Multi-channel omni-channel. This one simple equation may be the sticking point in your company.
All it takes is one great shopping experience for you to be hooked on omni-channel done right. As a consumer, you expect frictionless commerce. Ask any newlywed about their gift registry experience and chances are they will tell you about a happy path that resembles ordering take-out or using OpenTable to make dinner reservations. So why haven’t you had that experience lately when shopping retail? Better put, why are so few companies getting this thing called omni-channel correct?
They are trying. Believe us, companies are talking about and acting on omni-channel. At the National Retail Federation conference the past two years, for example, omni-channel was discussed everywhere. Macy’s, for example, applies most of their $1 billion CapEx towards technology and infrastructure projects that strengthen their omni-channel capabilities.
Omni-channel describes a new combination of existing business models: seamless integration of your supply chain and back office capabilities to support a best-in-class consumer experience. Multi-channel, on the other hand, is too often a replication of a single business model carried across individual sales channels. This ultimately leads to a retailer with deeper silos and thicker walls which impede a consumer’s ability to enjoy frictionless commerce. Imagine you are a consumer responding to a promotion on your loyalty mobile app and place an order on the e-commerce site. For the multi-channel retailer, this online channel is unlikely to recognize the mobile campaign and your loyalty profile will not get credit. After receiving the product, you decide to drop by the local retail store to exchange the product for a difference size only to discover the sales agent cannot process the exchange, has no awareness of the promotion, nor any record of the transaction. The retailer’s complexity has now become the burden of the consumer.
Much of the spending intended for “omni-channel” capability is actually going towards efforts that double down on multi-channel. “Multi-channel” is analogous to the top draft pick which offered so much hope for championships who never panned out. So why is multi-channel a bad thing? Because consumers want an integrated brand-centric sales experience and that promise is not fulfilled through single channel investments anymore. Developing an e-commerce fulfillment program to improve your inventory planning efforts will no doubt improve your e-commerce performance. Developing the app that gives your customer a loyalty program on the go will improve your mobile presence. However, each of these investments in isolation is not omni-channel. And if you made both piecemeal investments last year, you have likely executed against two very good multi-channel investments.
So how can you avoid these mistakes? We recommend becoming familiar with common pitfalls. From our vantage point, there are basically four key inhibitors that keep companies from achieving omni-channel excellence. If you can become aware of and sensitive to these four, your omni-channel efforts are more likely to succeed.
Single channel KPIs: Where sales credit gets recorded is the top cause for retarding omni-channel development. The inability to reward cooperation across channels has created powerful, self-serving fiefdoms in many companies. Oftentimes this is a direct result of investments made years ago when e-commerce was a proof of concept. Many retailers tested the waters of e-commerce as a sales channel and set up separate divisions and inventories to test if it was sustainable. Now the truth of the Internet’s power has been proven and this safe, controlled incubator environment has become a powerful inhibitor to omni-channel development. Omni-channel discipline requires these channels to share the inventory and the sales credit.
Out of sync operations: Operational misalignment is a killer to any omni-channel pursuit. To determine whether or not you are guilty of this, review your treatment of product, price, and promotions across channels. For an example of price misalignment, look no further than YouTube videos of customers showing cheaper prices they can find on their phone for the same products they have in hand in the store. Consumers have powerful means to price compare the brands they want and they will find inconsistencies. Retailers have enough issues trying to create brand differentiation against their true competitors; finding misaligned products, prices, and promotions within the enterprise creates unneeded problems.
20/40 vision: Inventory visibility is a common callout for enterprises attempting to become omni-channel for good reason. To this we must add the qualifiers of accuracy and timeliness. Bad data can be more harmful to your omni-channel efforts and may even reset your clock on behavior change efforts. If you wish to generate an omni-channel policy for order abandonment, availability, or returns, you need to equip your sales associates with a 20/20 vision of inventory in its many statuses (on-hand, saleable, on-hold, etc…). Timely data ensures associates have confidence the store across town has the product the consumer wants on the shelf t. Similarly, this data accuracy increases the likelihood the across town associate will actually hold the item instead of making a sale to the next walk-in customer. Inaccurate or untimely inventory visibility will stall omni-channel progress.
An “off the shelf” culture: In our experience, many enterprises believe omni-channel is a one-time software-driven solution. They wrongly believe businesses can purchase this thing called “omni-channel” and IT can simply plug it into their enterprise. Don’t get us wrong here, IT needs to be involved, but a broader slice of the enterprise needs to engage and adopt this as a way of operating, rather than a technology solution. Too often we have seen IT departments identify creative solutions that are perfectly aligned to operational improvements but miss the underlying brand element. The best retailers will treat omni-channel as a year-over-year activity, a way of operating, and dedicate resources to grow this initiative.
So what do you do once you are self-diagnosed as “multi-channel” instead of “omni-channel”? Stay tuned. In our next publication we will begin to tackle these inhibitors with recommendations on how to being to break through these inhibitors.