Are you pushing your customers around?

Kamil Michlewski explains how offering too many channels discourages customers from using any of them

Consider this simple scenario: a customer walks into a store (retailing sports equipment, let’s say) and asks if they have more information on the latest skiing equipment. The salesperson, instead of answering the query there and then, says they should check that sort of thing on their website. Customer walks out. Let’s now see how this simplified snapshot of the customer journey relates to three groups: customers, companies and consultancies.

CUSTOMER’S VIEW

What this means for the consumer is that they were not able to answer their need when and where they wanted and were forced to go to a channel that was not their first choice. Worse still, if they were a consumer segment that was not used to using the web to do research, they may have switched off from purchasing at this particular retailer.

Instead of appreciating the effort that the company has put into making the information available online, they see it as being ‘thrown around’. They may go to another retailer rather than go onto the website. Not a great outcome.

COMPANY’S VIEW

The company here may have thought: ‘Right, we have invested in our online channel so we’d better use it. Let’s shift as many of our customers onto that platform because it’s cheaper and more efficient.’ Hence, they may have seen this as a positive and proactive action by their employee. They may have thought: ‘Customers may not be too happy but surely they are on their way to finding out what they need from our new online system.’

To exaggerate for the sake of illustration. The company may have actually wasted money developing the system and lost an eager customer – a negative double whammy – while believing they are building an efficient multichannel platform.

Without the knowledge about which of the channel jumps are positive and which are negative, the company may just be making its vital decisions with its eyes closed.

CONSULTANCy’S VIEW

The established view in the world of multichannel consultancy is that the more channels customers engage in the more valuable they are. Countless Venn diagrams with two or three overlapping circles and a bull’s eye in the middle would have us believe that this is straightforward, plain and simple.

However, we’ve yet to see an approach that distinguishes between the numbers of channels people visit voluntarily versus how many they visit simply because they have to. Would somebody who visited three different channels five times and was forced to make two unnecessary (in their view) jumps be more valuable/satisfied/loyal than somebody who has switched only twice and on both occasions they were happy to explore the other channels? If you tried searching the received wisdom in the industry, you’d struggle to find references to this key question.

ALTERNATIVE VIEW

What we observe in our work is that it’s likely that those who engage in a greater number of channels happen to be in a purchasing mindset (and hence want to explore their options more thoroughly) versus those who engage with fewer channels who may be in a situation of seeking support.

The fact that there will be different values attached to those who engage with more channels is not surprising. What is missing from the picture as presented by many advisers is which group is actually more valuable: those purchasing who are exploring the channels voluntarily or those who are pushed from channel to channel along their journey.

If we generalise this to all the contacts across channels customers make, be it online, instore, call centre or mobile, we have a large amount of unnecessary channel switching that frustrates customers and adds costs to the company in revenue and lost opportunity. The argument that, as a result of a greater number of contacts, the sales and loyalty increase doesn’t stack up. From our evidence, we see that if consumers are unnecessarily forced to switch channels during their journey, they dislike that profoundly.

An article from Marketing Week – published online on 19 September 2011 by Rosie Baker – suggested that companies such as Morrisons, Dixons, Homebase, Phones4U, Sports Direct and DFS are missing out on the opportunity of multichannel marketing. The reality may be more nuanced as they may potentially be losing money in the process of developing their multichannel systems.

To reap the rewards of the new interconnectedness, firms need to understand not only how many different channels their customers visit. They should know how many channels they visit because they choose to and how many because they have to. With this knowledge companies can maximise the right contacts and minimise the wrong ones for the benefit of both their shareholders and consumers.

Dr Kamil Michlewski is senior consultant at The Value Engineers

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