By Kevin Moffitt, crossview.com
At the same time, retailers face serious obstacles in maximizing the effectiveness of their existing sales channels. Although industry research suggests cross-channel customers are much more profitable than their single-channel peers (with a lifetime value 4.5 times higher according to Shop.org), few retailers are successfully leveraging their channels to build a unified customer experience across their brand.
Transforming a business is never easy, but the first step is identifying those areas that may pose the biggest challenges. Based on our experience working with many clients who have embarked on this path, we’ve identified two of the largest obstacles standing in the way of building world-class cross-channel selling capabilities. Although neither of these obstacles is simple to overcome, there are specific strategies for minimizing the impact each may pose.
When thinking about the challenges of cross-channel integration, many retail professionals immediately think of advanced CRM databases, promotional engines, or other complex technologies. However, in our experience, the biggest challenges aren’t technical. They are psychological.
Modern retail companies have evolved into complicated, multi-faceted organizations. Many retailers run their stores, their web site, and their call centers as independent business units. The leaders of these organizations are incented to grow their own channel’s revenue, often with little regard to how each sales channel influences customer behaviors across the others. According to a recent McKinsey report, this evolution has resulted in “a layering of roles, capabilities and costs, resulting in higher distribution expense and fragmented customer experience.” In other words, retailers who aren’t embracing cross-channel integration may be spending more, while driving customer satisfaction down.
By definition, becoming a true cross-channel organization requires collaboration across all business units. It also requires individual business leaders to move beyond the assumptions and orthodoxies that may have powered their past successes and embrace new modes of serving their customers. These are big, stressful challenges.
At the same time, many large retail organizations remain highly siloed. The e-commerce team may think the store team is composed entirely of Luddites. The store management may think the e-commerce folks are a bunch of Twittering upstarts with little first-person selling experience. Communication between these areas may be limited, and cross-team strategizing is extremely rare. Overcoming this type of organizational momentum requires the dedicated support of the organization’s senior leadership.
To succeed, cross-channel integration must be incorporated into the core business strategy, championed by the CEO and the executive committee, and effectively communicated to company associates at all levels. Its key objectives must be integrated into individual performance plans and compensation models. It’s not something that can be “tacked on” by an external partner or developed in a vacuum within an individual business unit. The cross-channel mindset must become deeply rooted in the corporate DNA.
Maintaining a customer-centric world view
The traditional model of weekly newspaper circulars and television ads driving foot traffic to physical stores has clearly been transformed into a series of complex interactions, each influencing consumer behaviors in different ways. Recommendations from friends and family members are still important, but those may now take the form of a Facebook wall post. Customer reviews expose countless opinions, both positive and negative, from people the shopper will never meet. Advanced cross-channel capabilities offered by large retailers such as Sears, Walmart, and Best Buy continually set the customer service bar higher, increasing consumer expectations that other retailers should offer similar features.
With all of these changes occurring simultaneously, it is easy for retailers to feel overwhelmed. That’s why it’s so important for retailers to take a step back before attempting to leap forward. Although many retailers claim that customer satisfaction is an important company goal, only a minority engage with their customers in meaningful and consistent ways.
Developing a customer-centric world view requires retailers to actively listen. Every brand serves a particular consumer segment, and preferences between those segments may be very different. Through formal research such as surveys, focus groups, and usability tests, or informal methods such as visiting a store, listening to contact center calls, or interviewing friends and family members, retailers can gain a better understanding of what their customers are asking for, and how to best provide it. Those insights can then be used to cut through the clutter, and prioritize features and capabilities that will provide the most value to the retailer’s customers.
The cross-channel opportunity
After discussing these key challenges, it’s easy to understand why few retailers are considered cross-channel leaders. However, this also highlights opportunities. In highly competitive retail markets, those companies that best serve their customers maintain a strong advantage. Customers are adopting cross-channel buying habits. Retailers must evolve to keep pace or risk becoming irrelevant.
Like most big challenges, becoming cross-channel requires both a long-term vision and a commitment to action. Retailers who have already adopted a cross-channel mindset provide strong leads to follow, but there are no magic bullets, and few turn-key solutions. Instead, becoming cross-channel requires dedicated internal support and a focus on customer needs, combined with the right key metrics and unified technologies. By identifying the specific obstacles and objectives within each of these areas, retailers will be in a stronger position to compete in a rapidly changing marketplace.
Kevin Moffitt is VP of Strategy & Customer Experience at CrossView, Inc. (crossview.com).