Talking Omnichannel But Organised Multi Channel?
Remember when we used to talk about “channels and media”?
Life was simple. Channel meant physical route to market e.g. retail, wholesale, intermediated, direct, etc. Media meant one- or two-way communications devices e.g. TV, radio, telephone, website, email, webchat, face-to-face, etc.
These terms have effectively amalgamated since we started to become “multi channel”.
eCommerce kicked this off on a massive scale, although the catalog and home shopping industry would say it’s been going for a lot longer than the internet (see Kelly Phillips Erb’s article in Forbes).
The key point is that the website (a communications medium) also became the channel. This has been repeated with mobile devices and to some extent Social, which when added to the traditional routes to market, means that a business has become multi channel.
This change has been complemented by the move to purely digital products in some categories e.g. music downloads, ebooks / enewspapers / emagazines, movie streaming, SaaS. Just think how much retail space used to be taken up with the predecessors of these digital products – and the associated hardware (CD/DVD/video players, landline phones, fax machines, etc.). I couldn’t find an estimate but I’m guessing that it’s thousands of miles of shelving!
And things are still changing fast! The automotive sector, for example, is in an unprecedented period of market and legislation-driven disruption in its brands, products, markets, fuels, financing, taxation / charging – and channels & media.
Autonomous vehicles will completely transform ownership and usage in urban areas by as soon as 2025 – and will be utterly ‘connected’ (see “The Internet of Cars” referenced by Goldman Sachs in their excellent article “Cars 2025”). Who would have thought that your automobile would be as much of a ‘channel’ as your tablet or mobile phone?
Which brings us to what marketers are now talking about – the omnichannel customer experience.
The word “omnichannel” has been around for a few years, and as far as I can see nobody has conclusively nailed a definition that’s very distinct from “multi channel”. I don’t see this as a problem, as it seems clear that omnichannel is a concept rather than something you can put in a box, and it’s evidently a progression from the multi channel approach described above.
Multi means ‘many’ and omni means ‘all’ or ‘universal’, and that’s how the difference is often described – multi infers separate; omni infers interconnected or integrated. So, is omnichannel just well-connected multi channel?
I’d suggest that this doesn’t do justice to the seismic changes that the omnichannel customer experience will demand of businesses in the next ten years.
These changes will affect a lot more than the marketing department. Marketers have rightly seized the opportunity to join up communications channels but I would assert that we need to go further as businesses. Pretty much everything described so far has been about what businesses “do” for and to our customers. We “do” marketing and sales, but the customer “does” their experience!
“Multi channel” is therefore (but unintentionally, I believe) not a customer centric term. It has been about how we as businesses organise OUR channels, rather than taking an outside-in view that it’s the same customer taking a sales or service journey using whichever channels & media that are the most germane to their requirement.
I passionately believe that effective omnichannel customer engagement can’t be achieved without a customer centric business model. This points to a distinct definition of omnichannel customer experience (which is different from omnichannel marketing):
“Omnichannel customer experience is how a company unifies its business capabilities* to make and deliver on sales and service promises to prospects and customers wherever they are in THEIR journey and consistently in ALL the channels they choose.”
*Within “business capabilities” I include organizational design, culture, staff competencies, ways-of-working, agility, systems, processes, insight, propositions, data, compliance, standards, and measures.
The customer journey is therefore at the heart of the omnichannel approach and the challenge is beyond the remit of one department. It is therefore crucial that the CEO gets this message and champions omnichannel, because otherwise you’ll just end up with “multi channel done better”.
Because in reality most companies are talking omnichannel in their business strategies, but they’re actually still organised as multi channel.
That’s a bold statement! What do I mean by it?
I’m referring to companies that are still essentially product centric in the way they’re set up, or have silo’d channel management in their operations. I’ve had the privilege of working with many companies around the world in most business sectors, and I can honestly say that customer centricity is still a journey that most businesses are on rather than a destination they’ve achieved.
The explosion of all things “digital” illustrates this assertion. Many companies have realised the urgent need to catch up or develop in their digital capabilities using Agile principles, but they find that their internal change management can’t cope with such disruption. A digital development department or team is then established and empowered to ‘get on with it’ and launch something as quickly as possible to avoid competitive disadvantage.
Maybe it’s just me, but I’m concerned when I see this because the company has just added another silo into their organisation.
I’m not saying it can’t work and won’t deliver some quick benefits, but short termism has succeeded again, which I believe is the enemy of the customer experience.
Why are short termism and silos the enemy of customer experience? Don’t I need to get real and recognise the pressures that businesses and management are under to perform or perish?
There are numerous problems with short termism. Here are some that impact on the customer experience:
- Short termism distresses the market, resulting in over supply and brand devaluation
- Short termism leads to bad decisions that damage trust e.g. acquisition offers that are better than loyal customer offers, fee/interest rate increases, taking payments early
- Short termism tells customers that you only care about them if/when they’re buying
- Short termism educates the customer on how to ‘beat the system’ e.g. only place orders at the end of the quarter; only buy when there’s an offer
- Short termism can lead to illegal practices to fabricate sales figures, or to unethical practices such as ‘pulling sales forward’ to meet a target
- Short termism can reward counter cultural behaviours and make staff scorecards meaningless
- Short termism inevitably runs out of steam because there are only so many tactics that can be deployed (or the bad practice gets exposed!). This usually leads to a “coming clean” period (often under new leadership) when everything is re-set to ‘real’ figures and either the cycle starts again or the new team bites the bullet and starts changing the culture
Silos are the enemy of customer experience because unless there’s perfect collaboration they lead to inconsistent or competing objectives, marketing, service and measurement. All too often it’s the poor customer who ends up having to stitch together the disconnects in their experience by re-keying and re-explaining their requirements or situation in different channels.
You’ll never achieve a distinctive brand-enhancing omnichannel customer experience if your company’s current organizational design has in-built competition and tension across its channels. Neither will you if you’ve (perhaps unintentionally) established a set-up where channels have different management, objectives, culture, agencies, and service levels.
So, is there any hope for large, established businesses with infrastructures and legacy systems? Yes, there is!
Major corporations have the people, data and resources to meet the omnichannel challenge if their leadership has the will. This means being willing to champion the customer centric program and to make the changes to “the way things have always been done” before they’re forced on you.
You also have access to fantastic tools such as IBM Watson’s cognitive technology, which are helping unscramble big data and complex customer journeys in a way that’ll never be achieved with brown paper and post-it notes!
The 21st century organizational design needs three P&L lenses – product, channel, and customer.
Most corporations still only have the product P&L lens, and of course that will still be important. There should be one executive responsible for optimising product profitability.
Many companies have started to calculate channel economics, but fewer have made one executive responsible for optimising channel profitability – organising to deliver the omnichannel customer experience as defined above.
Similarly, many companies have built models to attribute value to customer segments or even individuals. There should similarly be one executive responsible for optimising customer profitability.
These three P&L lenses – product, channel, and customer – should ideally be reconciled to the same ledger, and their responsible executives MUST have equal influence and power in the boardroom. Only then can business profitability be optimised, with the senior team dedicated to demolishing silos and only creating genuine business value rather than having short-term “look good” tactics reigning.
These lenses are perfectly possible to build and reconcile with good data governance and the latest AI and analytics tools. Many companies are realizing that the Data Scientist role is going to be one of the most important in 21st Century organizations, and have already started investing.