With Great Opportunity Come Great Challenges
Each channel is an opportunity to reach the customer, but managing your communications across these various channels.
Channels are categorized as "non-addressable" (where the customer cannot be identified as an individual, such as television ads or billboards) and "addressable" (where it is possible to identify each individual: e-mail, phone calls, etc.)
This is not to say that companies capitalize on the opportunity to speak to an individual customer via addressable media, or even that those who do seize that opportunity do so effectively, merely that the potential is there.
While there are a wide array of media, with new ones being invented constantly, they fundamentally fall into those two categories.
Challenges for Marketers
With technology, there have been numerous shifts that present challenges for marketers. Some examples:
1) Interruption marketers are no longer tolerated. Telemarketers largely poisoned the voice channel - at one point, the average residential household received between ten and fifteen calls a day. Customer reaction to telemarketing is no longer positive, as evidenced by the decreasing effectiveness rate and the rise of do-not-call registries.
2) Buyers are taking charge. The internet has made it very convenient for buyers to do research before buying products, and less likely to be motivated by advertising to react immediately, without considering their alternatives.
3) Buyers are multichannel beings. They will use the media that is most convenient to them, and it is not unusual for a buyer to gather information via multiple media in making a decision.
What makes it worthwhile is that reaching customers through multiple channels pays off. Statistics are cited that indicate a cross-channel shopper spends 50% more and visits a store 70% more frequently than the average shopper (Multichannel Retail Report, 2001).
There is some question as to whether this is merely an effect of existing behavior (a person who is already an active shopper will utilize multiple media) or causality (using multiple channels leads a person to shop more frequently), and there have been studies that seem to support either conclusion - but whatever the case, the correlation is significant.
Additional Research (Gartner, 2007) suggests that multichannel customers have decreased loyalty (they have a better chance of receiving, and taking, a better offer) and expect a higher level of service (especially information in advance of purchase) than do traditional customers.
Ill-Suited Metrics
There are numerous problems with the metrics most companies apply to the medium.
Traditional marketing metrics are often a misfit for the medium: if you consider the number of shoppers who leave a Web site without making a purchase by the measurements for those who do the same in a physical store, you'll be misled.
Traditional metrics are also a misfit for customer-centric marketing: if the short-term goal (driving sales) takes precedence overbuilding a long-term relationship with a customer, the company's success will be short-lived.
Also, while there is a great deal of information available online, there is less information available in other media: you cannot count the number of individuals who jump in their car and drive to a store immediately upon seeing a television ad, but you can apply that measure to Internet advertising.
As a result, only 9% of marketers are confident in their ability to measure the financial returns of their marketing (Lenskold Group, 2007).
Integrated Marketing Communications
IMC became fashionable in the 1980's. it stressed that the same message should be sent across all media (if your newspaper ad sells on price and your radio spot sells on quality, you're sending mixed messages). At first blush, it's a good idea - but it has been applied so strictly that marketers have often sent a consistent message that was effective in some media, but entirely ineffective in others.
What IMC missed is the capabilities of the media to effectively communicate different kinds of messages, and the need to treat each customer as individual. Being consistent is important, insofar as the messages should not conflict, but to force them to be in lock-step is not the proper approach.
IMC has also been counterproductive to effectively managing customer contact: it focuses narrowly on the effectiveness of each channel, in and of itself, and often turns a blind eye to synergies (most companies can't tell you how many sales at a physical store were motivated by their Web site, or even a newspaper ad).
As a result, there is a gap between traditional IMC and the new media.
Customer-Centric Marketing
In brief, a customer-centric firm delivers its communications in a manner than makes them more valuable and relevant to the recipient - and as a result, they are more welcome to the consumer and more effective in fostering a sense of an ongoing relationship.
