Twelve: Brands Cross Channels
For a time, retailers held power in the supply chain: a brand that wished to reach consumers either had to cater to suppliers or build its own retail outlets. It was unusually to attempt to reach past retail to create consumer demand to pull products - only a few national brands had the capacity to do so.
Today, brands have greater ability to reach the customer directly, and even to sell to them directly, and while the importance of retail has diminished somewhat, most brands find that they still move significantly more inventory through retail stores and retail outlets rather than their own website, as few have eschewed retail entirely.
There is little concern about cannibalization. Fear that a Web site would steal customers away from the store channel was based on the assumption that customers would continue to shop the store if no web site existed for a brand - but when retailers failed to provide a web channel, shoppers who preferred the channel bought from other sources. As a result, firms have recognized the need to serve the customer in their channel of choice or lose the business.
As a specific example, consider than Barnes and Noble was committed to the store experience, and by refusing to sell online, lost many customers to Amazon, which has become the primary bookseller online. Even when B&N realized its error, it found itself struggling to catch up, and found it had lost many customers irrevocably and has struggled to remain viable as a firm.
In doing so, retailers came to take a more holistic view: a customer is a customer, regardless of the channel. Most importantly, the channels through which a customer is served must be in harmony: for the web site experience to be disjoined from the store experience is unacceptable, but in the same way that it is unacceptable for a catalog to be disjointed from the store experience.
How Do Customers Reach You?
When goods were in short supply, customers had no choice to put in whatever effort was necessary to buy from whomever was selling and be very compliant with the vendor's dictates. In a competitive market, customers have many options to buy an item from multiple sources, and vendors must now be accommodating of the customer's preferences.
Customers make choices based on multiple factors:
- The buying situation - If they need a good immediately, they will go to a store. If they can wait for delivery, they will use a catalog or the Internet.
- The merchandise - Customers are more inclined to buy some items without inspecting them in person, but for other items (such as clothing or fresh meat), they prefer to inspect in person.
- Their preference - Some customers enjoy the social interaction with sales staff, others would prefer to avoid human contact
Of critical importance: while generalizations may be drawn about the behavior of most customers most of the time, there are no hard and fast rules. The determination of channel will be made in the course of each buying task, and it will vary. When a business makes a singular choice based on its beliefs or assumptions, it is throwing away all the business it may have gotten by excluding other channels.
Raising the Rates
It is generally the practice of brick-and-mortar retail management to reconsider its practices in reaction to failing conversion rates. That is, if the number of purchases per customer are failing, the retailer asks "what are we doing wrong?" and seeks to make improvements.
Ironically, this practice is not often carried over into other media channels. When the conversion rate at a Web site decreases, there is no consideration of business practices, but instead an initiative to drive more people to the channel through advertising.
To use the leaky-bucket allegory, it's pouting more water into the bucket rather than patching the leaks. This is also based on the assumption that the conversion ratio among new customers will be the same as the conversion ratio of the old - i.e., if the store is converting 20% of visitors to buyers, then 20% of any new visitors brought in by advertising will also be buyers. Experience shows this assumption to be false: the new visitors responding to advertising are less inclined to purchase, particularly when the advertising was aggressive and devious in getting people to visit the store.
A better practice is to return to the question of "what are we doing wrong?" or "what could we be doing better?" in order to increase sales to existing customers - it is ultimately more effective and often less expensive to improve service than to drum up new customers, of whom there is a finite supply.
Consistent Customer Experiences across Channels
As new media have emerged, they became segregated. Organizations developed silos that served the store channel, the voice channel, the catalog channel, the Internet channel, and the digital channel and, as silos tend to do, they became insular and shared little information with one another.
As a result customers have a significantly different experience of a brand when shopping in a store and by ordering online, which is particularly problematic because many customers do use multiple channels in the buying process - specifically, they will check the price and availability of items online prior to visiting a store, and experience disappointment when they find the item is either unavailable or sold at a significantly higher price.
In terms of the perception of a brand, a bad experience in any channel creates a negative impression of the brand in all channels. That is if your website is shabby and amateurish, it will dissuade people from visiting a store, though the experience there is superlative.
Customers are particularly sensitive to bait-and-switch tactics, when an item online is not available in store. Ideally, they will be in synch - or there will be an indication of an item's availability at a particular store. As a back-up plan, a clerk should be prepared to have the item brought from another store or delivered to the customer's home if it is not in stock. Even this does not salvage the business of the customer who wanted the item right away (their trip to the store is wasted, because they could have ordered online if they were willing to wait for delivery).
Ultimately, the retailer must make their primary objective to provide the merchandise that customers want, regardless of the channel.