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Are you about to go through another season of not
knowing if your marketing dollars are being allocated to the right
medium? If you are, you´re not alone. This is the reality for over 95
percent of multi-channel retailers who say they engage in
multi-channel marketing according to the recent DMA 2001 Interactive
Industry Report. In addition, BCG and Accenture 2000/2001 reports
reveal respectively that over 75 percent of these retailers cannot
effectively track customer behavior across channels and 76 percent of
marketing executives say their company is unable to measure a
marketing campaign´s ROI. Further challenges arise with the fact that
catalogers generally wait at least 3 months for a standardized
matchback analysis to analyze results.
What´s more, the market is set to grow tremendously for the
interactive direct marketing business. Sales revenues attributed to
U.S. direct and interactive marketers are forecasted to exceed .86
trillion by the end of the year, representing a 9 percent increase
over 2000 sales, according to the DMA´s 2001 Economic Impact Report.
As a result, multi-channel retailers increasingly need to understand
how to accurately allocate marketing dollars across multiple channels
enabling more precise circulation, list and promotion decisions. In
addition, they must understand how and where consumers are spending on
and offline and tailor their plans accordingly.
The issue is that multi-channel retailers are not seeing all of the
demand that their marketing programs are driving across multiple order
channels. This leads them to make decisions based on a narrow view of
the world. In fact, looking at results across retailers from multiple
industry segments, we´ve seen that multi-channel retailers are
realizing only about 50-70% of demand by looking at one channel only.
When all channels were taken into account, the actual demand generated
across all channels ranged from 132% to 200% difference than what was
visible to the client through the catalog channel alone!
Multi-Channel retailers need to understand where and how consumers are
spending Retailers need to integrate their channels in order for their
customers to have consistent interaction with the brand from any
point. A study conducted by J.C. Williams Group and BizRate.com found
that more than two-thirds of online shoppers look for and purchase
items online they previously saw in the same retailer´s catalog. In
addition, the report found that the Internet is the most effective
pre-purchase influencer among all channels.
The study also identified the "Super" multi-channel shopper who is
more likely to be a customer of all three channels and purchase four
times more frequently than the average online shopper. Super Shoppers
purchase from a retailer´s store 70 percent more frequently than the
average store customer and 110 percent more frequently from the
retailer´s catalog. The basic message of the report is clear –
retailers that do not support their online channel face big risks.
As customers continue to buy across channels, email has become a
compelling offer channel that savvy multi-channel retailers should
take advantage of. Email has a faster response time, it´s cheaper
thanks to its cost per unit and it´s an effective means to maintain an
ongoing dialog with customers. A recent NFO study found that over 88
percent of daily Web users report they have made a purchase as a
result of a permission-based email campaign. The study revealed that
email is critical to increasing repeat purchases and therefore
lifetime customer value. Nearly 80 percent of consumers want to
receive special offers from online merchants on a weekly basis.
Multi-Channel retailers need to emphasize the link between multiple
channels Retailers need to do a better job of informing their
customers about available multi-channel options. The current problem
is lack of information about their channel integration and most
importantly lack of true integration among their channels internally.
Retailers should take note of a recent Shop.org study which states
that shoppers who use multiple channels -- store, catalog, online --
tend to spend more and be more loyal. The highest incidences of
tri-channel shopping are in the electronics and clothing markets.
In addition, advanced multi-channel retailers need to evaluate the way
they examine ROI. These retailers must look at more intangible metrics
such as brand equity gains as well. ABizRate.com study found that a
number of multi-channel retailers look at ROI in a narrow sense. They
use only traditional metrics such as direct sales, which may not show
the role that Internet plays on purchases through a catalog or made in
a store. The report also found that the move towards becoming truly
multichannel involves integrating data from all order channels. In
addition, the study found that 30 percent of multi-channel retailers
have no customer data integration.
The fact of the matter is that multi-channel retail excellence remains
elusive. As marketing budgets are being slashed across the industry,
now more than ever, savvy multi-channel retailers must move towards
building an integrated marketing strategy to understand true ROI. They
can no longer deliver "everything to everyone, everywhere." In order
to refine future marketing programs, retailers need to measure results
across channels. Furthermore, these retailers need to create an
organization that facilitates centralized, or at least coordinated
decision making based on cross channel data. An integrated strategy
can deliver a truly successful customer experience by sending the
right offers to the right customers through the right channels.
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