Retailers can increase their margins by 6% to 7% and exceed rising
customer convenience and service expectations with multichannel
retail systems
The race for multichannel retail systems has begun. Multichannel
retail leaders are emerging and compelling other retailers to
follow. Retailers must act today to achieve high-revenue and
high-margin leadership with vendor alliances to implement
multichannel retail systems. The alternative is relegation to
follower or also-ran status in the race to retail profits and
enhanced customer service.
Consistent customer service across all touch
points
Retailers are certain that multichannel customers
demand consistent customer service across all touch points and sale
channels. Customer and regulatory expectations are rising. We found
the following:
Customers expect consistency, fairness, respect, and justice
wherever they shop. Retailers who fail to meet these standards are
often boycotted.
Retailers fear that negative Web site experiences will cause many
shoppers to avoid bricks-and-mortar stores associated with the same
company. Because of this, some retailers may repeatedly redesign
their Web sites.
Levels of customer satisfaction positively correlate to consistency
of service, pricing, promotion, and business rules across all
customer touch points.
Multichannel retailing software
Web software vendors, like
BroadVision,
Art Technology
Group, and
Vignette, excel at Web front-end sell-side
systems. This functionality is important because Web front-end
systems are often the first touch point that online
 | | "Act now in the race towards
high-revenue and high-margin leadership, or expect to be a
follower" | | | | | |
| | Source: Randy Colvill | | |
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customers encounter.
Point-of-Sale (POS) and Web-enabled POS vendors, like
IBM
and
360Commerce, connect Web information to POS information.
Web-enabled POS functionality is a prerequisite for consistent
rules for delivery of service and management of business across the
Web and store customer experiences.
Analytic and campaign management vendors, like
BlueMartini
and
InterWorld, provide a closed-loop process for
promotional campaign management. Analytic and campaign management
functionality is important because it can be the basis of a
closed-loop process for developing consistent customer views across
all channels.
Segmentation vendors, like
MicroStrategy,
NetPerceptions,
Quadstone, and
E.piphany,
slice and dice customer segments every which way. Customer
segmentation is necessary for the consistent application of
business rules to similar customer types across all customer touch
points.
Retail specialists, such as
SVI,
Ecometry,
Evant,
CommercialWare, and
STS, look to
partner with horizontal software companies in order to offer basic
multi-channel retail system functionality. This is important
because only the retail specialists have the industry expertise
required to apply the functionality of the horizontal software
vendors to retail successfully.
Data collection and validation
Retailers report that consistent customer service requires a
closed-loop business process for implementing a single customer
view. The process starts with a customer loyalty programme to
gather profile data. We found that the business process must
include validation, correction, and updating of customer profile
data, and the customer profiling and registration process should be
an opt-in programme that respects privacy.
Disappointing customers with regard to privacy can lead to the kind
of negative scrutiny and FTC investigation that DoubleClick
received for violating privacy expectations.
Customer views must include consistent information on customer
purchase orders, returns, warranty claims, recall and fulfilment
history; otherwise, the customer view is incomplete and sure to
disappoint customer service expectations.
Manage business rules across all touch points
Retailers report that multichannel customers and regulators are
very good at spotting and exploiting pricing and promotional
inconsistencies. When this happens, customers are quick to exercise
low price options, and regulators are quick to launch legal
investigations that can easily cost retailers $100,000 (£62,289)
per month in defensive legal fees.
Stores, Websites and mail-order catalogues must collaborate when it
comes to pricing, promoting, transacting and providing products
across all channels. Otherwise, traffic flows and sales will shift
unexpectedly from one sales channel to another. Several apparel
retailers experienced this last Christmas.
Single view of customer interactions
Meeting or exceeding customer service expectations in a
cost-effective way requires a logical progression of procedures -
from self-help on the Web to contact by e-mail, fax, live chat or
telephone - through which customers can solve problems themselves
or escalate their concerns until their problem is solved by someone
else.
Retailers must treat different customers accordingly to exceed
convenience and service expectations. Some customers will demand to
speak to a live person. Others will be content to engage in
self-help on the Web or by pushing buttons on a telephone. The
successful multichannel retailer must satisfy all of these
different types of customers.
Channel requirements
Different types of retailers have different touch point and sales
channel requirements. Different channel requirements will make the
adoption of multichannel retail systems easier for some types of
retailers, but harder for others:
All of the retailers interviewed reinforced their brand messages
and associated value propositions across all channels in ways that
recognised the differences in shoppers' experiences. Brand
management across all channels requires a degree of content
management production, publication and syndication control that
does not yet exist in retail.
Recommendations
Retailers should act now to establish high-revenue and high-margin
leadership with multichannel retail systems. They should also
demand that vendors form alliances to deliver multichannel
functionality. Use the figures in this report to determine basic
requirements.
Act now in the race towards high-revenue and high-margin
leadership, or expect to be a follower. The race to leadership with
multichannel retail systems is already well underway in grocery and
catalogue retailing. Chain store, big box and specialty store
retailers will be next, in that order.
Look to alliances led by retail software specialists. Such
alliances must include horizontal software leaders to provide the
right mix of Web, Web-enabled POS, segmentation, analytical,
contact centre and retail systems functionality, to implement
multichannel retail systems. Any single vendor can provide only 20%
of multichannel retail system functionality today. The remaining
80% must come from alliances.
Look to multichannel cataloguer contact centre technology for early
examples of, and as a foundation for, multichannel customer
interaction management.
Remember that basic multichannel system requirements include a
closed-loop process for developing consistent customer views and a
repository for common business rules.
Be prepared for increased cross-channel scrutiny by multichannel
customers and regulators. Expect to explain business rule
inconsistencies across channels, either in the courtroom or in the
form of customer queries.
Expect increased multichannel customer and regulator concern with
regard to privacy and customer profiles. Always ask customers for
explicit permission before constructing, using or sharing profiles
on them.