Omnichannel Customers Are 2X as Valuable – How to Make Them Yours

With so many trying to sort out an “omnichannel” marketing strategy, I thought it would make the most sense this month to provide some structure around what it is, the best way to take the “buzz” out of the term, and provide a framework for thinking strategically about this new mandate in marketing and strategy. For starters, here’s a simple idea, or “true north,” you can use to drive your own marketing strategy as you embrace the omnichannel consumer. “Put the Customer First” and build your “omnichannel strategy” around them.

With so many trying to sort out an “omnichannel” marketing strategy, I thought it would make the most sense this month to provide some structure around what it is, the best way to take the “buzz” out of the term, and provide a framework for thinking strategically about this new mandate in marketing and strategy.

For starters, here’s a simple idea, or “true north,” you can use to drive your own marketing strategy as you embrace the omnichannel consumer. “Put the Customer First” and build your “omnichannel strategy” around them.

Let’s remember, connecting with, engaging and finding the right new customers are where customer value is created and realized in omnichannel marketing. Optimizing that value comes through studying and tuning communications, improving your relevance and becoming more creatively authentic, not in the boardroom, but in the eyes of your customer.

Today, marketers appreciate that consumers engage on multiple platforms, devices and channels—the ones they want, when they want. With mobile devices being a spontaneous window into their thoughts and an outlet for their wants and needs as they arise. What’s a bit more subtle and more often missed is the objective and capability to respect the way your customers choose to engage and buy across them in a scalable manner—as it will either fragment their relationship with your brand or galvanize it.

Consider Kohls. Not exactly a high tech player in most folks’ minds. However they now deliver an omnichannel experience that deepens relationships with them. Recently, my wife received a promotion by direct mail (I doubt if she remembers when they asked for her phone number the first time, making the connection between the POS and her online purchases), she had it in hand as she went to the website to browse. Later, she used another promotion from her email right at the POS with her iPhone.

In a single engagement with the brand, she hopped across three channels, not including a customer service call by phone. As a consumer, she didn’t even notice—she just expected it to work.

Similarly, OpenTable will consistently get you to a good restaurant based on where you’ve dined before, and what your current online browsing and mobile location is. You probably do it all the time. Your relationship with that brand hops between mobile, desktop and point of sale effortlessly—but as a consumer, you’re not exactly impressed: You expect it to work.

As a result, effective omnichannel organizations have become “stitched into” the lifestyles of their customers. Moreover, this supports the creation of competitive advantage in the measurable, trackable, digital age.

Omnichannel Means Understanding the Customer
Putting the customer first obviates really knowing and understanding your customer in more meaningful and actionable ways. Not just with an anecdote of the “average customer,” but with legitimate, fact-based methods that are built on a statistical and logical foundation. This is the basis for the “absolute truth” that your omnichannel source is dependent on.

This, too, is no small task for many organizations, but it’s becoming more “doable.” And it has to be—because your competition is thinking and investing in this path, and it’s not a long-term, viable position to not have an actionable strategy to miss the boat on knowing your customer in a way that is valuable, actionable and profitable.

But first, let’s clear up some of the confusion that we’ve been hearing for at least a year now: Is omnichannel more than the buzzword of 2015, or is it something much more important?

Multichannel
At the most basic level, “multi” means many. As soon as you adopted your second or third channel, be it a catalog or an e-commerce website, your organization became a multichannel organization. Multichannel came quickly—as it’s not uncommon that the majority of a customer base has made a purchase across more than one channel—whether you have that resolution or not is another matter, and often requires a smarter approach to collection.

Digital growth is accelerating channel expansion. With the explosion of online and digital channels and the rapid adoption of mobile smartphones, tablets and now wearables, digital can no longer be viewed as a single channel. We now have the merging and proliferation of digital, physical and traditional channels.

Many marketers have experienced as much challenge in juggling an increasing number of channels as there is opportunity. But digital channels, of course, are more measurable and challenge the traditional approaches by bringing a greater resolution and visibility for some, and confusion for others.

Key factors in leveraging, managing, and maximizing those channels include:

  • Competencies developed in the organization
  • Identifying third-party competencies, especially in digital partnerships
  • The culture of the organization
  • Support for change and innovation in marketing
  • The depth of technical capability in an organization

As channel usage expands, data assets “pile up,” though most of the data in its raw format is of limited practical use and less actionable as one would hope. From the inside of dozens of IT organizations, the refrain is common; “We’re just capturing everything right now.” Creating marketing value would require strategists and the business units.