Some of the key requirements of customer-centric marketing are:
- Two-Way Value: The business realizes that customers are seeking value from them as well (not just the other ay around)
- Ongoing Relationship: The business realizes that their relationship with the consumer is not once-and-done, but begins before they make a purchase and continues afterward
- Customer Experience: The business realizes that customers consider the entire experience of doing business with them rather than the specific need a product is intended to fulfill
- Multichannel Mindset: The business sees the customer as an individual who uses multiple channels, and drives the decision as to which channel best serves their needs.
There are various approaches for customer-centric marketing: mass-customization, personalization, one-to-one marketing, etc. Each works best for a specific kind of company, but a multichannel approach is a requirement that is common to all of them.
Leveraging the Voice of the Customer
In traditional marketing, the customer has very little opportunity to talk back. Messages are broadcast, sales are made, and that's the end of it. The only way customers could express themselves was by demanding a refund (which was diagnosed as a product defect) or rejecting the marketing message (which caused them to be excluded from the target demographic). A letter or phone call from a customer attempting to reach out to the firm was seen as an anomaly, and was often dismissed as such.
Given the communications capabilities of the online medium, customers have a voice, and their messages are not often directed to the company, but to other customers (or potential customers). A marketer would be remiss, to the point of being negligent, to ignore this voice.
More than listening to the voice of the customer, a savvy marketer can leverage it. Viral marketing is one approach to let your customers become evangelists for your company. You can leverage social intelligence to better package your goods (customers who bought X also buy Y). You can also solicit direct feedback that will help you improve your product, your service, and the entire customer experience.
Multichannel Metrics
The goals of multichannel metrics are to consolidate the effects of marketing across a landscape of channels, allocate resources to the most effective channels, better focus efforts to reach customers across the channels they employ, and capitalize on the benefits of multichannel marketing strategies.
One caveat is that metrics of any kind product results that must be viewed with skepticism, in terms of whether they are accurate (in the face of technical difficulties and interpretational assumptions) or applicable (whether the behavior measured has any relevance to the goal of building a better relationship with a customer).
The absolute number provided by a snapshot (percentage of customers who bought an item this month) are, and always will be, somewhat dubious. The importance is in measuring these phenomena over time. Moreover, the former may be misleading: an ad that generated a 10% response rate is seen as "more effective" than one that generates a 5% response rate, even if the second ad attracted customers who buy more product, more often, over a longer period of time.
Challenge: Data Collection and Integration
One of the foremost challenges to MCM metrics is collecting customer behavior data from all channels (not just the computerized ones) and integrating it into a complete picture, across the disciplines of marketing.
Prerequisite to overcoming this challenge is the storage of data in a uniform manner. If brand marketing, online marketing, and direct marketing store their data in different formats, this obfuscates the task of consolidation. Likewise, the data must be brought into the same central system that can be leveraged by all marketers.
This is not merely a matter of cramming data into a single software package, which often means that the data collected from some media must be truncated or distorted to fit a database schema designed for another. Presently, there is no good off-the-shelf solution for doing this.
Challenge: Marketing Silos
Another challenge is the traditional structure of marketing departments, with personnel assigned to very specific, narrow tasks who operate in ignorance of (and often in conflict with) those who do a different specific, narrow task.
While expertise in a specific medium or method is of value, marketing managers must seek to integrate their staff; or in the absence of such leadership, the marketers themselves must overcome these barriers.
Challenge: Marketing's Role
Another challenge is in the traditional role of marketing within an organization. Marketing was seen as a resource for generating sales, a very specific and short-term goal, and excluded from product design and operations, which are equally important to the customer experience.
The greatest cause of cognitive dissonance is in a customer who's been promised one thing (by marketing) and received another (by operations), which in turn is caused by the disjunction of these departments within the organization as a whole.
Challenge: Culture
The culture of most businesses tends to be short-term and performance oriented: sales this quarter, revenue this year. Refocusing this culture to a long-term approach is difficult: the employees are focused on metrics, not on the customer whose behavior drives those metrics.
The employees focused on the short-term because management is focused on the short term; which in turn is because the owners (stockholders) are focused on the short-term.