Business Level Strategy – Multi-channel Customers

The “store” is no longer at the mall, on the Web, or in a catalog–it’s wherever the customer is when he chooses to shop, browse, and buy. Consumers move seamlessly (and stealthily) from one channel to another when shopping. For you to be where they are, you need to be almost everywhere. So the stealth mode startup is a good business level strategy – Multi-channel customers may very well connect in a positive way.

Call it channel bundling. Nearly 60 percent of the most sophisticated shoppers find items they want online and purchase them in stores. That’s double the number who bundled channels this way in 20109, according to a study of the direct-to-consumer channel by our company, Peppers and Rogers Group, in partnership with the Institute for the Future.

It’s easy to underestimate the impact of channel bundling in the shopping process if you focus only on actual sales or transactions. Increasing your share of a customer’s business requires much more than measuring every transaction. It means remembering how a customer likes to shop. Channel-bundling consumers have more power over the total shopping process. They are controlling everything from the price they pay to how and when goods and services are delivered, and how they’re billed.

Bundlers buy

Understanding the motivations of a channel bundling consumer is difficult. Assessing preferences and tracking moves require state-of-the-art consumer radar–or at least a hybrid strategy.

But it’s worth it to cater to bundlers. Multichannel shoppers, say Jupiter Research, are buying more than their single-channel counterparts. Check out also this post titled “Seven Magic Words That Will Change Your Life”.

Think of the revolutionary step Circuit City took by integrating its 550 brick-and-mortar outlets and its Website. Now, you can research the price and features of a computer or television from home, order what you want online, and then pick it up at the location nearest you–bypassing shipping and delivery costs. It’s a great way to build customer loyalty: Not only is Circuit City offering online convenience, but it’s saving customers money.

Many retailers lack the ability to measure multichannel purchasing and anticipate their customers’ need to create a cohesive hybrid shopping experience. They need to imagine a retail store that recognizes customers, anticipates their needs, and customizes products and services to help them find exactly what they want. Talking of Applied Psychology…

Most of us already know of such a place–be it a corner deli that anticipates our ham-on-rye order, or a dry cleaner that remembers we like our shirts with extra starch. We go there, even if they charge a little more because they make us feel more convenient to shop. These stores have earned our loyalty by remembering our needs, one-to-one.

Suppose the store has a Website, too. We would expect it to record the last item we purchased in the physical store and make recommendations based on that sale. Or enable us to track our purchase history online, whether our last purchase was a Christmas gift bought online or a friend’s birthday present ordered from a catalog. Remember that overcomplicating is something that really should be avoided.

Feeling the store online

Wal-Mart Stores understands what it means to build a hybrid business model. The chain of more than 2,500 retail locations, along with its e-commerce site, is a wonderful example of one-to-one marketing on the Web. For example, its site features a department-by-department floor map. And, just like Circuit City customers, Wal-Mart customers can now return or exchange Web purchases at the store nearest them. The intention, says a Wal-Mart spokesperson, is “to bring the feeling of one of our stores online.”

Kmart, too, is trying to align services for its customers across all channels. A shopper buying a device at a local Kmart today may be showered tomorrow with discount offers for televisions and stereo equipment when she visits the Kmart Website, Kmart also plans to offer BlueLight shoppers a card for special online and in-store discounts.

Why is synergy between traditional and direct sales channels important? Because marketers can no longer count on reaching their most-valued customers through just one venue. Catalog pioneer Fingerhut is growing revenue by blending direct mail with the Web. By inviting recipients of its catalogs to browse its Website, Fingerhut can expand its product offerings, partner with new companies, and optimize its ability to offer value-added services, such as personalized and interactive Web pages. These opportunities wouldn’t have happened if Fingerhut remained a direct-mail-only company.

It all comes down to establishing a relationship with individual customers across all channels and customizing some aspect of your products and services that span those channels. You’ve got to keep these considerations in mind. You build this relationship by tracking each contact with the customer, regardless of channel, and tailoring products and communications according to the customer’s feedback. Startups will have to bring across at least a spark of authenticity if they want to succeed.

The shopper’s behavior toward your company is never immutable. And that’s why your behavior toward that individual must change, too, according to the insight and feedback you receive.

Ultimately, when you’re deciding how to market and interact with customers, where customers make their purchases may matter less than how they got there.