Omnichannel Is the Way Forward
While most organizations are still working through mastering their channels and the data they perpetually generate, the next wave of both competitive advantage and threats have come with them. The customer learns what works for them relatively quickly and easily, adopting new channels and buying where they want, how they want. Those touches are often lower touch, and introduce intermediaries, and are surrounded by contextual advertising, often from competitors.

Omnichannel buyers aren’t just more complex, they are substantially more valuable. We’ve seen them be as much as twice as valuable as those whose relationship is on a single channel. Perhaps this a reflection of the greater engagement with the brand.

Delivering that omnichannel experience will require more thought, focus and expertise than before. It requires the integration of systems, apps and experiences in a way that’s meaningful—to the customer—and that of course requires an integration of the data about those purchases and experiences.

To serve the business, the Omnichannel Readiness Process has six components, each of which require thoughtful consideration:

1. Capture—many organizations are aware that they need to capture “the data.” The challenge here is shifting to what to capture, and what they may be missing. The key challenge is: It’s impossible to capture “everything” without understanding how it can and should be used and leveraged. How that data is captured in terms of format and organization is of great importance.

2. Consolidate—In order to act on the omnichannel reality, we must have all our data in one place. In the ongoing effort to find the balance between cost, speed and value, “silos” have been built to house various data components. Those data sources must be consolidated through a process that is not quite trivial if those data sources are to create value in the customer experience and over the customer lifetime.

3. Enhance—Even after we’ve pulled our data together into an intelligent framework and model, built to support the business needs, virtually every marketer is missing data that consumers generally don’t provide, or don’t provide reliably on a self-reported basis. “Completing the customer record” requires planning and investing in appropriate third-party data. This will be a requirement if we’re to utilize tools and technology to mine for opportunity in our customer base.

4. Transform—much of the data we need to perform the kinds of analysis and create the kinds of communication that maximize response now, and the customer value over time, utilizes the derivation of new data points from the data you already have. Here is one example: Inter-order purchase time. Calculating the number of days between purchases for every customer in your base allows you to see whose purchase cadences are similar, faster, slower or in decline. On average, we’ll derive hundreds of such fields. This is one example of how a marketer can “mine” data for evidence of opportunity worth acting on and investing in.

5. Summarize—The richest view of a customer with the best data in its most complete state is a lot to digest. So to help make it actionable, we must roll it up into logical and valuable cohorts and components. Call them what you will—segments, personas or models—they are derivative groups that have value and potential that you can act on and learn from.

Many marketers traditionally spend 80 percent to 90 percent of their time and effort on getting their data to a point where it serves both the omnichannel customer and their brand. However, marketers can do better with emerging tools and technologies.There is no replacement for solid data strategy that is built around the customer, but efficiencies can be gained that speed time-to-value in an omnichannel environment.

6. Communicate—The prep work has been done, you’ve found the pockets of opportunity, now it’s time to deliver on the expectations the omnichannel customer holds for marketers. At this juncture, we need to quickly craft and deploy messages that resonate in ways consumers will think about their situation and your brand. They must address the concerns they have and the desires and opportunities they tend to perceive.

Omnichannel customers expect you will recognize them for their loyalty and their engagement with your brand at multiple levels, and that those experiences will be tailored in small ways that can make a bigger difference.

They expect your story to better-fit with their own, if not complete it. That sounds like a dramatic promise, but the ability to know your customers and engage them in the way they prefer, and at scale, is upon us.

Keep It Relevant to Your Business
This entire process must include of course, the answers to key business questions about the types of discoveries we’d make and questions we’d answer with it—for example, does the Web cannibalize our traditional channels? (Hint: It surely doesn’t have to).

That said, we’ve learned to start with the most basic questions—and are not surprised when there are no robust answers:

1. How many customers do you have today?

2. Do you have a working definition of a High Value or Most Valuable Customer?

3. If so, how many of those customers do you have?

4. How many customers did you gain this past quarter? How many did you lose?

a. Assuming you know how many you lost, what was the working definition of a lost customer?

5. How many customers have bought more than once?

6. What’s the value of your “average” customer, understanding that averages are misleading and synthetic numbers are not to be trusted? But we can measure where other customers are in terms of their distance from the mean.

7. Who paid full price? Who bought at discount? Who did both? How many of all the above?

8. For those who bought “down-market,” did they trade up?

9. How many times does a customer or logical customer group (let’s call them “segments,” for now) buy? How long, on average, is it between their purchases? And the order sizes, all channels included?

10. All this, of course, gets back to understanding more deeply, “Who is your customer?” While all this information about how they engage and buy from us is powerful, how old are they? Where are they from? What is relevant to them?

