Advice and Insights From A Practitioner

Harnessing Multichannel Marketing for Strategic Advantage

Sustainable competitive advantage no longer arises exclusively from position, scale, and first-order capabilities in producing or delivering an offering. All those are essentially static. So where does it come from? Increasingly, managers are finding that it stems from the “second-order” organizational capabilities that foster rapid adaptation. Instead of being really good at doing some particular thing, companies must be really good at learning how to do new things.”[1]

In this day and age, which is defined by volatility and uncertainty, multichannel marketing can be an organizational capability that provides a business with a strategic advantage.  By its very nature, multichannel marketing, with all of its moving parts, is the key to building stronger lifetime value through longer term relationships with your customers, before, during and after purchase. Having spent the past 20 years in various marketing leadership roles, I know firsthand the tactical challenges marketers face in trying to orchestrate successful multichannel campaigns. It isn’t easy but, to me, the rewards in terms of profitability can be significant so it makes sense to make this a key competitive advantage.


Top Down, Bottom Up or Side to Side?

From a strategic standpoint, it is critical to have a top down approach to the process, people, technology, partnerships and infrastructure necessary to enable effective multichannel marketing.   Once the multichannel infrastructure and network is in place it then requires aligning and tightly integrating all of the tactical elements of marketing—strategy, budgeting/spending, channel management, targeting, creative and messaging—with the journey that consumers or businesses undertake when they make purchasing decisions around your products and services. Once the “decision journey” is identified, defined and mapped it is then necessary to ensure that the customer value proposition and multichannel capabilities are linked and can live up to the brand promise. In other words, no matter how the customer chooses to interact with your business the customer experience must be seamless, consistent and the brand promise is maintained throughout the entire experience.

Multichannel Marketing Defined

My definition of Multichannel Marketing is presented here in 2 parts:

Multichannel marketing – is a marketing methodology that uses two or more different media approaches to reach and influence a target audience in a single campaign. 

Furthermore, Multichannel marketing is usually supported by:

one or more inbound response channels, that, when combined, produces a single, return-on-marketing investment result.

A good example of this definition is Eddie Bauer’s multichannel approach. Their approach is referred to as a “bricks, clicks and flip” approach that leverages Stores, The Eddie Bauer.com website and their catalogues where ordering can be done through any of these inbound response channels (store, online or call center).

Why is Multichannel Important?

Here are 4 of the many reasons why multichannel is important:

  • Multichannel buyers generate more revenue, purchase more items, purchase in more categories and all of this more frequently than single channel buyers. (1)
  • According to a 2009 study by McKinsey & Company, consumers who shop across multiple channels will spend on average 4 times more annually on purchases than those who shop via a single channel.
  • Multichannel drives higher customer satisfaction levels, higher cross sells and retention levels. (2)
  • Heavy users – have demonstrated greater preference for shopping in multiple channels. (3)

Multichannel Marketing Options

“The medium is the message – and never before has there been so much different media and, hence, so many ways to shade, inflect, blow out, or screw up your message.” – AdWeek: Media Plan article, July 2011.

According to our definition above, a subset of multichannel marketing is media selection. The media selection of a given multichannel campaign is critical since it can add to the complexity and effectiveness of the outcome, including the ROI.

A common way to look at multichannel marketing is to separate it into inbound and outbound media channels.

Outbound Channels:

  • Direct mail
  • Tradeshows/seminars/events
  • Email
  • Web sites, Microsites, PURLS
  • Contact Centers (Telemarketing)
  • DRTV and Radio
  • Mobile/SMS/Chat/Apps
  • Brick and mortar stores
  • Other (newspaper, out-of-home ads, etc.)

Inbound Channels:

  • Paid search/Pay per click
  • Search Engine optimization
  • Blogs and social media
  • Word-Of-Mouth (WOM)
  • Viral video

The outbound channels are more traditional and “one way” communications and as such, are “marketer lead”, are becoming more expensive from a cost per lead perspective and less effective in generating responses than inbound channels, all other things remaining equal. (Source: “Marketing Data:101 Charts and Graphs of Original Marketing Research” by Hub Spot.)

The important distinction between the two categories is the simple fact that inbound channels are customer-lead channels that encourage and encompass “two-way interaction” capabilities.  As one executive recently stated, we are increasingly living in an opt-in world. Inbound channels are opt-in, sometimes even permission-based and most importantly, they drive engagement with the customer. On average, the cost per lead is significantly less for inbound channels.

Multichannel Dimensions

From a strategic perspective, in addition to the managing the channels marketers have to consider and manage these different dimensions of multichannel marketing:

1. Managing the allocation of Marketing spend across two or more channels.

2. Channel-specific promotional events that can vary by:

  • Sequencing of events,
  • The Timing,
  • Testing and learning protocols:  targeting, product positioning, offer, format, messaging and pricing.

3. Channel Adoption Duration – which is the time it takes for customer to adopt a channel.

4. RFM analysis:

  • Recency – or, the time between transactions.
  • Frequency – # of Transactions (i.e. per campaign, per year, or however you define this metric) and the
  • Monetary value – basket size and cumulative “share of wallet”.

5. The customer view of your operational performance via multi-channels:

  • Time between order, fulfillment and delivery.
  • Any real or perceived breakage in the sales process.
  • Accessibility and convenience.
  • Richness of the information presented.

6. Customer interactions: as customer relationships grow, develop, deteriorate and dissolve based upon the customer experience with 2 or more channels.  (Journal of Marketing, April 2007, Page 116.)

7. Post-acquisition behaviors – your ability to carefully support withdrawals, cancellations, cross sells, upsells and add-ons.

