Remember when we used to talk about “channels and media”?
Life was simple. Channel meant physical route to market e.g. retail, wholesale, intermediate, direct, etc. Media meant one or two-way communications devices e.g. TV, radio, telephone, website, email, web chat, 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, or 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 omni-channel customer experience.
The word “omni-channel” 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 omni-channel 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; onmi infers interconnected or integrated. So, is omni-channel just well connected multi-channel?
I’d suggest that this doesn’t do justice to the seismic changes that the omni-channel 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 (see Ann Handley’s THINK Marketing blog “Omni-channel marketing is everything: But what does that really mean?”).
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 organize 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 omni-channel customer engagement can’t be achieved without a customer centric business model. This points to a distinct definition of omni-channel customer experience (which is different from omni-channel marketing):
“Omni-channel 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 omni-channel approach and the challenge is beyond the remit of one department. It is therefore crucial that the CEO gets this message and champions omni-channel, because otherwise you’ll just end up with “multi-channel done better.”
Because in reality most companies are talking omni-channel in their business strategies, but they’re actually still organized 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 realized 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 organization.
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 recognize 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 behaviors 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 omni-channel 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 omni-channel 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 optimizing product profitability.
Many companies have started to calculate channel economics, but fewer have made one executive responsible for optimizing channel profitability – organizing to deliver the omni-channel 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 optimizing customer profitability.
These three P&L lenses – product, channel, and customer – must 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 optimized, 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.
Peter Lavers is an expert in CRM and customer experience management. He is one of the world’s top influencers on the subject (e.g., Satmetrix Top 50 & SAP Top 60 Customer Experience influencers; Vcare Top 50 Customer Care influencers; Huffington Post Top 100 Customer Service professionals; and MindTouch Top 50 Customer Success influencers).The insights he has derived from these engagements give him a unique perspective on what does and doesn’t work in the field of customer management. Peter is a paid contributor to THINK Marketing.