Now, even if a marketer could get the answers to all of these questions, how does this relate to this “Omnichannel” Evolution?

Simple. It only relates to your customer. Of course, they are the most important actors in this business of marketing—in fact in the business of business. What this really means is deceptively simple, often overlooked, and awesomely powerful:

Omnichannel Is Singularly Focused on Customers, Not Channels
It’s about the customer, and having the resources, data and insights at your disposal to serve that customer better. Virtually all of your customers are “multichannel” already. Granted, some are more dominantly influenced by a single channel. For example, online through the voice of the “crowd.” But even then, the point of omnichannel only means one thing: Know your customers across all the channels on which they engage with you. Note the chasm between having the dexterity to examine and serve customers across all the channels, and just knowing their transactions, behaviors or directional, qualitative descriptors.

So “knowing the customer” really means having ready access to actionable customer data. Think about it. If your understanding of your customer data isn’t actionable, how well do you really know your customer in the first place?

Considering the 10 questions above, and evaluating the answers in terms of the most important questions about your customers, is a solid starting point.

When you’ve worked through all of these, you’re now ready to create experiences and communications for customers that are not only relevant, but valuable—to your customer and to the business.

When you’re adding value and are channel-agnostic, as you must become, you’ve achieved the coveted omnichannel distinction that market leaders are bringing to bear already.

Not only is this an impressive accomplishment professionally, it surely is—but remember—it’s the customer we have to impress.

Does Channel Even Matter Anymore? Prove It With an ECHO!

I’ve heard it said, and I believe it, that the consumer has gone “omnichannel” on us. As customers have taken all the power in which brands they choose to interact with, we’ve awakened to find ourselves in a world where we—the brands and the marketers behind them—need to be everywhere the customer is. Digital created a real-time, on-demand environment where communities could easily tap and share knowledge. There is a collective intelligence there that, in tandem, empowers individual customers who use it. The result has affected all channels

I’ve heard it said, and I believe it, that the consumer has gone “omnichannel” on us. As customers have taken all the power in which brands they choose to interact with, we’ve awakened to find ourselves in a world where we—the brands and the marketers behind them—need to be everywhere the customer is. We need to be ready on demand, easily accessed, relevant but not intrusive, poised with an offer, with an ability to listen and interact accordingly, all on top of a product or service that demonstrates value to the customer.

The shift to customer centrism—the growth of customer power—probably began before the digital age, but certainly digital was the game-changer. Digital created a real-time, on-demand environment where communities could easily tap and share knowledge. There is a collective intelligence there that, in tandem, empowers individual customers who use it. The result has affected all channels.

It’s been said that the sole purpose of a business is to create a customer and grow the value of that customer over time. (Using this same reasoning, I doubt that the sole purpose of a charity is to create a donor, but it is to show a need to create a donor, and to make that donor relationship happen and grow.)

So in this brave new world, does channel even matter? Former Direct Marketing Association Chief Executive Officer Larry Kimmel (now with hawkeye) once told direct marketers we need to be “channel-agnostic.” That is, we need to be willing to understand and accept that our prospects and customers could be anywhere, with wants and needs, so we need to be able to recognize these individuals and communicate with them with relevance and permission—and deliver value to them when and where they are ready to engage.

(By the way, relevance—always interpreted from a consumer’s perspective—trumps permission. Discuss.)

I’ve always preferred the descriptor “channel fluent” to communicate this same message. Be channel agnostic, yes, but also have the best practices know-how to deploy any channel in an all-channel mix.

So BAM! Now we have all these channels, and all this channel data to deal with, and the customer wanting brand interaction and engagement in real time, her wants and needs met, and to move on until she’s ready to interact again.

How does a chief marketing officer navigate all this … with success? How should channels be deployed in concert with each other—around the customer? What unique attributes, if any, does any single channel bring to the brand engagement mix? What successful results have been achieved? How can we learn from each other?

I believe it’s time we take a page from the consumer to establish and share collective intelligence, this time among advertisers and marketers. Enter, the DMA 2013 International ECHO Awards Competition.

Does Your Marketing Have What it Takes?
Prove It With an ECHO Entry

Since its debut in 1929, the ECHOs have evolved with direct-response advertising—in all its channels and all of direct marketing’s manifestations. Today, the ECHOs are about the world’s best data-driven marketing campaigns—with data informing both strategy and creative, and producing results. Winning campaigns in 2012 came from Australia, Brazil, Canada, Denmark, Germany, India, Mexico, New Zealand, Spain, the United Kingdom and the United States. The winners represent today’s direct marketing—and the winners truly showcase the best in channel-fluency performance.

