At a time when shoppers are demanding a seamless experience across all brand channels, both on and offline, retailers are struggling to move at the speed their consumers want and need. Those were the findings of a Periscope survey at World Retail Congress 2016, which found 78% of retail executives admit there is no one brand experience across their channels, whilst also acknowledging that “a well-defined cross or multi-channel strategy” was the top innovation that would drive digital growth (64%).
Consumers are desperate for omnichannel experiences: they work across channels, why can’t their favourite retailers? In their minds it is as simple as that, and a lack of multi-channel strategy leads to frustration, and diminished brand loyalty amongst consumers. What is clear is that whilst there are technical challenges to delivering omnichannel experiences, the biggest challenge for retailers is the organisational change that needs to take place: the removal of organisational siloes, creation of new processes, and the forming teams that work across, rather than within channels. These take careful planning and execution, but cannot be ignored, because without them any retailer is doomed to fail.
It is clear that the enemy within, rather than technology, or investment, is holding companies back from successful implementations. That is not to say that it is their fault, it is a complex project to implement a genuine omnichannel deployment that spans both customer experience and the back office.
What do we really mean by omnichannel?
Firstly, what do we really mean by omnichannel? Multichannel was the first stage of customer interaction, with retailers offering different formats – first physical stores, then online and then social. These channels were not integrated, and customers could have different experiences in each. With omnichannel, the channels are integrated, so the retailer has a comprehensive understanding of who the shopper is and, as a result, can personalise the experience for them based on behaviours across the different channels.
In order to be truly omnichannel, you need to understand each individual customer and the interactions they could be having across different channels simultaneously. Achieving this requires you to go through several steps:
• The first step in the journey to a true omnichannel business starts with having a clear documented understanding of your brand, merchandising, and pricing strategies across all channels.
• Secondly, you must have the right organisational structure and incentives to support an omnichannel strategy.
• Thirdly, you need the right kind of analytics to understand how customers behave across these channels at the individual customer level.
• And lastly, with setting up the right answers in steps 1-3, you can then personalise interactions, including across promotions, with less cannibalising across channels, and secure more loyal trips from your target customers.
Getting over the hurdles
There are operational, organisational and experiential issues to overcome to achieve a true omnichannel business.
In more traditional multichannel environments, the chief merchant officer controls the merchandising in the physical stores, while the CIO or head of online controls the offering in the online stores. They each have different agendas tied to different or misaligned incentive structures. This can cause the same retailer to cannibalise itself across channels, which inherently leads to less than optimal results for the customer. If you follow the steps above, it will help to ensure your path to omnichannel will be as smooth as possible.
It’s important to keep in mind that online and in-store don’t have to have the same pricing on items. This can have a negative financial impact on the organisation. It could be that just the key value items need to be the same, for example.
Another pitfall to avoid is trying to solve too much too quickly – compromising operationally or experientially in ways that can cause resistance and slow down the journey. It’s better to build out a roadmap and strive for quick wins first that can have a positive impact on the customer experience. Even a journey of a thousand miles begins with a step. It’s important to identify the right first step and goals for one, three, and five years down the journey, as this will set the tempo of your project and keep the team focused on the priorities.
Finally, not having the right data, structured in a coherent manner, may mean you do not ask the right questions or determine the right answers. Therefore, it’s imperative that you begin with the end in mind. For example, what are you planning to achieve through online sales (for example, an extension of your current channel structure, a better way to reach your target customer base, or a way to improve the brand through merchandising across all the channels your customers interact through/in)?
Time to shine
Like it or not you are probably driving you customers slowly crazy by not having an omnichannel experience in place. As we said earlier it is the way to rest of their online life is starting to function. When you break it down, it’s obvious that unhappy customers mean less revenue and diminishing loyalty. Omnichannel, is not an option for continued online success, it’s a requirement, in the same way a website became a must-have 20 years ago.
Channie Mize is general manager for retail at Periscope, a McKinsey Solution.
