer satisfaction. As customer loyalty goes up, repeat customers refer others to the company.

• Perfect and expand new customer acquisition more efficiently. Customers can be tracked, measured and promoted by channel-buying experience. Cross-selling to other channels is stronger and more acceptable to customers.

• Increase bottom-line profitability. All the studies show that multichannel buyers spend more annually and are more loyal than those buying from only a single channel.

A final attribute of successful multichannel companies is they have and retain good people. Don Libey, direct marketing futurist and guru, has said that “the finest companies have the finest employees.” To be certain, winning multichannel companies have a work environment and culture that cares about their people. Both internal employees and external customers.

A Culture of Cooperation
Successful multichannel merchants build cooperation among their selling channels rather than operating them in silos. They strive for cooperation among the merchandising, customer service and fulfillment functions, which can take on some negative silo characteristics even in the best-run organizations.

Identifying techniques to break down the traditional silos is vital to building a new culture. Retailers with a “store-only” mentality are probably the most silo-focused. But even traditional two-channel (catalog/Internet) direct marketers must work to build a customer-centric organization.

In recent years, it’s been widely reported that consumers who purchase via multiple channels are more valuable than single-channel shoppers. A Shop.org study from a couple years ago revealed multichannel shoppers buy 12 percent more frequently and have a 32 percent greater annual spending rate than customers who shop in stores only.

Plus, the Shop.org research found that customers who purchased from all three channels were 73 percent more likely to make similar purchases from that marketer.

Culture-Building Tips
1. First and foremost, make senior managers part of the change so they espouse the value of multiple channels without favoring one.

2. All selling channels must cooperate with one another. Marketing, fulfillment and administrative costs must be fairly allocated across channels; otherwise everyone will complain.

3. The company database must drive marketing and communication. Even if there are channel-specific submarketing groups, maintain a master customer contact plan that’s controlled by your head of marketing. Successful multichannel marketers have active transactional data from all selling channels and can access that database from all channels. Build RFMP (recency, frequency, monetary and product category) segmentation while measuring lifetime value by source and channel. This is still the critical metric for growing a profitable multichannel business.

4. Maintain brand consistency across all channels. Want to confuse your customers? Easy, just mix design and image messages across selling channels. Keep your company culture under control by paying close attention to all brand details.

5. Structure worker and managerial compensation in an “if the company succeeds, I succeed” format. While there should be friendly competition between channels, “my channel is superior to yours” or “we make more money than you do” attitudes are deleterious to the entire company. Seize every opportunity to cross-sell other channels, whether by mail, phone, e-mail, Web site or at the store.

Change Attitudes
Creating a company culture that supports your multichannel concept is no easy task. But it’s done successfully all the time by changing attitudes while encouraging customer-focused thinking from everyone — especially top management.

In the September issue, we’ll look at two of the key elements in multichannel selling when we hone in on branding and merchandising tactics that reach customers with changing buying habits.

Brent Niemuth is creative director and brand evangelist at J. Schmid & Assoc. You can reach him at (913) 236-8988 or at BrentN@JSchmid.com.

George Hague is senior marketing strategist at J. Schmid & Assoc. You can reach him at (913) 236-8988 or at GeorgeH@JSchmid.com.