8. Return-on-Marketing-Investments (R.O.M.I.) – analysis and insights, by channel and channel combinations.

9. A commitment to transparency and compliance – including your ability to track, record and archive customer interactions, calls, problems and disputes.

 Addressing Common Multichannel Pain Points

Here is a brief list of challenges or common pain points the strategist encounters in the development and execution of multichannel marketing efforts:

  • Channel Silos: online/offline, inbound/outbound.
  • Complexity – the proliferation of New Channels.
  • Determining the ROI of some of the channels (i.e. social media).
  • Synchronization – the managing multi channels, simultaneously.
  • Costs of Resources to support the efforts. This includes the deliberate avoidance of over investing in what McKinsey calls the “3 Es Trap”:  investing to provide “Everything to Everyone Everywhere.”[2]
  • Tracking and reporting across multichannel campaigns – to arrive at a single ROI.
  • Cannibalization – or the fear of cannibalization.  Walmart’s online sales are a mere 2% of total sales and the reason for that is fear that the online channel will cannibalize in store sales. Store managers managing warehouses of 40,000 feet still wield a tremendous amount of power. As a result, Amazon’s online sales of $34 billion per year is still 3 times that of Walmart.com – but Walmart intends on changing that with the purchase of Vudu (a low cost, on-demand, movie streaming site).

The Traditional Sales Funnel/Process Has Changed

Here is a look at the traditional sales or purchasing funnel.

“Consumers are moving outside the purchasing funnel—changing the way they research and buy your products. If your marketing hasn’t changed in response, it should.” -McKinsey Quarterly, 2009 #3

In the traditional funnel metaphor, consumers start with a set of potential brands and methodically reduce that number to make a purchase. And then, re-emerge in some cases to make an additional purchase.

The traditional sales funnel has changed to something like this, which is more of a lifecycle as shown by the series of concentric circle than a single event:

McKinsey developed this lifecycle model by examining the purchase decisions of almost 20,000 consumers across five industries and three continents.  The emphasis here is delivering a great customer experience throughout what they call a “consumer decision journey”.

Managing Systematic, two-way Interactions

Their research showed that the proliferation of media, channels and products require marketers to find new ways to get their brands included in the initial-consideration set that consumers develop as they begin their decision journey. We also found that because of the shift away from one-way communication—from marketers to consumers—toward a two-way conversation, marketers need a more systematic way to satisfy customer demands and manage word-of-mouth. In addition, the research identified two different types of customer loyalty, challenging companies to reinvigorate their loyalty programs and the way they manage the customer experience.

Finally, the research reinforced our belief in the importance not only of aligning all elements of marketing—strategy, spending, channel management, and message—with the journey that consumers undertake when they make purchasing decisions but also of integrating those elements across the organization. When marketers understand this journey and direct their spending and messaging to the moments of maximum influence, they stand a much greater chance of reaching consumers in the right place at the right time with the right message.

Conclusion

In the final analysis, to gain a strategic advantage, you must have all of these elements in place:

  1. A common definition of what Multichannel Marketing truly is.
  2. Formulation of the multichannel strategy.
  3. Organizational alignment around the people, processes and technology to be able to execute such campaigns.
  4. A complete set of multichannel and media options, both inbound and outbound, at your disposal.
  5. Knowledge and understanding of all of the various dimensions of multichannel marketing.
  6. The ability to address and eliminate any “pain points” associated with these multichannel efforts.
  7. Development of a map of the Customer Experience or Customer Decision Journey to determine all of the potential lifecycle touch points, customer interactions and the use of channels for each so you provide a seamless and consistent experience across all channels.
  8. Development of Key Performance Indicators and ROI targets. Tracking and measurement is paramount.
  9. Once cross channel tracking and measurement is accomplished, then the optimization effort can proceed.

In the final analysis, managing the “points of influence” throughout the customer life cycle will determine whether you merely meet customer expectations or delight them.

For more information, see Multichannel Power.com web site I created to share articles and where you can download the presentation entitled: “Customer Experience Marketing” featured at the recent Professional Insurance Marketing Association (PIMA) conference, July 28th 2011.

Bill Tyson is the CEO and Owner of Strategic Marketing Plus, LLC, an independent consultancy firm specializing in strategic marketing and sales optimization based in Santa Rosa Valley, CA. For more information see: http://www.strategicmarketingplus.com and his website dedicated to multichannel marketing called MultichannelPower.com


[1] Adaptability: The New Competitive Advantage, by Martin Martin Reeves and Mike Deimler  HBR July 2011.

[2] McKinsey Marketing Solutions, 8/2000.

[3] McKinsey Quarterly, June 2009, The Consumer Decision Journey.  This diagram appeared in a follow-up article entitled “Winning the  consumer decision journey,  By David Court, Dave Elzinga, Susan Mulder, and Ole Jørgen Vetvik
[4] Ibid
[5] McKinsey Quarterly, June 2009, The Consumer Decision Journey.  This diagram appeared in a follow-up article entitled “Winning the  consumer decision journey,  By David Court, Dave Elzinga, Susan Mulder, and Ole Jørgen Vetvik

[6] Ibid

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Categorised in: Accountability, Best Practices, Bill Tyson Consulting, Bill Tyson's Blog Strategy-In-Action, Business, Business Model, Business Strategy, Change, Customer Decision Journey, Customer Engagement, Customer Value Proposition, Distribution channels, ERM, Execution, Innovations, Insurance, Marketing, McKinsey Purchase Funnel, multichannel marketing, Product Development, Research, Risk, Risk Management, Strategic Plan, Strategy, The Balanced Scorecard Approach, Trends, Value Creation

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