For 2013, Winners will be selected in 15 business categories, including three new categories in consumer products, education, and professional services, as well as automotive; business and consumer services; communications and utilities; financial products and services; information technologies; insurance; nonprofit; pharmaceutical and healthcare; product manufacturing and distribution; publishing and entertainment; retail and direct sales; and travel and hospitality/transportation.

Channels represented among the winning campaigns will cover the media landscape: alternative media, catalog, direct mail, email, mobile, print, search engine marketing, social media, telemarketing, television/video/radio, Web advertising and Web development. Entries may represent single channel success—but increasingly entries reflect integrated marketing deployments, not necessarily “omnichannel,” but moving toward this customer expectation.

This year’s call for entries is now open, under the theme “The Ultimate Team Award” (campaign credits to Quinn Fable Advertising, New York, NY). Information on the ECHOs is posted at http://dma-echo.org/index.jsp.

The deadline is May 3, so let’s get started on building 2013’s version of marketing excellence collective intelligence—to share how and when channels matter. I’ll have more to share on the ECHOs in future posts here at “Marketing Sustainably,” but get started today on proving how direct marketing matters, and matters most, in creating and engaging customers everywhere.

If You Speak, Will They Listen?

Yesterday, I was one of two speakers at a webinar hosted by Target Marketing. During our prep call earlier in the week, the host advised us that over 1,000 people had signed up to attend this free event. Now I know from past experience that only 50 percent will likely attend, but another 10 percent to 20 percent will listen to the podcast after the fact. But despite providing case studies, facts and figures based on industry best practices, the disappointing reality is that very few “attendees” will ever try to implement the lessons that I shared

Yesterday, I was one of two speakers at a webinar hosted by Target Marketing. During our prep call earlier in the week, the host advised us that over 1,000 people had signed up to attend this free event.

Now I know from past experience that only 50 percent will likely attend, but another 10 percent to 20 percent will listen to the podcast after the fact. But despite providing case studies, facts and figures based on industry best practices, the disappointing reality is that very few “attendees” will ever try to implement the lessons that I shared.

How do I know this? Because I’ve worked with hundreds of clients and have spoken at dozens of conferences and am continued to be amazed at how many companies feel the need to reinvent the wheel.

For example, when presented with a prospect’s particular marketing challenge and we recommend a fully integrated campaign solution that includes online and offline initiatives, the client says “let’s test to learn what will work best.”

Really?

I’ve been involved in testing for my entire 30+ year marketing career. And I’ve tested offers, colors, premiums, even signature lines, and those can yield very different results client to client. But here’s the one thing I don’t need to test: A fully integrated marketing campaign will outperform a single medium campaign every time. Why? Because different people consume information differently.

Some spend time online and click through banners, buttons or SEM results. Others gather information at conferences and webinars. Still others open and read email and direct mail.

Net-net, at some point, if they have a need, they will raise their hands in some way, whether they accept an inbound call from your sales rep or make a call into your call center. Perhaps they’ll visit your website and download something? Or visit your booth at a tradeshow?

The source of the “lead” will be misleading if you’re trying to measure and prove ROI, because they were exposed to your message in a number of ways and just because they finally raised their hands, you assign them to one channel and credit it with being the driver of leads. The next thing you know, you’re shifting marketing dollars to that one channel, and yet a year later you’re wondering why lead volume is down.

On the other end of the spectrum, I’ll meet new prospects who say their last (single channel) marketing campaign didn’t work. Therefore the (single channel) is a waste of money.

After digging a little deeper, the prospect didn’t really know where the “list” came from, or what the “offer” was or whether the campaign ran during a hurricane which meant that no one was online searching for their particular product during that particular week.

Here’s the key takeaway: Well planned, fully integrated campaigns usually yield the highest number of leads at the lowest cost. And the key to real sales success is the follow up.

Follow up those leads with an intelligent combination of emails and phone calls based on lead value (oh yeah, don’t forget to ask two or three questions when acquiring that lead so you can score its value to the organization), and—here’s the most important part—actually follow up with emails and phone calls that demonstrate to that prospect that you understand his or her pain and have the experience and solutions that can help solve the problem. In other words, talk to them in a language they can understand.

When prospects complete an online form and complete the box that asks “Industry” by choosing “Manufacturing,” don’t contact them as if they are in healthcare. If the forms asks for “Company Size” and the respondent chooses “1 to 10,” then treat that respondent like the small business it is. Demonstrate that you understand the challenges facing small businesses in manufacturing and you’ll gain far more credibility and brand engagement.

The next time management asks you to reinvent the wheel to solve the marketing challenge, tell them you already know what to do, because you’ve done your homework.