Building a Profitable Omni-channel Customer Experience

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Building a Profitable Omni-channel Customer Experience

By Sahir Anand - 01/20/2015
The fundamental goal of any omni-channel strategy is to achieve greater customer engagement and therefore, greater profitability and share of wallet per customer when compared to single channel sales and service strategies. Yet, three out of four retailers are unable to measure and manage this goal as competing operational pressures such as inventory visibility and merchandise planning take over, according to RIS/EKN Research's Customer Engagement Tech Trends Study: The Personalization Imperative. The operational disposition of many retailers is puzzling considering retailers that use omni-channel capabilities such as buy-online pick-up in store are able to find almost twice the customer conversion vs those who don't.
 
Data from EKN Research's January 2015 Omni-Channel Customer Profitability study reveals that among leading omni-channel capabilities of 'extreme importance' retailers rank inventory planning (77%) and merchandise allocation (65%) ahead of customer relationship management (64%) and promotions (50%). Similarly, retailers rank inventory visibility across channels (52%) higher than a customer convenience capability such as buy-online pick-up in store (40%). The ultimate focus of retailers is to capture as many sales as possible without leaving themselves overburdened with stock at the end of the season.
 
Inventory planning and visibility is the starting point of retailers' omni-channel journey. However it needs to gradually mature with an equal focus on customer engagement and customer relationship management. There are four key strategies retailers should focus on:
  • Holistic customer engagement strategy that focuses on relevance of the promotion/ offer, context (right content at right place at the right time), and advocacy (constant reinforcement of brand/overall value to the customer).
  • The way customers interact with a retail brand across all channels offers retailer the ability to understand every aspect of customer journey. It is important for retailers to move beyond using just transactional data and focus on processing and analysis of large omni-channel transaction and sensory data sets. This will enable a holistic view of your customers and their preferences.
  • Adequate efforts need to be made to strike a balance between operational and customer-engagement metrics. Companies need to look beyond traditional customer satisfaction scores towards more revealing and holistic customer-centric KPIs such as CLV, customer share of wallet etc.
  • Organizational structure and culture related issues are amongst the toughest to operationalize. It's important for retailers to build cultivate an environment which facilitates omni-channel transformation keeping customers engagement as the focus.
To realize customer profitability and financial benefits of omni-channel strategies, there has to be a balance between the operational and customer-side of the Omni-channel equation. EKN Research's Omni-Channel Customer Profitability Framework highlights four key execution blocks that retailers should focus on as they move along the Omni-channel maturity curve. To review EKN Research's Omni-Channel Customer Profitability Framework, click here.
 
For further discussion on this and related retail topics, please contact Sahir Anand at [email protected], @sahiranand, @EKNResearch