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A friend of mine told me that they had bought a new couch and put the old one in the basement. When the spouse came home, seeing the old couch in a new place and said “we really need to spruce up this basement to go along with that couch”. The project was ultimately handed off to an expensive contractor who got hired for the job of making the old couch fit a new environment with new demands. Next thing you know, the contractor was moving walls, installing new carpet, a bar, all sorts of upgrades, and the price – and time frame – increased substantially.
This project reflects the journey a lot of CSPs experience when they begin to review their omni-channel commerce strategy. They take stock of their existing channels – online, store, direct mail, etc and often look for a comprehensive solution to replace everything. Furthermore, business sales executives say they also want to provide better, faster experiences for their customers through their channels – field sales reps, call centers, B2B Integration, and more. All of these systems evolved over time, were expensive to implement, and vary tremendously in effectiveness – some systems are old and ineffective, while others are brand new and best of breed. Many vendors tout an omni-channel commerce experience for Telcos using their products. But while they say “Omni-channel”, what they really mean is “My-channel”. They propose large scale, expensive and disruptive answers which are expensive and risky.
For traditional retailers, omni-channel is a must. Some do it better than others, and those that don’t face survival issues. Chris Peterson, of Alix Partners a strategic consulting firm, recently presented an interesting discussion of relative margins delivered in an omni-channel retail model, “Which is more expensive – Omni-channel or retail stores?” In his discussion he states, that omni-channel margins decline when one compares brick and mortar to buy online/pick up in store to ship-from-store. Omni-channel is the new normal; however, he projects that “The true measure of omni-channel survival will be the total “costs to sell through” … all the way to the hands of the customer, where ever she wants delivery! Ironically, for the CSP, the AlixPartners model seems too monocular. In this model, an apparel retailer, they consider the “retail price” minus the “cost of goods” minus the “store ops cost” to deliver a net profit and margin. However, an omni-channel transaction metric assessment for margin should include the leverage of all touch points across the lifetime value of a customer, which for a CSP is further elongated over multiple transactions: bill pay, service transactions, moves, adds and changes, plan enhancements, hardware, device upgrade, etc. In general, a traditional retailer assesses margin on a transactional basis – like AlixPartners presents in the above named article. AlixPartners loosely defines Omni-channel as “multiple ways to sell,” but omni-channel is the net sum of transactions occurring over time. IBM defines omni-channel as a business focus on driving orchestrated satisfying customer interactions that are frictionless and consistent across all channels, devices and touchpoints of the customer life-cycle; regardless, of starts, stops and restarts, across systems and engagements. Given this point of view, omni-channel margin for a CSP cannot be a simple equation of price minus COGS minus op costs.
Instead of remodeling the entire basement all at once with an expensive contractor, smart CSPs are choosing to leverage what they have, and to make small scale changes as they go. No more big bang. This presents an opportunity to truly rationalize existing systems without a massive disruption. A true omni-channel commerce environment allows a CSP to repurpose all the valuable systems while only changing out the pieces which need attention. A true omni-channel system then pulls all of this together, from consumer to midmarket to enterprise systems, into one customer experience.
And my friends with the couch? While this may not be an exact analogy, they did say this was the most expensive couch ever reused! And after the basement project was done? You guessed it –the old couch didn’t match the new décor and they had to buy a new one!
Take a lesson from the Couch Tale! Make your CSP omni-channel commerce experience truly omni-channel. See how you can use what you have and then change as you go: How do you measure your cost-to-serve omni-channel fulfillment? Or visit us at https://www.ibm.com/watson/customer-engagement/industry-communications/.