10 things you must know about OmniChannel marketing

Integrated marketing communications is poised to take on a whole new meaning, a new complexity, a bewildering fluidity. Are you ready?

You’ve probably seen a new buzzword creeping into online marketing conversations—”OmniChannel marketing.”

John Bowden, senior vice president of customer care at Time Warner Cable, defined it in a recent Marketo post:

“Multi-channel is an operational view—how you allow the customer to complete transactions in each channel. OmniChannel, however, is viewing the experience through the eyes of your customer, orchestrating the customer experience across all channels so that it is seamless, integrated, and consistent. OmniChannel anticipates that customers may start in one channel and move to another as they progress to a resolution. Making these complex ‘hand-offs’ between channels must be fluid for the customer. Simply put, OmniChannel is multi-channel done right!”

You might be wondering, “What is really new here? Haven’t we always wanted to do a good job with our multi-channel marketing?”

Why is this hot now?

Earlier this year Wal-Mart asked its suppliers to develop OmniChannel strategies. Thousands of companies are in a frenzy to figure this out. You never ignore Wal-Mart.

Add a study by Retail Systems Research showing that 47 percent of retailers surveyed say that multi-channel customers are much more profitable than single channel customers—a rise from 38 percent in 2012 and a sharp rise from 28 percent in 2009.

We are creating increasingly complex digital connections between companies and customers. Mastering these layers (and integrating traditional advertising) through a uniform communication strategy is OmniChannel marketing.

The layers of the OmniChannel

With the first company websites, we created the first permanent digital relationships with our customers. We began to condition consumers to expect a 24-7 buying and service experience. The business emphasis was on establishing a presence.

The second digital layer emerged a few years later, enabled by Google. Now that we had websites, we had to be found!

A third layer emerged around 2007 as “chat rooms” bloomed into social networks. For many, social networks became the way to communicate, discover products and services, and connect to customer service.

Mobile picked up steam at the same time. Mobile is the greatest new commerce channel since the shopping mall. Mobile with social media presented an unprecedented opportunity to focus on utility—helping people whenever and wherever they were with content.

Next? The future belongs to wearable technology, augmented reality, and advanced filters to deal with overwhelming information density, a fourth digital layer.

As the illustration depicts, traditional marketing, advertising and merchandising co-exist with these layers, and increasingly pervade them.

Devin Wenig, the president of eBay Marketplaces, described it this way in a McKinsey interview: “E-commerce for many years was an interesting trend, but … today we don’t even know what e-commerce means. Everything has come together, on- and offline. Now, every merchant, every retailer must have an OmniChannel strategy or they won’t survive. That’s very different than just 24 months ago.”

10 Implications of the OmniChannel

If you think this through, there are some important implications of this integration:

1. The best miners win

Customers leave a data trail on every level. The companies that mine this stream will create powerful competitive advantage. That’s why, increasingly, marketing = math. Analytics is the key to the kingdom. For many retailers, data analysis may present the only competitive advantage in a world of instant price comparisons and “buy now” buttons.

2. New resources, new skills

Not every customer will engage with you on every layer. That means your channel strategies are going to multiply, which means you need resources. Eighty percent of CMO’s say they are failing at OmniChannel marketing for lack of resources.

These new resources will also require a new outlook and new skills. Devin Wenig of eBay put it this way:

“Building engaging experiences across channels is incredibly important. Many retailers have spent their entire lives thinking about how to build an engaging experience in one channel, usually a store. But now, understanding how to connect with your core customers across every way they want to connect—not the way you want them to connect but the way they want to connect with you—is a different skill.

“It requires design and product management. It requires understanding how to market in digital. I see many instances where it is old-school marketing. It’s still about major TV campaigns, get people into the stores. That’s still important, and that’s not going to go away.

“But understanding how to engage in a world of exploding social networks, how to use search, how to optimize, and how to engage—very different. I think that is going to become part of the playbook for retailers and merchants.”

3. Distinctive ubiquity

Standing out in an increasingly complex and cluttered world across all these channels is not going to be easy—or cheap. If the experiences in each channel are not uniquely helpful, you risk annoying customers with repetitive ubiquity everywhere.

While “multi-channel” may lose its luster as the buzzword, you need to connect with consistent, but different, approaches by channel.

Your goal needs to be “distinctive ubiquity.”

4. Measurement wins

Like social media, measurement can be difficult. The companies most likely to succeed and fund new initiatives are the ones best able to measure success. According to a recent study, 85 percent of CMOs don’t measure cross-channel efforts.

In this rudderless environment, do you know how to invest in marketing that works? Measurement can be a competitive advantage.

5. Break down the silos

Retailers say their biggest challenge remains merging the digital and physical retail worlds into an easily understood and executed system. Consumer interactions are so complex and rapidly evolving that it is difficult to pin down a direction.

One large retailer I spoke to operates store merchandise marketing, media marketing and Internet marketing as silos … and all have different goals. This company is years away from consistent integration unless they break down silos, both internally and with their advertising partners.

6. Un-learn what we did best

I believe the single biggest hurdle to OmniChannel will be the cultural battle between the two centuries-old attitudes of “stack it high, move it fast” and “exceed quarterly numbers” and re-orienting on the customer’s desire to dictate buying terms based on the latest apps and social media buzz.

There are implications for organizational structure, external partnerships, fulfillment, merchandising—almost every aspect of buying.

7. An overhaul of the fulfillment system

If retailers can break with these attitudes (I think they will), it presents a new dilemma—accurate fulfillment. Today, fulfillment is choreographed among manufacturing, procurement, marketing, and distribution. Everything must work in harmony.

Supply-chain planning for seasonal fashion changes or even an annual update to a furniture line can take more than a year. Following the customer through an ever-changing digital buying cycle requires complex and expensive new fulfillment models.

8. Protect assets

Another struggle looms between serving customers digitally and protecting investment in brick-and-mortar stores. ShopperTrak’s network of 60,000 shopper-counting devices to track visits to malls and large retailers across the U.S. reported foot-traffic declines of 28.2 percent in 2011, 16.3 percent in 2012 and 14.6 percent in 2013.

This transition will be painful and expensive. With augmented reality, will we even need a store? Ikea is already providing 3D AR renderings of their products in your home. Take a look at this:

9. Are ad agencies friends or foes?

I recently reviewed an “OmniChannel marketing plan” from a Fortune 100 company. This is what the ad agency proposed: Sunday-newspaper coupon flyers, in-store displays, television ads, and in-store sampling.

In other words, the 1965 version of OmniChannel.

Why? Because this is what ad agencies know, this is what they sell, and this is what they want to preserve. I am not indicting all ad agencies but I have seen enough presentations to conclude that this is a widespread problem. To get true OmniChannel, brand leaders will have to drive the change and pioneer new funding and incentives for agency partners.

10. And then everything changes again

The hurricane of change makes it difficult to think two-three years out, but augmented reality will be coming soon. As we saw in the Ikea video, it’s already here.

For the companies that move first into these spaces, there will be an unparalleled opportunity to create deep customer connection and loyalty.

And as we know, customer loyalty trumps everything.

A version of this article first appeared on Mark Schaefer’s blog, {grow}.

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