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GUEST COMMENT Omnichannel – fighting from the inside out
Channie Mize
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At a time when shoppers are demanding a seamless experience across all brand channels, both on and offline, retailers are struggling to move at the speed their consumers want and need. Those were the findings of a Periscope survey at World Retail Congress 2016, which found 78% of retail executives admit there is no one brand experience across their channels, whilst also acknowledging that “a well-defined cross or multi-channel strategy” was the top innovation that would drive digital growth (64%).
Consumers are desperate for omnichannel experiences: they work across channels, why can’t their favourite retailers? In their minds it is as simple as that, and a lack of multi-channel strategy leads to frustration, and diminished brand loyalty amongst consumers. What is clear is that whilst there are technical challenges to delivering omnichannel experiences, the biggest challenge for retailers is the organisational change that needs to take place: the removal of organisational siloes, creation of new processes, and the forming teams that work across, rather than within channels. These take careful planning and execution, but cannot be ignored, because without them any retailer is doomed to fail.
It is clear that the enemy within, rather than technology, or investment, is holding companies back from successful implementations. That is not to say that it is their fault, it is a complex project to implement a genuine omnichannel deployment that spans both customer experience and the back office.
What do we really mean by omnichannel?
Firstly, what do we really mean by omnichannel? Multichannel was the first stage of customer interaction, with retailers offering different formats – first physical stores, then online and then social. These channels were not integrated, and customers could have different experiences in each. With omnichannel, the channels are integrated, so the retailer has a comprehensive understanding of who the shopper is and, as a result, can personalise the experience for them based on behaviours across the different channels.
In order to be truly omnichannel, you need to understand each individual customer and the interactions they could be having across different channels simultaneously. Achieving this requires you to go through several steps:
• The first step in the journey to a true omnichannel business starts with having a clear documented understanding of your brand, merchandising, and pricing strategies across all channels.
• Secondly, you must have the right organisational structure and incentives to support an omnichannel strategy.
• Thirdly, you need the right kind of analytics to understand how customers behave across these channels at the individual customer level.
• And lastly, with setting up the right answers in steps 1-3, you can then personalise interactions, including across promotions, with less cannibalising across channels, and secure more loyal trips from your target customers.
Getting over the hurdles
There are operational, organisational and experiential issues to overcome to achieve a true omnichannel business.
In more traditional multichannel environments, the chief merchant officer controls the merchandising in the physical stores, while the CIO or head of online controls the offering in the online stores. They each have different agendas tied to different or misaligned incentive structures. This can cause the same retailer to cannibalise itself across channels, which inherently leads to less than optimal results for the customer. If you follow the steps above, it will help to ensure your path to omnichannel will be as smooth as possible.
It’s important to keep in mind that online and in-store don’t have to have the same pricing on items. This can have a negative financial impact on the organisation. It could be that just the key value items need to be the same, for example.
Another pitfall to avoid is trying to solve too much too quickly – compromising operationally or experientially in ways that can cause resistance and slow down the journey. It’s better to build out a roadmap and strive for quick wins first that can have a positive impact on the customer experience. Even a journey of a thousand miles begins with a step. It’s important to identify the right first step and goals for one, three, and five years down the journey, as this will set the tempo of your project and keep the team focused on the priorities.
Finally, not having the right data, structured in a coherent manner, may mean you do not ask the right questions or determine the right answers. Therefore, it’s imperative that you begin with the end in mind. For example, what are you planning to achieve through online sales (for example, an extension of your current channel structure, a better way to reach your target customer base, or a way to improve the brand through merchandising across all the channels your customers interact through/in)?
Time to shine
Like it or not you are probably driving you customers slowly crazy by not having an omnichannel experience in place. As we said earlier it is the way to rest of their online life is starting to function. When you break it down, it’s obvious that unhappy customers mean less revenue and diminishing loyalty. Omnichannel, is not an option for continued online success, it’s a requirement, in the same way a website became a must-have 20 years ago.
Channie Mize is general manager for retail at Periscope, a McKinsey Solution.
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